The U.S. enacted FATCA on March 18, 2010 to curb tax evasion committed by U.S. taxpayers who maintain foreign financial assets and foreign financial accounts outside the U.S.. It compels Foreign Financial Institutions (FFIs), including RCBC, to identify U.S. persons from its account holders. A U.S. person is defined by the Intergovernmental Agreement (IGA) between the U.S. and the Philippines as a U.S. citizen or resident individual, a partnership or corporation organized in the United States or under the laws of the United States or any State thereof, a trust if (i) a court within the United States would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust, and (ii) one or more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a decedent that is a citizen or resident of the United States.
In November 2014, the Philippines was listed as among the ten (10) countries that have agreed in substance to the IGA with the U.S.. On July 13, 2015, the IGA was officially signed by the Philippines and the U.S. Under the IGA, the reporting of U.S. Reportable Accounts will be coursed through the Philippine tax authority or the Bureau of Internal Revenue (BIR), which would in turn submit the reports of all covered Philippine financial institutions to the U.S. Internal Revenue Service (IRS).
The IGA requires all new covered financial accounts to be opened by individuals or entities on or after the determination date of November 30, 2014 to be subject to the FATCA due diligence procedure, which would require them to disclose certain information to RCBC in order that the latter could identify clients who are U.S. persons.
Apart from the additional account information, RCBC requires the submission of additional documents to attest to and certify a client's FATCA status. For pre-existing clients, or accounts opened prior to November 30, 2014, RCBC sent letters and forms via registered mail for them to accomplish and submit to their branch of account.
On the other hand, new clients (those who opened accounts on or after November 30, 2014) are given ninety (90) days from the account opening date to submit the required documents. Failure to submit the documents after the prescribed period will classify the account holder as recalcitrant.