This week, HM Revenue and Customs (HMRC) confirmed that UK financial institutions (FIs) that have no US-reportable accounts will not be required to submit annual ‘nil returns’ in order to ensure compliance with new rules designed to prevent tax evasion by US citizens.
The change comes after the US Internal Revenue Service (IRS) updated its own Foreign Accounts Tax Compliance Act (FATCA) information to clarify that it itself does not require nil returns but that they might be required by the FI’s local tax authority.
It is believed that this issue has been controversial with FIs in ‘Model 2′ territories – such as Switzerland, Hong Kong and Bermuda – that have to report directly to the IRS.
But what about Singapore? According to a member of IRAS’ FATCAteam, nil returns will be expected from SG based FI’s –
“A Reporting SGFI will need to submit a nil return to IRAS even if it has no US Reportable Accounts. Reporting SGFIs must do so by submitting either a Nil Return XML file through the IDES or a paper nil return to IRAS. IRAS will post a copy of the paper nil return for Reporting SGFI’s use on its FATCAwebpage in the next few weeks.”