What does it mean for financial institutions in Cyprus

PwC, the leading organisation in the provision of audit and advisory services, organized on Monday, 7 November an open seminar aiming to raise awareness of the main provisions of the Foreign Account Tax Compliance Act and its potential impact on organizations in Cyprus.

The seminar was presented by a PwC leading FATCA specialist, US Tax Partner, Kenneth Shives who explained that a massive amount of new regulation, including tax regulations which will affect the financial services industry, is expected to continue intensely for the next years.

The Foreign Account Tax Compliance Act ("FATCA") was in March 2010 signed into law in the US as a part of the Hiring Incentives to Restore Employment (“HIRE”) Act. The aim of FATCA is to implement mechanisms designed to prevent the avoidance of taxation on income derived by US persons outside the US.

FATCA potentially imposes a series of due diligence, reporting and withholding obligations on foreign entities that receive specific payments from US sources. Failure to meeting these obligations could result in 30% withholding tax on certain types of US source income and gross proceeds. Primarily, FATCA will affect financial institutions such as banks, investment firms and insurance companies.