PwC pushes for FATCA implementation in Nigeria
PwC Nigeria, a leading professional services firm, has challenged financial institutions operating in Nigeria and the sector’s regulators on the need to develop a regulatory framework to drive the implementation of the Foreign Account Tax Compliance Act (FATCA) in the country.
Andrew S. Nevin, a partner at PwC Nigeria and PwC’s Africa Strategy and Operations leader, made this call at a workshop on the Implementation of FATCA which held at the Four Points by Sheraton Hotel in Lagos, with over 50 representatives of various financial institutions and regulators in attendance.
FATCA is a United States regulation enacted on March 8, 2010, as part of the Hiring Incentives to Restore Employment (HIRE) Act. It seeks to detect and deter tax evasion by US citizens with offshore investments and requires Foreign
Financial Institutions, Trusts and Corporations to enter into disclosure compliance agreements with the US Internal Revenue Service (IRS) about financial assets of US citizens or foreign entities with substantial US ownership.
Nevin stated that the US aimed to compel financial institutions across the world to participate by imposing 30 percent withholding on all qualifying US source income to customers and financial institutions that fail to comply with FATCA’s requirements.
He noted that while some Nigerian financial institutions had registered with the IRS, there was need for a regulatory framework to drive FATCA compliance and promptly mitigate the negative consequences of not meeting impending deadlines.
“The reality is that FATCA is a ‘ticket to the game’ and the global interconnectivity of the financial system is a powerful incentive to comply. The cost of non-compliance is high and ranges from loss of correspondent banking relationships to avoidable business disruptions, which include delayed transactions and counter-party issues, among others” said Nevin. He also highlighted the benefits of FATCA and the scope of its impact on implementing entities.
“FATCA implementation does come with some benefits.” The process for example provides an opportunity for financial institutions to closely scrutinize and refine current Know Your Customer (KYC) frameworks while improving the overall quality of customer information obtained at onboarding. The scope and impact of FATCA is significant. It involves governance, process and system changes that will significantly impact the operations of Financial Services institutions.”
Nevin emphasised that PwC has the knowledge, experience and resources to help clients solve the complex issues that FATCA poses; and is currently supporting some leading financial institutions in Nigeria as they set up systems and processes for compliance.
PwC firms help organisations and individuals create the value they’re looking for. PwC is a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services.
