The Dubai Financial Services Authority (DFSA) dispensed a letter to Dubai International Financial Center (DIFC), on 1 May 2014, regarding a program to collaborate with the United States on Foreign Account Tax Compliance Act (“FATCA”) compliance. The DFSA is participating in this combined effort.
Under the FATCA Act foreign financial institutions must comply with certain reporting requirements in respect of the income of US citizens. Failure to do so would mean that a withholding tax is imposed on certain income.
Furthermore, from May, an Inter-Governmental Agreement (“IGA”) was announced and it was agreed in principle that the UAE Ministry of Finance and the US Treasury would settle the final agreement before the end of the year.
The burden will remain on the financial institution to comply with the FATCA. All Dubai Financial Services Authority regulated entities are therefore required to assess their obligations under FATCA regulations and take necessary steps to comply in the light of the IGA.
