AMFI has issued uniform guidelines for fund houses to follow in order to ensure compliance with Foreign Account Tax Compliance Act (FATCA). Cafemutual has a copy of the FATCA guidelines which AMFI has sent to fund houses.
FATCA is an anti-tax evasion law under which fund houses are required to report information on US investors to US IRS (Internal Revenue Service) through CBDT. India has agreed ‘in substance’ to FATCA by signing an Intergovernmental Agreement Model 1 (IGA-1) with US in effect from July 9, 2015. Simply put, the legislation is meant to prevent wealthy US individuals from parking money overseas to avoid paying taxes.
AMFI had appointed KPMG to advice fund houses on FATCA compliance. Recently, AMFI in consultation with Karvy, KPMG and other key stakeholders has come out with guidelines, declaration forms and FAQs on FATCA.
The new declaration form will capture information like type of address (residence, business, registered office etc.), country of tax residence, tax identification number, Global Intermediary Identification Number (GIIN) and seek investors consent for sharing the information with relevant tax authorities. Distributors are expected to update the details of their existing foreign investors by adding this information.
While many fund houses had stopped accepting fresh investments from US investors due to stringent compliance requirements under FATCA, a few AMCs had asked their distributors who have clients from USA to furnish the documentary evidences of tax residency and other information.
Some officials say that US NRIs can potentially be a sizeable market for the Indian mutual fund industry. They believe the new guidelines will help AMCs to seek mandates from US entities to manage investments in India.
AMCs will have to follow AMFI’s guidelines on FATCA from November 1, 2015.
