Foreign Account Tax Compliance Act (FATCA)
What is FACTA?
The Foreign Account Tax Compliance Act (“FATCA”) was published by the U.S. Department of the Treasury and the U.S. Internal Revenue Service (IRS) on March 18, 2010, and the “Agreement Between the Government of the Republic of Turkey and the Government of the United States of America to Improve International Tax Compliance Through Enhanced Exchange of Information” was signed on July 29, 2015, and entered into force upon the ratification on March 16, 2016, by the Grand National Assembly of Turkey.
Countries that became parties to FATCA by signing an information exchange agreement with the United States of America (U.S.) are obliged to identify natural and legal persons who are or would be taxpayers in the U.S. and fulfill the criteria set forth in the agreement, and report their assets to the U.S..Similarly, U.S. is also required to provide a report with the same scope to the other party of the agreement.
What are the TKYB’s obligations within the scope of FATCA?
The Agreement requires all financial institutions resident in Turkey to report to the Revenue Administration of the Ministry of Economy. We, as TKYB, undertake to comply with the national and international legislations, laws and regulations within this scope. Therefore, we are obliged to compile the necessary information, documents and declarations in accordance with the legislation procedures and to report to the Revenue Administration our clients who meet FATCA criteria.
Which clients will be affected by FATCA?
Below mentioned clients will be affected by the agreement
- Natural persons: U.S. citizens, those born in the U.S., Green Card holders, those with a U.S. address or phone number, those resident in the U.S., those transferring money to the U.S. on a regular basis.
- Legal persons: those with a U.S. address, those founded in or having headquarters in the U.S., passive entities(1) where at least one of the natural persons who control the entity(2) is a U.S. citizen or resident.
- Financial institutions such as banks and investment companies who hold accounts on behalf of customers.
 A detailed explanation of Passive Non-Financial Entity is given in Agreement Annex-1 VI. Articles B.3. and B.4. in the Special Rules and Descriptions.
 Controlling Persons are described as “natural persons who have control over an entity” in the Agreement.
Which forms will be obtained from clients affected by the FATCA agreement?
Our clients who are U.S. citizens or residents, Green Card holders and others considered as U.S. Persons affected by FATCA are in the status of U.S. taxpayer.. Such clients are to declare their taxpayer information to us through the United States tax authority IRS Form W-9.
Non U.S taxpayer clients who are affected by the agreement, have to provide us with the appropriate W-8 form.
What happens if clients do not provide us with information, documents or a declaration?
Clients who are affected by the agreement but have not declared their taxpayer status (those who have not submitted either W-9 or W-8 form, as applicable) will be considered as U.S. Reportable Account with in the scope of the agreement.
In accordance with the agreement, all financial institutions in Turkey are to determine whether their clients are U.S. taxpayers and to demand information, documents or a declaration from their clients to this end. On the other hand, institutions will have the right to withhold 30 percent of their clients’ U.S. source income should they refuse to provide information, documents or a declaration.
However, the Development and Investment Bank of Turkey does not have any withholding responsibilities in accordance with the Model I IGA (Intergovernmental Agreement) signed between Turkey and the U.S. Withholding authority and responsibility will lie with institutions authorized by the U.S.
What information will the Development and Investment Bank of Turkey report to the Turkish Revenue Administration concerning clients affected by FATCA?
- Name, address and U.S. tax number of each natural U.S. person account holder;
- If a legal U.S. person or a non-U.S. legal person controlled by one or more U.S. persons is identified, then the name, address and U.S. tax number of each these entities and each of the U.S. persons;
- Account number (or functional equivalent in the lack thereof);
- Account balance or value at the end of the current calendar year or the end of other appropriate notice periods, or if the account holder closed the account during the year, the balance directly before account closure (including cash value or waiver cost in case of cash value insurance contract or recurring payment agreement);
In addition to the above information, other information may be reported to the Turkish Revenue Administration in the following years in the scope of the agreement.
Where can I find the agreement and detailed information on FATCA?
You can find the Turkish and English language versions of the agreement as well as the Frequently Asked Questions concerning the agreement at the Revenue Administration links provided below.
What is the FATCA status and the Global Intermediary Identification Number (GIIN) of the Development and Investment Bank of Turkey?
The Bank’s GIIN is 3C7ID8.99999.SL.792.