UAE- US reaches agreement in substance related to FATCA
Reaffirming its commitment to strengthen the stability of the financial and banking sector in the UAE, the UAE and the US recently reached an agreement in substance to include the UAE on the list of jurisdictions to be treated as having an Intergovernmental Agreement (IGA) in substance.
This will reduce the burden of the Foreign Account Tax Compliance Act (FATCA) for banks and financial institutions operating throughout the emirates.
As per the UAE Cabinet’s Decision No. (100/5 and / 2) for 2013, the Ministry of Finance (MoF) is the authority responsible for negotiating with the US Treasury Department to sign a draft agreement on the foreign account tax compliance for individuals subjected to tax as per the US tax law (FATCA). The agreement is in line with the UAE’s commitment to encourage and support banks and financial institutions as well as help them to implement the law’s requirements in order to strengthen the country’s position as a global financial centre.
The UAE has adopted the Model 1 IGA to negotiate the exchange of data and information between the UAE MoF and U.S. Department of the Treasury. Financial entities and regulatory bodies in the UAE have announced the importance of complying with the FATCA’s regulations through meetings and issuing instructions on due diligence requirements, and have followed up on the financial institutions’ commitment to these obligations.
H.E. Obaid Humaid Al Tayer, Minister of State for Financial Affairs stated that this is an initial agreement between the UAE and USA, however the emirates will be treated as having an IGA in effect. HE ensured that meetings and business workshops will be conducted on different committee levels during the coming months to finalise all required procedures in regards to signing the final draft of the agreement.
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