So who is behind the scene..really!

On August 24th, the Financial Crimes Enforcement Network (FinCen) issued a guidance that requires private banks, credit unions and trust companies to identify the beneficial owners of legal entities and the people who control these entities. The step is taken to track down people who are hiding company ownership to avoid taxes and other government rules.
As the readers may recall, the rules announced in May 2016 covered federally regulated banks.

It is believed that the FinCen will also soon announce that certain other banks and financial institutions will also be covered under these rules. Banks authorized by law in Puerto Rico and the U.S. Virgin Islands to provide banking and other services to nonresident aliens can also be included.

Ownership Percentage

The IRS said this list isn’t exclusive and could be expanded at some point.
In one feature likely to attract attention, FinCEN didn’t propose changing the ownership percentage that triggers reporting from the 25% required in the final rule in May.

Some called for the agency to lower it, asserting that 25% was too high and wouldn’t catch numerous taxpayers trying to hide from the IRS. Others said it was too low and would create big hassles for banks.

FinCEN said it considered increasing the ownership percentage to 50%, but finally concluded that 25% is “appropriate to maximize the benefits of the requirement while minimizing the burden.”

The beneficial ownership rules would require banks to enhance customer identification programs and anti-money laundering initiatives.

Taiwan agrees to FATCA with United States

Taiwan’s Financial Supervisory Commission (FSC) and the Ministry of Finance (MoF), jointly announced their intent to pursue an intergovernmental agreement to facilitate the implementation of the Foreign Account Tax Compliance Act (FATCA) – RIA News.

Taiwan has created an interagency task force, including the FSC, the MoF, the Ministry of Justice and the Ministry of Economic Affairs to study compliance options under FATCA. Previous consultations between the U.S. Treasury and Taiwan were focused on reducing compliance costs associated with FATCA. In addition, efforts have been dedicated to assisting local financial institutions to comply with all the domestic legal requirements and to protecting the depositors as well as the investors.

“The Taiwan authorities are supportive of the underlying goals of FATCA, and are interested in exploring a framework for mutual cooperation to facilitate the implementation of FATCA,” the statement said.
“Both sides affirm their willingness to continue their consultations and actively seek to finalize the signing of an agreement.

Tax tribunal in India rules database access fees as royalty – implications for US companies

In the case, the taxpayer (ONGC) was an Indian resident company engaged in the exploration and development of natural oil and gas. ONGC subscribed to an online database maintained by Wood MacKenzie (WM), a U.K. resident company. The subscription, which provided information on the global oil and gas industry, required ONGC to pay a fee to WM in exchange for a license agreement that provided for an exclusive and non-transferable right to access and download information from the site. No right to sublicense was granted to ONGC under the license agreement and the use of the information was limited to what was specified in the agreement. The website was only accessible by select ONGC employees and WM provided two days of training per year to 20 ONGC employees on technical issues related to oil and gas exploration.

The Indian Income tax Appellate Tribunal ruled that the fees paid by ONCG are properly characterized as royalties, for Indian tax purposes, under both Indian domestic law and the India-UK double taxation treaty. It was therefore subject to the applicable withholding tax according to the treaty.

Number of U.S. based companies provide the database subscriptions services to the users in India. They should closely study amd monitor the case as this may have deep implications for them.