What is FATCA? Who are the parties concerned?
Foreign Account Tax Compliance Act (FATCA) is the law of the United States enacted to enforce non-U.S. financial institutions located outside the United States (Foreign Financial Institution or FFI) to:
  • Report account details and financial transactions of U.S. individuals and U.S. juristic persons who are clients of an FFI to Internal Revenue Service (IRS) enabling IRS to monitor information of U.S. citizens, U.S. residents, and U.S. juristic persons, specifically income from sources outside the United States effective 1st July 2014 going forward;
  • Withhold tax at 30% of the income sourced directly or indirectly from or with reference to U.S. securities paid to clients who do not comply with FATCA (recalcitrant account holders) and remit the withheld amount to IRS.
Rationale and objectives of the Asset Management Company’s participation in FATCA
The Asset Management Company and the fund (under the administration of the Asset Management Company) are considered a Foreign Financial Institution (FFI) under the FFI definition of FATCA and are required to:
  • Be bound by the IRS or, in other words, become a Participating Foreign Financial Institution (PFFI) of which duties mentioned in 1 are to:
    - Report information and financial transactions of U.S. individuals and juristic persons with characteristics specified by FATCA;
    - Check clients’ information to find any relationship between clients and the United States and request that certain clients provide identification documents that meets FATCA’s specifications.
  • If asset management companies and mutual funds do not comply with FATCA’s requirement (Non-Participating Foreign Financial Institution) (NPFFI), they will:
    - Be subject to 30% withholding tax by FATCA Participating Foreign Financial Institution on income directly or indirectly sourced from or referenced to the U.S. securities regardless of whether the income is generated by such NPFFI or it is clients’ saving including clients who are non-U.S. citizens in which case the withholding tax is not only based on the return but also includes the principal in the calculation (depending on the effective date specified by FATCA);
    - May be refused to make transactions with other FATCA PFFI which will hinder the business of the Asset Management Company.
Therefore, to protect the interest of all unitholders, the Asset Management Company and the mutual fund (under the administration of the Asset Management Company) are bound by and must comply with the criteria and the requirement of the relevant laws to ensure that asset management companies and mutual funds are able to fulfill the obligations under requirements and criteria of the relevant laws.
FATCA Impact on the Asset Management Company and Unitholders
The Asset Management Company
  • must consider and register for participation in FATCA with the IRS by 5 May 2014;
  • collect information of all current unitholders and prospects for reporting to the IRS which includes information of unitholders who are U.S. citizens (and FATCA recalcitrant account holders) or information of unitholders whose characteristics are as specified by the relevant laws, all of which are required to be reported in accordance with the criteria and requirement of the relevant laws such as name, address, U.S. tax ID no., number and value of investment unit balance, redemption amount or dividend received.
  • are requested to submit additional information, documents and/or consents to confirm or prove the relationship with the United States such as a certificate of renunciation of the U.S. citizenship, information specified in various forms of the IRS, or update the Asset Management Company of new information upon changes;
  • provide consent to the Asset Management Company to disclose information of the unitholders who are considered U.S. citizens or persons who fall within the specified criteria, to the IRS.
To open a new bank account, unitholders must provide the following as required by FATCA:
  1. FATCA Form
  2. Form W-9 (unitholders who are U.S. citizens)
  3. Form W-8BEN (for unitholders who have indication that they may be U.S. citizens but confirm that they are not) and identification document
The Asset Management Company may request that clients submit additional documents or evidence for consideration for confirmation of identification with effect from 1 July 2014.
กJuristic Person
The IRS has postponed the scheme by six months; the scheme will be in effect from 1 January 2015 onwards.
Consequence for unitholders who fail to provide information
Unitholders who fail to provide necessary information for verification whether they are U.S. citizens will be deemed by the Asset Management Company to be a recalcitrant in which case the Asset Management Company reserves the right as follows:
  • refuse purchase order / switching order / transfer of units for new transaction of such unitholders or refuse to open a new account for such clients;
  • take any other action in accordance with criteria and requirements of the relevant foreign laws, however, they must not conflict with Thai law (if any).
In practice, the Asset Management Company will only take actions against a recalcitrant. There will be no impact on unitholders who have stated that they are U.S. citizens and provided documents as requested.
ใPursuant to requirements under Thai law, the Asset Management Company (including the fund and relevant parties) must submit information of unitholders to agencies or organizations specified by the government. The Asset Management Company shall comply with the requirements under Thai law without permission from unitholders.
This procedure is necessary and will protect overall interest of the fund since it prevents the Asset Management Company and the fund (under administration of the Asset Management Company) from breaching FATCA and relevant foreign laws whereas non-compliance may result in the fund being subject to withholding tax or closure of accounts as specified above which will unavoidably have an adverse effect to unitholders if the fund intends to invest in the U.S. instruments or securities.
Account Information of U.S. citizens the Asset Management Company to be reported to the IRS:
  1. Name, address, and tax ID of U.S. unitholders
  2. Name, address, and tax ID of U.S. shareholders (in case of juristic persons)
  3. Number of accounts of U.S. unitholders
  4. Account balance as at year end
  5. Income or return from investment in mutual fund
Timeframe for the Asset Management Company’s compliance with FATCA’s requirement
Date Details
19 August 2013- 5 May 2014 IRS requires all financial institutions to register.
2 June 2014 IRS announced the first group of registered financial institutions.
1 July 2014 Financial institutions collect information related to FATCA for reporting to the IRS such as information of:
- All new account holders (On-boarding process)
- All existing clients who already have an account which fall within the criteria (Pre-Existing Customer Due Diligence process)
The Asset Management Company creates this website to give information to its clients and the website does not give advice or suggestions in relation to the tax law of the United States. Should you have questions regarding such laws, please seek advice from your tax consultant or visit www.irs.gov/FATCA for more information.

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