Foreign Account Tax Compliance Act 2010 (FATCA) and Common Reporting Standard (CRS)
General
Foreign Account Tax Compliance Act 2010 (FATCA) is intended to capture United States (U.S.) person’s account information and report to the U.S. Internal Revenue Service (IRS) that may be investing and earning income through non-U.S. institutions.
Similar to FATCA, Common Reporting Standard (CRS) is a global standard introduced by the Organisation for Economic Co-operation and Development (OECD) for the automatic exchange of financial information between jurisdictions that have agreed to participate.
Hence, Financial Institutions (FI) are required to perform due diligence on account holders and identify non-residents and report to Inland Revenue Berhad Malaysia (IRBM) or U.S. IRS those information relating to the Reportable Jurisdictions.
Under the FATCA / CRS rules, we are required to collect information on the country of tax residence of our customers. We would like to seek your utmost cooperation by providing us your information and/or documentation for FATCA & CRS purposes should it be required. It is important that you respond to all requests in a timely manner.
If you are impacted by FATCA & CRS in any way, kindly contact your professional tax adviser as Malacca Securities Sdn Bhd (MSSB) is unable to offer professional tax advice.
Foreign Account Tax Compliance Act 2010 (FATCA) and Common Reporting Standard (CRS) - Self-Certification Form
Per regulatory requirement, all customers, including local tax residents in Malaysia, are required to complete the relevant Self-Certification forms based as follows:
The submission of the duly completed form(s) can either be personally sent to one of our branches or via email to [email protected].
Differences between FATCA & CRS
| FATCA | CRS | |
| Affected Person | Complete declaration of income from US Taxpayers | Complete declaration of an account holder’s country (or countries) of tax residence. |
| Aims | U.S Persons The term ‘US person’ includes the following (but is not limited to):
| Tax Residence of listed countries (E.g. Malaysia, Singapore, Japan & etc) List of Countries |
| Taxpayer Identification Number | Social Security Number (SSN) for US Person individuals Employer Identification Number (EIN) for US Entities Individual Taxpayer Identification Number (ITIN) for Resident Alien and do not have/not eligible to get an SSN | Taxpayer Identification Number (TIN) |
General
Clients need to do the following for submission of self-declarations to MSSB.
Steps | Submission |
| 1. Download the self-declaration templates to be used |
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| 2. Fill in data |
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| 3. Tick the check boxes |
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| 4. Submit self-declarations to MSSB |
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| 5. Provide supporting evidence |
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| 6. Signatory |
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- For Individuals
- Identity Proof that displays the full name (e.g NRIC)
- Passport or any other document issued by govt. that displays the nationality, date of birth and country of birth
- Address proof like bank statement, utility bills; separate for permanent and mailing address
- Copy of tax statement or any other government issued document that displays their tax identification number.
- For Entities
- Certificate of Incorporation / business registration that displays the full legal name, country, and registered address
- Address proof can also be like registration documents, or annual statements, Memorandum and Articles of incorporation, or Investment Management Agreement, that displays address
- Entity type can be supported with Memorandum and Articles of incorporation, or Investment Management Agreement, or any other business practice license
- Copy of tax statement or any other govt. issued document that displays their tax identification number.
- The FATCA and CRS self-declarations can be sent to us via a soft copy can be emailed to MSSB at: [email protected]
No, however, if there is any change in details of the client mentioned in the self-declarations changes the client is required to provide an updated self-declarations to MSSB within 30 days of such change.
- For FATCA : The US government has signed the intergovernmental agreements with the countries that MSSB operates in, to make it mandatory for financial institutions like MSSB present in those countries to obtain such self-declarations from clients
- For CRS : The local authorities in each country where MSSB operates in, has made it mandatory for financial institutions like MSSB present in those countries to obtain such self-declarations from clients
Hence, MSSB would not be able to open new accounts if such self-declarations are not provided by clients at time of new account setup.
- MSSB may not open new accounts or offer additional products / services to clients who choose not to comply with MSSB request for documentation to establish a client’s status under FATCA or CRS.
- MSSB may exit the relationship with clients who decide not to provide the necessary information and documentation to MSSB within the required regulatory timeframe.
