Financial institutions in Costa Rica are preparing to comply with FATCA law

Costa Rican financial organizations are prepared to meet the demands of the United States on the foreign account tax compliance Act (FATCA), which came into force this year.

The law of United States oblige financial institutions of Costa Rica to provide financial information to the United States internal revenue about their national clients service, the law obliges foreign financial institutions to supply information to the service of internal revenue of United States (IRS) about its customers, with the objective of combating tax evasion through the use of accounts abroad.

Over the next year local agencies will have to modernize their systems so, 01 January 2014, they are able to locate United States taxpayers who have accounts with them and perform the compilation information.

According to Manrique Blen, specialist at the accounting firm of Deloitte tax, institutions will be seeking to identify what customers might be American taxpayers. In January 2014, they will start to contact customers requesting more information to confirm their status as taxpayers. Then the companies will decide that customers should be reported to the IRS.

In 2010 the United States adopted the law of rent, which encourages employers who hire people who have been unemployed for a certain period of time. To cover the cost of these incentives, the Government created FATCA, which has instituted a series of controls on international financial transactions.

The Act does not require, but invites financial organizations around the world to provide this information to the IRS. However, according to close, there are penalties for those who violate.

"As a law of the United States, should not be able to oblige the Costa Rican financial institutions," said. "However, those who do not comply with these processes will be punished by the financial institutions in the United States with deductions of up to 30 percent in any payment made to a foreign financial agency that does not have an agreement with the IRS."

Starting from March 31, 2015, local financial institutions will have to start reporting to the IRS information on clients of United States taxpayers that they carried out operations in 2013 and 2014. From 2016, containing more than $50,000 of personal and corporate accounts containing more than $250,000 shall be informed.

According to Blen, Deloitte advises a large number of banks and has spoken with 90 per cent of the financial organizations of Costa Rica. "Everyone knows FATCA and many already they are applying," he said. "During the rest of this year, all to make changes which to date."

"FATCA is an important development in the United States efforts to combat offshore breach. At the same time, the IRS recognizes that the FATCA application is an important commitment for financial institutions," said the IRS Commissioner Doug Shulman in a statement released in July 2011.

Close also recognizes that one of the advantages of the law is that it allows greater transparency in the destination of the funds and the tax obligations of persons holding financial transactions outside the United.

Blen added that the IRS also offers countries the possibility of signing intergovernmental agreements, in which foreign Governments sent the United States information about financial operations of American taxpayers in their countries. Mexico was the first Latin American country to sign an agreement of this type.

"There is a list of about 50 countries that are negotiating with the United States signing these agreements," said.

Posted by Costa Developers