FACTA in the Works for NZ
October 30, 2012 New Zealand Taxation
New Zealand banks will soon need to pass on all information regarding their American clients, as New Zealand looks set to join the US FACTA agreement.
Late last week the Revenue Minister of New Zealand Peter Dunne announced that Cabinet has now agreed to lodge “…an expression of interest in negotiating a FATCA [Foreign Account Tax Compliance Act] tax information agreement”.
The FACTA was enacted by the US government in 2010 and requires all foreign financial institutions from participating countries to report to the US Internal Revenue Service all information regarding clients who are also US taxpayers.
Explaining the benefits of singing the agreement, Peter Dunne said “…without an intergovernmental agreement, financial institutions would have to enter into separate agreements with the IRS, withhold tax on certain accounts, and risk being in conflict with New Zealand’s privacy and human rights laws.”
He also said that if the agreement is enacted, New Zealand financial institutions will report data regarding American clients directly to the Inland Revenue Department, which will pass the data to the Internal Revenue Services, thereby greatly reducing administrative and compliance costs.
If New Zealand does not sign onto the FACTA, all local financial institutions will face a 30% withholding tax on their American incomes, unless they sign a separate compliance agreement with the IRS.
Photo by Canadian Pacific