- Where clients refuse to provide their self-declarations, MSSB is obliged to report them based on the information available in our records to the relevant tax authority.
- MSSB may also be required to withhold tax on certain US source payments coming into the client’s account.
- MSSB is not authorized to provide clients with any tax advisory.
- All the FATCA and CRS related queries can be directed to [email protected]
FATCA
FATCA stands for Foreign Account Tax Compliance Act 2010. It is a legislation to help counter tax evasion in the United States of America.
FATCA creates a new information reporting and withholding regime for payments made to certain foreign financial institutions and other foreign entities. Frequently asked questions about FATCA are available on
FATCA legislation affects both personal and business customers who are treated as a US person for US tax purposes. The FATCA legislation also affects certain types of businesses with US owners.
The term ‘US person’ includes the following (but is not limited to):
- a citizen of the US, including an individual born in the US but resident in another country or territory (who has not given up their US citizenship)
- a person residing in the US, including US green card holders
- certain persons who spend a significant number of days in the US each year
- US corporations, US partnerships, US estates and US trusts.
We will be reviewing the impact of the legislation for our customers, and will provide further information to affected customers in due course.
For more information regarding FATCA, please visit the
or contact your tax professional.
- Individual Self-Certification Form
- Entity Self-Certification Form
- Controlling Person Certification Form
- W8 – to be filled by Non-US persons
- W9 – to be filled by US persons
There is only 1 type of W9 template but there are 5 types of W8 templates. Below guideline can be used to select the appropriate template for submission to MSSB.
Template | Instructions | Guideline to select relevant template |
| W-9 | Instructions for the Requester of W-9 | Any Beneficiary Owner (Individual or Entity) who claims they are Tax Resident in United States |
| W-8BEN | Instructions for W-8BEN | Any Beneficiary Owner (Individual only) who claims they are Tax Resident outside United States |
| W-8BEN-E | Instructions for W-8BEN-E | Any Beneficiary Owner (Entity only) who claims they are Tax Resident outside United States. The form also contains options for the entities to declare themselves as exempted from FATCA |
| W-8IMY | Instructions for W-8IMY | Any person acting as an Intermediary rather than a Beneficiary Owner |
| W-8EXP | Instructions for W-8EXP | A foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession simply claiming the exemption from FATCA |
| W-8ECI | Instructions for W-8ECI | A foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession if they received income which is effectively connected with conduct of a Trade or Business in United States, and are not eligible to claim an exemption for chapter 3 or 4 purposes on Form W8EXP |
CRS
CRS stands for Common Reporting Standard, which is released by the OECD aims to put in place a global model of Automatic Exchange of financial account Information (AEOI) on tax matters to combat tax evasion and protect the integrity of taxation systems.
Over 100 jurisdictions have publicly expressed their commitments to the implementation of CRS (“Participating Jurisdictions”). Under the CRS, the FIs of a Participating Jurisdiction are required to carry out due diligence procedures to identify the jurisdiction of residence of an account holder and identify whether a financial account is a “Reportable Account”. In respect of a Reportable Account, the FIs will need to report relevant information to the local tax authorities, who then exchange the relevant information with the tax authorities of the Reportable Jurisdictions where account holders are tax residents.
The full list of countries that have committed to the implementation of CRS is available here.
Frequently asked questions about CRS are available on OECD website
There are three types of CRS self-declarations
- Individual – To be filled by natural persons who hold accounts at MSSB
- Entity – to be filled by a legal entity who hold accounts at MSSB
- Controlling Persons – to be filled by natural persons who exercise control of the legal entity
- Taxpayer Identification Number (TIN) is a unique combination of letters and/or numbers assigned to you/your entity.
- Some countries do not issue a TIN, and some countries may issue alternatives such as social security/national insurance numbers or company registration numbers.
The OECD has published a list of the acceptable
- Your tax residency is the country where you are resident / registered for tax purposes.
- Each country has its own rules or criteria for defining tax residency.
- For more information on tax residency, please consult your tax advisor
- In cases where there are no such natural person with more than 10% ownership, the senior managing official who makes decision for the entity will be the controlling person.
- The entity will need to decide who their senior managing official is.