Taxation Bill introduced today includes rules allowing people to comply with foreign account information-sharing agreements.
The United States Foreign Account Tax Compliance Act (FATCA) legislation is due to take effect on 1 July 2014. Under FATCA, financial institutions, regardless of their location, will be required to report on certain United States account holders directly to the United States’ Internal Revenue Service, or face a withholding tax on United States sourced income of 30%.
It is proposed that New Zealand enter into an “intergovernmental agreement” (IGA) with the United States, to significantly reduce the compliance costs of FATCA for New Zealand financial institutions. Negotiations for such an agreement are currently underway.
The provisions in the Bill will enable financial institutions to comply with the IGA, and any future similar agreements.