Japan Signs FATCA IGA with U.S.

The U.S. Department of Treasury announced on June 11, 2013, that the U.S. and Japan have signed an Intergovernmental Agreement ("IGA") under FATCA and posted a copy of the agreement on the Treasury website. The IGA is a Model 2 form of agreement under which Japan agrees "to direct and enable" reporting Japanese Financial Institutions to register with the IRS by January 1, 2014, and implement the requirements of an FFI Agreement. Further, Japan agrees to direct such Financial Institutions to request from all holders of preexisting accounts, maintained as of January 1, 2014, that are identified as owned directly or indirectly by U.S. persons to consent to reporting of information on such accounts to the IRS, and to require such consent from new account holders as a condition to account opening. Japanese Financial Institutions must also report to the IRS annually aggregate information with respect to non-consenting account holders and Nonparticipating Financial Institutions. Japan agrees, upon request by the U.S., to obtain specific information with respect to such accounts and provide it to the U.S. within six months of such request. If Japan is unable to obtain the requested information within such six-month period, the Reporting Japanese Financial Institution may be treated by the U.S. as noncompliant with FATCA and thus subject to withholding under FATCA. According to Section 10 of the IGA, the IGA "starts to be implemented" on June 11, 2013.

See: Statement of Mutual Cooperation and Understanding between the U.S. Department of the Treasury and the Authorities of Japan to Improve International Tax Compliance and to Facilitate Implementation of FATCA.