Frequently asked questions – Philippines – Retail Banking and Wealth Management

What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. It is a new piece of legislation to help counter tax evasion in the US.

Introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS), FATCA aims to improve tax compliance among its citizens by preventing US persons (see glossary for the definition terms) from using banks and other financial organizations to avoid US taxation on their income and assets.

On 13 July 2015, the Philippines and the United States of America signed an Inter-Governmental Agreement (IGA) formalizing the country’s agreement to comply with FATCA. Once the Philippine Senate ratifies the IGA, local legislation may be enacted to incorporate the US FATCA into Philippine laws.

What is the impact of FATCA?

On an annual basis, banks and other financial organizations will be required to report information on financial accounts held directly or indirectly by US persons.

HSBC is committed to being fully FATCA compliant in all countries where we operate. We will therefore be reviewing our existing customer base to confirm the FATCA status of each of our customers and where necessary, contact said customers for further information and documentation.

How do I know if I am affected?

FATCA legislation will affect both personal and business customers who are treated as a US person (see glossary) for US tax purposes. The FATCA legislation will also affect certain types of businesses with US owners.

The term ‘US person’ includes the following (but is not limited to):

• a citizen of the US, including an individual born in the US but resident in another country (who has not given up their US citizenship)
• a person residing in the US, including US green card holders
• certain persons who spend a significant number of days in the US each year
• US corporations, US partnerships, US estates and US trusts.

Over the next few months, we will review the impact of the legislation to our customers, and provide further information to affected customers in due course.

For more information regarding FATCA, please visit the IRS website: External site: Link opens in an overlay or contact your tax professional.

When will the FATCA legislation become effective?

The FATCA legislation of the US became effective on 01 July 2014.

Is HSBC the only bank to be affected by FATCA?

No. All banks and other financial organizations will be affected by FATCA.  However, the approach to adopting FATCA by other banks and other financial organizations may differ from that of HSBC’s.

What does HSBC have to do to comply with FATCA?

To comply with FATCA, HSBC will:

• conduct a review of new and existing customers to identify those that are reportable under FATCA
• classify business customers according to the FATCA legislation (for example, as US persons, foreign financial institutions or non-financial foreign entities)
• report information to the IRS or local tax authority on all accounts held directly or indirectly by US persons
• report information about customers who do not provide the required documentation to us.

Under the IGA, Philippine banks will not apply US withholding tax to the accounts of US persons.  Instead, it will report relevant information on accounts of US persons; customers failing to provide appropriate documentation and non-compliant entities.  This report may be through the Philippine Bureau of Internal Revenue (BIR), which will then transmit the report to the Internal Revenue Services (IRS), or sent directly to the IRS while providing a copy to the BIR.  In turn, the IRS will report to the BIR relevant information on US accounts of Philippine residents.

Please refer to the glossary for the definitions of US persons, foreign financial institutions, non-financial foreign entities and withholding tax.

Is FATCA applicable to personal or business customers?

FATCA legislation will impact both personal and business customers who hold an account, policy or agreement with HSBC.

Am I only affected if I am a citizen of the US?

No. If an individual’s account holds any of the following seven criteria, HSBC may request further information or documentation to determine if you are a US person under FATCA.

• US citizenship or US residence.
• US place of birth.
• US address including US PO boxes.
• US telephone number.
• Repeating payment instructions to pay amounts to a US address or an account maintained in the US.
• Current power of attorney or signatory authority granted to a person with a US address.
• In care of or hold mail address which is the sole address for the account holder.

What does FATCA mean for me if I am a US person?

If you are considered a US person (see glossary), you may be asked to supply HSBC with additional information or documentation. You may also wish to visit the IRS website: External site: Link opens in an overlay to determine if you need to complete and submit any additional IRS forms.

If you are a specified US person (see glossary), HSBC will be required to report information about you and your account to the local tax authority and/or the IRS on an annual basis.

Whilst we will correspond with affected customers in due course, HSBC cannot offer any advice relating to FATCA and we recommend that you contact a professional tax advisor to discuss your personal tax situation.

What does FATCA mean for me if I am not a US person?

For most customers, FATCA will have minimal impact, and there will be no action required.

However, HSBC may still contact you to confirm your status as a non-US person if we have reason to believe you are potentially a US person for FATCA purposes.

Does FATCA replace existing US tax rules that I already follow?

FATCA does not replace the existing US tax regimes, it may however add additional requirements and complexity to the existing US tax rules you may already follow. We recommend you contact a professional tax advisor to discuss your personal tax situation.

What happens if a joint account is held by a US person and a non-US person?

A joint account which has one US owner is treated as a US account and therefore the entire account is subject to the FATCA legislation.

How frequently will I have to provide information for FATCA purposes?

FATCA is an ongoing process. If your account information changes, we may be required to contact you to obtain additional information or documentation so that we are able to update your account classification under FATCA.

What information will HSBC report to the IRS or local tax authority?

The information reported to the IRS or local tax authority will depend on the FATCA classification of the customer. This information will typically be of a personal nature (for example, name, address, US taxpayer identification number), and of a financial nature (for example, account number, account balance, amounts paid into the account). We will be communicating with the affected customers in detail on these requirements.

What types of information and/or documents can I expect to supply to HSBC?

We will be communicating with the affected customers to provide full details of the information and documentation HSBC needs for FATCA purposes. Documents may include US tax forms (also referred to as withholding certificates or W forms) or self-declarations of FATCA status.

Will HSBC supply me with all the forms I need to complete?

Yes. If HSBC requires further information from you, we will either send you the relevant forms or direct you to a website where you can download them.

When do I have to provide the requested information and/or documentation for FATCA?

In general, customers should supply the requested documentation and information by the date contained within the communication.

What will HSBC do if I do not provide the information required under FATCA?

HSBC is committed to being fully FATCA compliant in all countries where we operate.

The HSBC Group may not open new accounts or offer additional products and services to customers who choose not to comply with HSBC’s requests for documentation to establish a customer’s status under FATCA.

HSBC will have the sole discretion to exit customers who decide not to provide the necessary information and documentation required by FATCA.  Furthermore, HSBC may be mandated to report information about customers who do not provide the required documentation to us.

What do I need to do if I am affected by FATCA?

Over the next few months we will continue to review the impact of the legislation for our customers and will correspond with affected customers in due course. For more information regarding FATCA, please visit the IRS website, or contact your professional tax advisor for advice.

Please note that you may receive more than one request for documentation if you have multiple relationships with different members of the HSBC Group. It is important that you respond to all requests, even if you believe you have already supplied the requested information.

Please note that HSBC is unable to offer tax advice. For tax related questions please contact your professional tax advisor or refer to the IRS website: External site: Link opens in an overlay.