The UAE Ministry of Finance (MoF) said it has signed the intergovernmental agreement with the US on the Foreign Account Tax Compliance Act (Fatca) as part of its measures to protect Emirati financial institutions.

The Fatca was enacted by the US Congress in 2010 to target non-compliance by US taxpayers using foreign accounts. The US law requires foreign financial institutions to provide annual reports on account information of customers who are US persons.

The agreement was signed by Younis Haji Al Khoori, the undersecretary of MoF, and Barbara A. Leaf, the US Ambassador to the UAE, at the ministry’s premises in Abu Dhabi.

Commenting on the pact, Al Khoori said: "The country was keen to sign this agreement to protect UAE financial institutions. In the case of non-compliance with the requirements of Fatca, any non-US financial organisation could face a 30 per cent penalty on certain financial returns of its operations in the US market.”

He pointed out that the Ministry would continue to meet all necessary requirements for linking UAE government financial institution systems to the Fatca e-system.

The ministry will also determine the required processes for monitoring reporting by financial institutions, said the official.

Ambassador Leaf said Fatca was fast becoming the global standard in the effort to curtail tax evasion.

"This agreement reflects the UAE's commitment to the adoption of best practices as well as the growing strength and breadth of our bilateral relationship," she noted.

Under the intergovernmental agreement, the first report, for 2014, must be submitted to the US by September 30, said the ministry in its statement.
 
The agreement exempts certain government institutions, sovereign funds and international organisations from the reporting requirements, it added.-TradeArabia News Service