Statement on FATCA and CRS

1. What is FATCA?

Foreign Account Tax Compliance Act (FATCA) was enacted by the U.S. Department of the Treasury and the Internal Revenue Service (IRS) on 18 March 2010. The obligations stipulated in this law became effective as from 1 July 2014.  This law requires non-U.S. financial institutions to find out their customers who are U.S. citizens and U.S. taxpayers and to give certain information about those customers to the U.S., in order to tax in a fair way their taxable incomes. 

Bilateral agreements have been signed by and between the U.S. and several other countries to exchange information for compliance with the FATCA. For such compliance, “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 29.07.2015. This agreement was ratified by the Turkish Grand National Assembly and put in effect on 05.10.2016. Pursuant to the FATCA, financial institutions located in the countries which have signed FATCA agreements with the U.S. must  find out their customers who are U.S. citizens and/or U.S. taxpayers and notify the accounts of those customers on annual basis to the Revenue Administration of the Turkish Ministry of Treasury and Finance (GIB). 

2. What is CRS?

Common Reporting Standard (CRS) is a standard for exchange of information between the member countries to prevent tax losses. An international automatic exchange of information process similar to the FACTA was discussed in the G-20 summit held in 2013, so that Organization for Economic Co-Operation and Development (OECD) published the Common Reporting Standard on 13 February 2014. 

To implement the CRS, the Revenue Administration of the Turkish Ministry of Treasury and Finance signed “Multilateral Authority Agreement for Automatic Exchange of Financial Account Information” on 21 April 2017 and issued a guideline to find out residence and facts. Revenue Administration published the said guideline in its data transmission system BTRANS, and the Ministry notified the financial institutions located in Turkey that they are required to fulfill their obligations stipulated in the said agreement as from 1 July 2017.

3. What are Hayat Finans Katılım Bankası’s responsibilities under FATCA and CRS?

Hayat Finans Katılım Bankası is responsible for finding accounts of its customers who are U.S. citizens and/or U.S. taxpayers and its customers who are taxpayers in the countries covered by the CRS and for reporting those accounts in accordance with the standards stipulated in the FATCA to the Revenue Administration on annual basis. 

4. Are all banks required to report such accounts?

All banks are required to report such accounts under the bilateral agreement entered by and between the Republic of Turkey and the U.S.A. and the multinational agreements entered by and between the Republic of Turkey and the OECD member countries. 

5. Who must be reported?

We must report our customers who are U.S. citizens and/or U.S. taxpayers (i.e. those having U.S. passports or registered as taxpayers in the U.S. or having a Greencard) and our customers who are taxpayers in the OECD member countries complying with the CRS.

6. What accounts must be reported?

Financial accounts (i.e. deposit accounts and custodian accounts) of such customers of this bank must be reported. The interest and dividend earned by such account and the income earned from the sale of a financial asset in a given year will be reported on annual basis.

7. What must a customer do if his tax status (residency) changes?

Customers must give information about their current tax status to this bank. 

8 How can I get detailed information about the FATCA and CRS?

Please visit the website of the Revenue Administration to read the Turkish and English texts of the FATCA and the frequently asked questions. You can also visit the U.S. Internal Revenue Service (IRS) website for the FATCA.  Please visit the website of the OECD for detailed information about the CRS.