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By Edward C. Kelleher

More than 110 tax professionals from leading banks and financial organizations across the country attended DTCC’s 14th Annual Global Tax Forum in New York on April 26 to learn about the latest developments surrounding the Foreign Account Tax Compliance Act (FATCA) and the intergovernmental agreements that will help implement FATCA.

FATCA requires foreign financial institutions (FFIs) to report to the Internal Revenue Service (IRS) information about accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

“The intergovernmental agreements (IGAs) are meant to establish a partnership with a foreign government and help create an international approach to tax compliance,” said Nicole Tanguy, Tax Counsel with Citigroup. Tanguy gave the keynote address on FATCA. “They are meant to counter offshore tax evasions for other countries, as well as the U.S., and help improve international tax compliance.”

Tanguy outlined the different models of IGAs and said that while the U.S. Treasury had announced in November 2012 that it had engaged more than 50 countries to discuss FATCA acceptance, the roll-out of executed IGAs has been slower than expected.

A panel discussion focusing on FATCA implementation by financial organizations followed Tanguy’s presentation. Representatives from Goldman Sachs, Morgan Stanley and Ernst & Young each described how their firms were approaching implementation issues including legal entity registration, onboarding, and educating staff about FATCA. “Every firm will face unique challenges,” one panelist said, “so remember, there is no one way to go about it.”

Transaction tax

Latest developments on the European Union Financial Transaction Tax were presented by Mark Persoff and Neil Bromberg of Ernst & Young. The European Union Financial Transaction Tax (EU FTT) is a proposal to introduce a financial transaction tax by certain member states in the European Union. The current 11 participating member states (EU11) are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. “But this is not a closed list,” said Persoff, who added that other countries, including The Netherlands, would be able to join the group.

Persoff also said the original implementation date – January 1, 2014 – didn’t provide “a realistic timeline” and that “the window to prepare…has been elongated.” He also cited critics of the proposal. UK Prime Minister David Cameron described it as “sheer madness” and U.S. Treasury Secretary Jack Lew said it was “very troubling.”

Stock loan income tracking

Ian DeSacia, DTCC Director, Settlement and Asset Services, gave an update of DTCC’s Stock Loan Income Tracking System (SLITS), outlining the responsibilities of the lender and the borrower and providing a description of how the service works. DeSacia said DTCC is considering an initiative that would provide greater transparency on the tax status of counterparties and information to facilitate tax information reporting for both U.S. participants and non-U.S. participants. DTCC is going to work with the industry to decide if this additional information will benefit DTCC participants.

Other presentations in the half-day forum included:

  • An update on DTCC’s Corporate Actions Reengineering by Matthew Schill, DTCC Director, Asset Services;
  • Depositary Receipts Market Update by Brett Lewis of GlobeTax Services, Inc.

Thumbs up

The Forum once again got the “thumbs up” from attendees with more than 94% saying they would attend the forum again next year and 98% will recommend it to colleagues. Some post-forum comments include:

  • “This is a well-organized seminar that provides relevant information to the financial industry, and I enjoy attending every year.”
  • “The industry updates from Nicole (Tanguy), Ernst & Young and the (FATCA) panel were very informative.”
  • “A good forum. Lots of relevant topics and discussions. I enjoy the event every year.”