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, 2020 and 2021 reportable information and NIL Returns under FATCA to IRBM has been tentatively postponed to 2022.

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, June 7, 2021 at 8:00 am EDT through Wednesday, July 7, 2021 at 5:00 pm EDT.  The test session will be open to users that have completed IDES enrollment by Wednesday, June 2, 2021 at 5:00 pm EDT.
  
  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:
  
  
• User participation in IDES open testing is voluntary.
• Any production taxpayer data 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.
• As you are aware, the public/private key pairs used for encryption for FATCA filings have an expiration date. The IRS Public Key can be downloaded from IDES.
• As a reminder, when purchasing a new digital certificate or replacing one that is about to expire, IDES only recognizes and accepts digital certificates issued by IRS approved Certificate Authorities (CA). Follow the Upload Digital Certificate instructions found in the IDES User Guide, Publication 5190, beginning on page 33, to upload your new digital certificate. The user guide is available on the IRS IDES Homepage or https://www.irs.gov/businesses/corporations/international-data-exchange-service. 
• Test FATCA Reports submitted must conform to the FATCA XML Schema version 2.0. Any files submitted using other than version 2.0 of the schema will generate error notifications.
• The test environment may be accessed at https://wwwpse.idesgateway.com. You may log in using the same credentials used for production.
  

Before you begin:



Review the revised IDES User Guide, Metadata XML Schema Guide, data preparation instructions, sample test packet and user tips and DocRefID format

• Make sure your e-mail system will accept e-mails from the idesgateway.com and ides-support.com domains.
• Verify that your alert preferences settings on the IDES enrollment site are configured to receive alerts on all transmissions. Improper settings may result in failure to receive IDES Alerts and Notification errors.
• IDES only recognizes and accepts digital certificates issued by IRS approved Certificate Authorities listed at https://www.irs.gov/businesses/corporations/digital-certificates.
• Review sample code for the data preparation process on GitHub.
  

About data packets and transmissions:

• Follow the guidelines for recommended file names. File names are case sensitive and any variation in name, extension, characters or format may cause a transmission failure.
  

  The file naming convention of data packet is composed of a Coordinated Universal Time (UTC) timestamp and the entity ID or GIIN of the sender: UTC_FATCAEntitySenderId.zip. The timestamp format of the UTC is YYYYMMDDTHHMMSSmsZ. For more information, review the IDES User Guide.

• After transmitting a data packet, you will receive one or more of the following:
  • IDES Alerts via email from alerts@idesgateway.com.
  • Notifications via the IDES Gateway. A notification is an IRS-generated data packet that provides status details about a prior transmission.
• Use IDES Sentinel to review and track all transmission history and reports. IDES Web Monitoring and Web Dashboard tools are found at https://visibilitypse.idesgateway.com/SentinelWebDashboard/login.html.
  

About data preparation:

• SQL Injections
  • Certain characters are restricted from use in IDES and must be removed or replaced with entity references.  See the web page on SQL character restrictions for more information.
• File size and key encryption
  • Key size must be exactly 32 bytes or 256 bits.  Initialization vector (IV) must be 16 bytes, for a total size of 48 bytes.
  • Encrypt the AES 256 key with the IRS Public Key available at www.ides-support.com.
  • File size is limited to 200 MB compressed.
• Metadata XML Schema
  • Review the sample metadata and XSD files on the FATCA XML Schema web page.
  • Include your correct FATCA Entity Sender ID or GIIN in the metadata file.
  • Include the metadata file in the final data packet.
  • A metadata wizard is also available on the IDES Enrollment site.
  • An explanation of the International Compliance Management Model (ICMM) electronic field-level errors can be found at https://www.irs.gov/businesses/corporations/fatca-error-notifications.
  • Answers to FATCA Frequently Asked Questions are found at https://www.irs.gov/businesses/corporations/fatcafaqs.
    

Assistance during testing:

• If you are unable to log in to the test site or need assistance with enrollment, contact the IDES Help Desk at https://www.ides-support.com/Support.
• If you need additional information about Data Preparation or other aspects of FATCA reporting please visit the IRS FATCA website at www.irs.gov/FATCA.

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