BAFT — ABA’s global transaction banking subsidiary — today released guidance on the Foreign Account Tax Compliance Act to help practitioners comply with FATCA’s complexities and determine whether and how it applies to various trade product fee types.
“When FATCA tax regulations were originally written, the implications for various commercial fee payments may not have been considered,” said Tod Burwell, president and CEO of BAFT. “We recognized a need for a broad, clearly defined assessment of fees for traditional trade finance products, and information on how to analyze them for withholding and reporting requirements, which led us to develop this guidance.”
BAFT’s FATCA working group — which consists of tax, legal and product specialists from 15 financial institutions and supplier members from the U.S., Canada, Asia and Europe — collated a list of fees levied by U.S. domestic and foreign banks for handling traditional trade products and performed a sourcing analysis for each fee, creating a source matrix. The guidance, accessible to BAFT members only, is intended to be a general supplement to the source matrix and provide further clarity on the analysis.