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FINAL DEBT/EQUITY RULES ON DISTRIBUTIONS: NO CHANGES; STILL CONCERNS

The IRS has had a long-standing concern about taxpayers who try to use debt rather than stock (especially for foreign-parent companies of US corporations) to gain a tax advantage: a deductible interest expense versus a non-deductible dividend distribution. This has resulted in various attempts (some abandoned after a period of time) to write regulations governing the rules for debt versus equity.

ARE YOU REQUIRED TO FILE A FATCA CERTIFICATION?

A FATCA certification consists of one or more series of questions that the Responsible Officers (RO) of certain Foreign Financial Institutions (FFIs) must answer and submit to the IRS to confirm the entities’ compliance with the requirements of FATCA.  There are two general types of certifications: 

  • one that relates to an entity’s preexisting accounts (COPA) and
  • another that relates to the entity’s compliance with various FATCA requirements (periodic certification). 

MANDATORY NON-TAX REPORTING OBLIGATIONS FOR INTERNATIONAL BUSINESSES

The US Bureau of Economic Analysis (‘BEA’), an agency of the US Department of Commerce, monitors inbound and outbound US investments as part of its regulatory mission of tracking international commerce.
To help fulfill this mission, the BEA conducts ‘benchmark’ surveys every five years.  A benchmark survey of interests abroad held by US persons is due by May 29, 2020.  The BEA imposes mandatory reporting obligations upon:
  1. US persons and businesses holding a (direct or indirect) 10% or greater interest in a foreign business enterprise; and
  2. US business enterprises that are themselves (directly or indirectly) 10% or more foreign owned.
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