On the 3rd December, the Ministry of Finance, the Economy and Investment (MFEI) organised a seminar on the implications of the model intergovernmental agreement implementing the information reporting and withholding tax provisions arising from the Foreign Account Tax Compliance Act (“FATCA”). Dr. Adrienne M. Baker, a partner at Dechert LLP led the attendees through the salient issues of FATCA.
Through the imposition of reporting obligations FATCA seeks to prevent US investors from evading US tax by investing through non-US vehicles. A 30% withholding tax on “withholdable payments” (effectively income from US financial assets) may be imposed on non-US entities which are non-compliant with their reporting requirements.
During the seminar, the attendees were informed that at this stage, the Government of Malta is in informal discussions with the US Treasury and is, in parallel, consulting with the local industry in order to tailor Annex 2 of the model agreement to Malta’s requirements.