Phl banks asked to participate in FATCA

MANILA, Philippines - Banks in the Philippines are encouraged to participate in the Foreign Account Tax Compliance Act (FATCA) passed by the United States Congress to enable them to participate in the global banking environment.

In a press briefing during a recent visit to the Philippines, US-based tax lawyer Kurt Rademacher said that the FATCA, enacted in 2010, introduces reporting requirements for foreign financial institutions with respect to certain accounts.

The main point of FATCA is that the US will waive withholding taxes on purchases of US securities made by non-US financial institutions on behalf of their clients.

During his briefing, Rademacher encouraged Philippine banks to participate, saying that failure to do so would prevent banks to invest in the US capital markets.

“I think Filipino banks will decide to comply with the law. That’s the best option. It makes sense to do it,” Rademacher said.

The tax expert said American citizens or green card holders have to pay taxes on income but many are not paying.

The FATCA seeks to encourage non-US institutions including banks in the Philippines to perform an audit function for the IRS.

“The United States, France, Germany, Italy, Spain and the United Kingdom are cognizant of the need to keep compliance costs as low as possible for financial institutions and other stakeholders and are committed to working together over the longer term towards achieving common reporting and due diligence standards,” FATCA said.

He said that with FATCA, there won’t be a penny of withholding tax that will be collected on the purchase of US securities because all banks would sign up for the program.