Background

FATCA, which affects Financial Institutions ("FIs") worldwide, aims at reducing tax evasion by US persons. It requires Financial Institutions outside the US to provide information regarding their customers who are US persons to the US Internal Revenue Service ("US IRS"). A 30% withholding tax is imposed on the US source income of any FI that fails to comply with this requirement.

The US has developed Intergovernmental Agreement (IGA) models as tools to facilitate FIs` compliance with FATCA:

• Model 1 establishes a framework for FIs outside the US to report account information of US persons to their relevant domestic authority, which will in turn provide the information to the US IRS;

• Model 2 establishes a framework for FIs outside the US to directly report account information of US persons to the US IRS, which is supplemented by information exchange upon request between the US IRS and its relevant government counterpart.

More information on FATCA can be found on IRS FATCA web page.


Malaysia-US IGA

On 30 June 2014, Malaysia reached an agreement in substance on a Model 1 IGA with the US to implement FATCA. Accordingly, Malaysia has been included in the US Department of Treasury's list of jurisdictions that are treated as having an IGA in effect with the US. The list of jurisdictions can be found by clicking on the following link: IGA List

Under the terms of the Malaysia-US IGA ("Agreement"), Reporting Malaysia-based Financial Institutions ("MYFIs") will provide Inland Revenue Board of Malaysia (IRBM) with the required account information of US persons. IRBM will then exchange that information with the US IRS.

The IGA is however still in the process of finalisation. The US Treasury through their letter dated 25th April 2017 has agreed that Malaysia remains on the Treasury IGA list and continues to be treated as if it has an IGA in effect.

The date for submitting the 2014, 2015, 2016, 2017, 2018, 2019 and 2020 reportable information and NIL Returns under FATCA to IRBM has been tentatively deferred to 30 June 2021.

FATCA News

New! FATCA Notification XML Schema v2.3

The IRS updated the FATCA Notification XML Schema v2.3 to include new file and record level error notification codes for Nil Reports and FATCA XML Schema v2.0. The notification schema will be effective in January 2017. For more information on the Notification XML schema v2.3 and samples, go to the IDES Schema web page.

ANNOUNCEMENT:

• New! IDES Testing Schedule:
  The FATCA International Data Exchange Service (IDES) opens for testing from Monday, 16 December 2019 at 8:00 AM EST to Friday, 24 January 2020 at 5:00 PM EST.  The test session will be open to users that have completed IDES enrollment by Thursday, 12 December 2019 at 5:00 PM EST.
  
  To complete the enrolment process, obtain IRS-issued GIIN, FIN or HCTA Entity ID / username, and a valid certificate. Contact the IDES Help Desk for assistance.
  
  All testing sessions will be announced on the IDES Testing Schedule web page. If you need assistance with enrolment, contact the IDES Help Desk
  
  How to participate:
  
  
• Open to all IDES users that have completed IDES enrollment by 5 p.m. Eastern Daylight Time on Thursday, 12 December 2019. If you enrol after the end of the enrolment period, you cannot participate in the upcoming test session.
  
  
• On the first day of testing, all users enrolled by the cut off date will receive an email with links to access the current test servers via SFTP and HTTPS. Do not attempt to use previous tests links.
  
  
• Update your password and profile information BEFORE the enrolment cut off. The IDES password expires every 90 days without notification.
  
  
• Verify that your digital certificate is valid and has not expired.
  
  
• After the enrolment cut off date, the current user profile is transferred to a test environment. Any subsequent profile changes, such as adding or disabling users, updating email alert preferences, and changing passwords, are not reflected in the test environment. For example, if you change your password after the enrolment cut off date, you will not be able to access the test environment with your new password.
  
  
• Any production files submitted to the test environment will not be processed. Do not submit production files to the test environment or test files to the production environment.

Guidance Notes on Compliance Requirements for Malaysia-US IGA

To assist MYFIs to comply with the requirements under the Malaysia-US IGA, a Guidance Notes has been prepared. The draft was open for public comments from 15 March 2015 - 15 April 2015.

Following the comments received on the draft Guidance Notes, a revised draft was issued dated 11 September 2015.This draft will be revised accordingly once the IGA is signed.

FATCA Registration

Under the Malaysia-US IGA, MYFIs that are not exempted need to register with the IRS and obtain a Global Intermediary Identification Number (GIIN). For more information, visit the FATCA Registration Resources.

MYFIs that have completed registration and obtained a GIIN will appear on a monthly published IRS FFI list.

FATCA Data Transmission

For the purpose of FATCA reporting, US IRS has developed a platform called International Data Exchange Service (IDES). Under Model 1 Option 2 agreement, Reporting MYFIs will be transmitting their FATCA reporting data to IRBM via the IDES. IRBM will in turn authorise the onward transmission of such data held at the IDES to the US IRS.

Next steps :

1. Download the FATCA XML Schema.
2. Prepare the FATCA Report data file step by step as per IDES Data Preparation website.
3. Obtain one valid digital certificate issued by an approved certificate authority (CA) and enroll with IDES.
4. Transmit the FATCA reporting package to IRBM via IDES.

A Reporting MYFI with no US Reportable Accounts is required to make a Nil return annually to IRBM.

Help Page Link

?IRS FATCA Regulations

?IRS FATCA FAQs

Contact us

Please send your enquiry on FATCA to fatca@hasil.gov.my