Barely a day goes by without a news story, interview or irate comment about the US Foreign Account Tax Compliance Act, or FATCA. Yesterday, the US Internal Revenue Service launched an online portal through which foreign financial institutions – a wide term – can register under the regulations.

FFIs can register whether they are under the full regime or if the country in which they operate is part of an intergovernmental agreement. (In the latter case, governments’ revenue departments collect the necessary data from FFIs, rather than the institutions having to directly file data to the IRS.)

The experts at Kinetic Partners, a consultancy advising on such issues, points out that information entered in the system will be saved and be available for modification until 31 December 2013, allowing time for financial institutions to become familiar with the system and ensure they can provide all the necessary information. As registrations are finalised from 1 January 2014, what are called “Global Intermediary Identification Numbers” will be issued by the IRS, with the first published list of registered FFIs posted on 2 June next year.

To get on this list, registrations will need to be finalised by 25 April 2014, although any FATCA registrations made on or before 30 June 2014 will be effective from 1 July 2014. 

In other words, financial institutions that do not have a GIIN on 1 July 2014 are at risk of paying withholding tax of 30 per cent on any US source income.

Even though the UK has signed a Model 1 IGA, which allows institutions to report to HMRC, firms must register on the IRS portal to ensure they have a GIIN, Kinetic adds.