JPMorgan Chase & Co. · NYSE:JPM
JPMorgan Chase & — FATCA Webinar (June 2010)
17 slides from JPMorgan Chase &'s conference presentation, Jun 10, 2010
Slide 1: JPMorgan T&SS – Foreign Account Tax Compliance Act (FATCA)
10th June 2010 JPMorgan T&SS – Foreign Account Tax Compliance Act (FATCA) Peter Grant – Tax Manager Mariano Giralt – Tax Manager © JPMorgan Chase & Co. All Rights Reserved. JPMorgan Chase Bank, N.A. Member FDIC. All services are subject to applicable law s and regulations and service terms. Not all
Slide 2: Agenda
Agenda: Background Definitions of FFI and FE Key Withholding Requirements FFI Compliance Requirements and Withholding Exemptions FE Compliance Requirements and Withholding Exemptions Withholding Scenarios Other Features of FATCA Next Steps - Timeline 1
Slide 3: Background
Background On March 18, 2010, President Obama signed the “Foreign Account Tax Compliance Act” (FATCA). FATCA effective dates are: September 14, 2010 for provisions related to withholding tax on substitute dividends and certain dividend equivalent payments. March 18, 2012 for provisions related t
Slide 4: Background
Background FATCA achieves the goal of identifying to the IRS U.S. persons for: Foreign Financial Institutions (“FFI”) by imposing a new 30% withholding tax on U.S. source “withholdable payments,” unless the FFI enters into an agreement with the IRS to identify its U.S. account holders Non-Financ
Slide 5: Definition of FFI and FE
Definition of FFI and FE FATCA will apply to two types of foreign entities: FFIs and FEs. Foreign Financial Institution (“FFI”) FATCA legislation defines FFI as “any financial institution which is a foreign entity.” FATCA defines the term “Financial Institution” as any entity that: (i) accepts depos
Slide 6: Key Withholding Requirements
Key Withholding Requirements FATCA requires “withholding agents” to apply a 30% withholding tax on “withholdable payments” to non compliant FFIs and FEs. Withholdable Payments include: – Interest, dividends and other periodic payments from U.S. assets; – Gross proceeds on the disposition of proper
Slide 7: Key Withholding Requirements
Key Withholding Requirements U.S. Withholdable Payment U.S. source income + gross proceeds 30% U.S. WHT UNLESS Foreign Financial Institution (FFI) Foreign Entities (FE) enters into an agreement with provides information the IRS to identify its U.S. account holders on substantial U.S. owners (if any)
Slide 8: FFI Compliance Requirements
FFI Compliance Requirements FATCA does NOT require Withholding Tax if the FFI enters into an agreement with the U.S. Treasury to identify its U.S. accounts: “U.S. Account” means any “financial account” held by a “specified U.S. person”. “Financial Account” includes: – Any depository or custodial
Slide 9: FFI Compliance Requirements
FFI Compliance Requirements The FFI enters into an agreement with the U.S. Treasury to identify its U.S. accounts: 1) Obtain information for each holder of account to determine which are “U.S. accounts”; 2) Comply with verification and due diligence procedures to identify “U.S. accounts”; 3) Report
Slide 10: FFI Withholding Exceptions
FFI Withholding Exceptions Exception for certain types of financial institutions: If the FFI is a member of a class of institutions for which the IRS has determined the FATCA withholding and reporting requirements are not necessary or if the FFI complies with IRS procedures to ensure there are no U.
Slide 11: FE Compliance Requirements
FE Compliance Requirements FATCA does NOT require Withholding Tax in the following cases: The FE certifies that it has no owners that are “substantial U.S. persons” or provides information on substantial U.S. owners to the withholding agent: 1) a certification that the foreign entity has no direct o
Slide 12: FE Withholding Exceptions
FE Withholding Exceptions Exception for certain payments: No withholding is required on payments that are beneficially owned by: (i) publicly traded corporations and their affiliates; (ii) entities organized under the laws of a U.S. possession (e.g. those residents in Puerto Rico); (iii) foreign gov
Slide 13: Withholding Scenarios
Withholding Scenarios Scenario I Scenario 2 Scenario 3 FFI has not entered into FATCA FFI complies with its FATCA Agreement FFI complies with its FATCA Agreement but Agreement with the IRS but has Recalcitrant; elects to withhold has Recalcitrant; elects not to withhold U.S. $100 U.S. $100 U.S. $100
Slide 14: Other Features of FATCA
Other Features of FATCA Repeal of portfolio interest exemption to non registered bonds (Bearer Bonds) If the bond is not registered, it would be subject to a 30% withholding tax (or a reduced treaty rate if applicable). This provision will apply to debt obligations issued after March 18, 2012. Inc
Slide 15: Next Steps - Timeline
Next Steps - Timeline Development of Legislation Process: FATCA legislation enacted into U.S. law: March 18, 2010. Certain “Dividend Equivalent” payments subject to U.S. withholding tax: September 14, 2010. Draft regulations likely late summer 2010. Final regulations expected end of 2010 (
Slide 16: Q&A
Q&A Peter.J.Grant@jpmorgan.com 44 (0) 207 742 0351 mariano.a.giralt@jpmorgan.com 44 (0) 207 742 0352 15
Slide 17: Strictly Private and Confidential
IRS Circular 230 Disclosure: J.P. Morgan Chase & Company and its affiliates do not provide tax advice. Accordingly any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in the connection with the promotion, marketin