The FSC, during its 11th general meeting, approved the Implementation Rules for the Korea-US Tax Information Exchange agreement, which will go into effect on July 1, 2014. The purpose of the rules is to provide a clear guideline with Korean financial institutions that come under reporting obligation of the Foreign Account Tax Compliance Act(FATCA) in order to relieve their compliance burden.
FATCA, enacted in 2010, requires foreign financial institutions(FFIs) to report to the Internal Revenue Service(IRS) information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Non-compliant FFIs face a 30% withholding tax on certain US-source payments made to them.
According to the bilateral agreements, financial institutions are required to report their own country’s tax authorities – the National Tax Service(NTS) for Korean financial firms and the IRS for U.S. firms – information about their clients’ financial accounts. The NTS and the IRS will exchange such information in every September starting from 2015.
click to read the press release -> http://www.fsc.go.kr/downManager?bbsid=BBS0048&no=91002