February 08 2001
New United States withholding tax regulations (effective from January 1 2001) provide that anyone holding assets in and receiving income from the United States in his or her own name, or through one or more foreign intermediaries, will be required to disclose substantial account information to the US Inland Revenue Service (IRS).
If the IRS approves the 'know-your-client' procedures of a jurisdiction, financial institutions within that jurisdiction that hold US investments for their clients will be able to become a 'qualified intermediary' by signing an agreement with the IRS. This will greatly simplify withholding and reporting obligations by qualified intermediaries, and allow the IRS to satisfy itself that various exemptions from the requirement to pay US withholding tax by non-resident persons and foreign corporations are being applied only to those entitled to such exemptions.
There would be no requirement for qualified intermediaries to disclose details of non-US clients to the IRS.
The IRS has approved Jersey's 'know-your-client' procedures for opening accounts and will now enter into agreements with financial institutions in Jersey that wish to become qualified intermediaries.
For further information on this topic please contact Nicola Davies at Mourant du Feu & Jeune by telephone (+44 1534 609532) or by fax (+44 1534 609333) or by e-mail (firstname.lastname@example.org).
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