What is FATCA?

FATCA (Foreign Account Tax Compliance Act) is a law enacted by the United States government on March 18, 2010, that requires Foreign Financial Institutions (FFIs) to identify, report, and (in some cases) withhold funds from US persons. The law came into effect on July 1, 2014.

What is the goal?

To detect and deter tax evasion on overseas investments by US residents and citizens. Financial institutions outside the United States have a significant incentive to comply with this law, as it is the only way to avoid a 30% withholding tax on any US-sourced payment subject to withholding.

Who is impacted by FATCA?

FATCA is a broad regime that can impact any individual or entity, US or foreign, to the extent that such person is involved in making or receiving payments that fall within the scope of FATCA.

FFIs must comply with FATCA in one of the following ways:

• In countries with Intergovernmental Agreements (IGAs) Model 1, FFIs must comply under local regulations and report to their tax authority, which will exchange information with the Internal Revenue Service (IRS).
• In countries with IGA Model 2, FFIs must comply with local regulations to enter into a FATCA agreement with the IRS and report directly to the IRS. The requirements for compliance with this law are set out in the IGA signed by the country.
• In countries that have not signed an IGA, FFIs must enter into FATCA agreements with the IRS and report directly to that agency.

How does FATCA impact society?

Argentina has signed a Model 1 FATCA Agreement with the US and the Company has registered with FATCA as a Model 1 Reporting Financial Institution in order to comply with the requirements and obligations that ARCA (local IRS) requires of us in order to continue providing quality financial services to its customers. For this reason, we must obtain and verify certain information from our customers, report certain information about US customers to ARCA, and ARCA will forward this information to the IRS. ARCA requires us to review our current customer acceptance processes and adjust them in accordance with the regulations, as appropriate.

When do FATCA withholdings start?

FATCA withholdings on US-sourced income such as interest, dividends, premiums, annuities, began on July 1, 2014. Withholdings on gross proceeds from the sale or withholding of assets that generate dividends or interest will begin on January 1, 2017. In addition, withholdings on foreign "pass-through" payments did not begin until January 1, 2017. It should be noted that withholdings will only be applied to those customers who, being identified as US persons, do not agree to provide the required tax documentation and to non-participating financial institutions.

What are the implications for customers?

As established by the IRS, FATCA came into effect on July 1, 2014. This law requires us to determine the FATCA status of new customers from that date on, before accepting them as customers. For existing customers, the FATCA status must also be determined.

Who are considered "US Persons"?

• US citizens, even if they do not reside in the United States.
• Individuals who have dual nationality (US and other).
• Individuals who are permanent residents of the United States (i.e., "Green Card" holders).
• Individuals who have been in the United States for a number of days in recent years, in which case the "Substantial Presence Test" (*) rules apply.
• Legal entities organized under US law.
• Foreign corporations, when one or more US Persons own a 10% or more interest in the total capital.

(*) Substantial Presence Test:

• 31 days during the current year, and
• in the last 3 years (including the current year) a total number, equal to or greater than 183 days, computed as follows:
  • All days spent in the United States in the current year.
  • 1/3 of the days spent in the United States in the preceding year and
  • 1/6 of the days spent in the United States in the second preceding year.

Please contact your tax advisor if you have specific questions about US taxes or visit https://www.irs.gov/ for more information.

What is the OECD Agreement?

It is an agreement for the automatic exchange of tax information signed by 117 countries (including Argentina) within the framework of the Organization for Economic Cooperation and Development (OECD). In our country, it was implemented through ARCA's General Resolution No. 4056/2017.

What is the objective of the OECD Agreement signed by Argentina?

The objective of the OECD Agreement is to intensify the fight against tax evasion at a global level.

Who is impacted by the OECD Agreement?

The OECD Agreement has an impact on all individuals and legal entities subject to the payment of income tax in the 117 countries that have signed the agreement.

How does the OECD Agreement impact the Company's customers?

As of January 1, 2016, new customers (individuals and legal entities) must declare whether they have tax residency outside of Argentina, and in the case of legal entities, they must also declare whether they have controlling entities (beneficial owners with more than 10% control of the company) that are tax resident outside of Argentina.

On the other hand, the Entity must identify existing customers as of December 31, 2015, with tax residency outside of Argentina, or (in the case of legal entities) also with controlling entities with tax residency outside of Argentina. In this context, it is possible that some customers may be contacted to sign an OECD Declaration.