The US Foreign Account Tax Compliance Act (Facta) will affect almost all financial institutions and other entities in Bahrain with exposure to US taxpayers and transactions, according to KPMG.

The Facta legislation and its impact on the entities in Bahrain was discussed in a breakfast seminar hosted by global audit, tax and advisory firm KPMG.

More than 55 delegates from 30 organisations in Bahrain attended the conference yesterday at the Intercontinental Regency Bahrain.

The seminar was opened by KPMG managing partner Jamal Fakhro and included a briefing from KPMG Middle East and South Asia head of international tax Eugen Straub and director, forensic services, KPMG in the UAE Nicholas Cameron.

'The specific requirements for Facta compliance remain largely unknown and, hence, we acknowledge that businesses require more knowledge from global experts and we hope to address the implications of Facta regulation through our seminar,' Fakhro said.

The goal of Facta is to identify offshore account holders and penalise foreign financial institutions and entities that refuse to disclose the identities of certain US persons.

Foreign financial institutions are to report certain information to the IRS about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.

To be Facta-compliant, foreign financial institutions (FFIs) and other entities have to sign an agreement with the US tax authorities (IRS) that they will identify all US taxpayers in their customer base and report certain data to the IRS on a regular basis.

This agreement has to be prepared between July 1 and December 31, 2013 to be effective from January 2014.

According to Straub, all affected companies have to review their business model and products to understand how they will be affected.

Since Facta rules generally impact all group companies, the analysis has to be done on a group level, he stated.

'It might sound that there is still plenty of time until these rules come into effect, but the required steps to analyse the impact may identify some fundamental changes to the way the entities in the region will operate,' he added.-TradeArabia News Service