Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act (FATCA) is a new legislation enacted by the United States that has come into effect from 1 July 2014. FATCA is designed to counter tax evasion by US persons and provide greater transparency in tax matters. It provides for new information reporting and withholding requirements to be applied to all financial institutions across the world, including banks in the Kingdom of the Saudi Arabia and other financial institutions as defined under FATCA. The Kingdom of Saudi Arabia has entered into an intergovernmental agreement (IGA) with the United States in order to facilitate FATCA compliance.
Common Reporting Standard (CRS)
The Common Reporting Standard (CRS) is a standard for Automatic Exchange of Financial Account Information regarding Tax Matters, it was issued by the Organization for Economic Co-operation and Development (OECD) of which the Kingdom of Saudi Arabia is a member. The Kingdom of Saudi Arabia has the required legislations in place with an effective date for compliance with CRS starting from 8th September 2017.
Will you be impacted by FATCA and CRS?
FATCA & CRS could impact customers of all banks and other financial institutions, regardless of nationality, residency or citizenship. This is because banks and other financial institutions are required to review the information they hold on their customers to ascertain their customers’ tax residency. If the bank or the other financial institution does not have this information on file, they may contact you to provide additional documentation to certify your tax status.
What impact does that have on you as a customer?
If you receive communication from a bank or other financial institution requesting additional information, you are required to provide the requested documentation within 30 days of receiving the communication.
Please note, if you have multiple relationships with a financial institution you may be contacted multiple times requesting additional documentation. It is important that you respond to all requests, even if you have provided the required information for a different account or financial product. We reaffirm here the attention to ensure the reliability of the communication and be formal to avoid any mysterious fraudulent contacts which are not initiated by the Bank.
If you refuse or do not provide the required documentation then the bank is required to classify you based on the information available on your customer profile, and accordingly you may be reported as a US citizen, US resident and/or as a resident in a reportable jurisdiction for tax purposes to the Saudi competent authority and/or take the necessary actions as per the applicable regulations.
The bank submits annual tax reports to the Saudi competent authority as per the Kingdom of Saudi Arabia’s laws and regulations, and this authority, in turn, provides this information to the Internal Revenue Service in the United States and/or OECD member countries as per the applicable tax agreements.
In case of any future change in circumstances you are obliged to inform the bank within 30 days.
Further information
For FATCA & CRS definitions, please follow this link
For further information on FATCA and how it impacts you please visit https://www.irs.gov/
Detailed guidance regarding CRS can be found on the OECD Website (including information about TINs and tax Residency):
https://www.oecd.org/tax/automatic-exchange/
Please note, your bank will be unable to provide tax advice. If you require tax advice, please contact a professional tax advisor.
