Frequently asked questions – Indonesia – Commercial Banking

What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. It is a new piece of legislation to prevent tax evasion by US taxpayers in the US.

Introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS), the purpose of FATCA is to encourage better tax compliance by preventing US Persons (see glossary) from using Banks and other Financial Organisations to avoid US taxation on their income and assets.

A significant number of countries/territories and territories worldwide are expected to sign Inter-Governmental Agreements (IGAs) relating to FATCA compliance with the United States government. These IGAs will result in the FATCA legislation becoming part of these countries’/territories’ local laws. (Please refer to glossary for IGA definition)

What is the impact of FATCA?

On an annual basis, Banks and other Financial Organisations will be required to report information on financial accounts held directly or indirectly by US Persons.

HSBC has made a commitment to being fully FATCA-compliant in all countries/territories where we operate. We will therefore be reviewing our existing customer base to confirm the FATCA status of our customers and where necessary we may need to engage our customers from time to time to help us understand them better including requiring customers to provide us with further information and documentation.

How do I know if I am affected?

FATCA legislation will affect both personal and business customers who are treated as a ‘US Person’ for US tax purposes. The FATCA legislation will also affect certain types of businesses with US owners.

The term US person includes the following (but is not limited to):

• A citizen of the US, including an individual born in the US but resident in another country/territory (who has not given up their US citizenship)
• A person residing in the US, including US green card holders
• Certain persons who spend a significant number of days in the US each year
• US Corporations, US Partnerships, US estates and US trusts

Over the next few months we will be reviewing the impact of the legislation to our customers, and will provide further information to affected customers in due course.

For more information regarding FATCA, please visit the IRS website: External site: Link opens in an overlay or contact your tax professional.

When will the FATCA legislation become effective?

The FATCA legislation is currently due to become effective from 30 June 2014.

HSBC is committed to becoming fully FATCA-compliant in all countries/territories where we operate in accordance with the legislative timeline.

Is HSBC the only bank to be affected by FATCA?

No. HSBC is committed to becoming fully FATCA-compliant in all countries/territories where we operate. Other banks and financial organisations will also be affected. However their approach to ensuring compliance with FATCA may differ to that of HSBC.

Why do HSBC participate in FATCA when HSBC is not a US corporation?

HSBC is committed to becoming fully FATCA-compliant in all countries/territories where we operate. Other banks and financial organisations will also be affected. However their approach to ensuring compliance with FATCA may differ to that of HSBC.

What does HSBC have to do to comply with FATCA?

To comply with FATCA, HSBC will:

• Conduct a review of new and existing customers to establish their status as either a US Person or Non-US Person in accordance with FATCA. Business customers will be classified according to the FATCA legislation. (For example, as US Persons, Foreign Financial Institutions or Non-Financial Foreign Entities).
• Report information to the IRS or local tax authority on all accounts held directly or indirectly by US Persons. In addition, HSBC may also need to report information about customers who do not provide the required documentation to us.
• In certain circumstances and where customers fail to provide the appropriate documentation or when doing business with non-compliant entities, HSBC may be required to apply 30% US withholding tax on certain types of US income paid to such customers.
• (Please refer to the glossary for the definitions of US Persons, Foreign Financial Institutions, Non-Financial Foreign Entities and Withholding tax)

Is FATCA applicable to personal or business customers?

FATCA legislation will impact both personal and business customers who hold an account, policy or agreement with HSBC.

Am I only affected if I am a US Company?

No. The impacts of FATCA are wider than just US companies. HSBC will be reaching out to many business customers globally to determine their status under FATCA. The aim of this exercise is to identify customers which are reportable under FATCA. We will be communicating with customers who need to take further action.

What do I need to do as a business customer?

In order to establish your tax status under FATCA, we may need you to provide additional information/documentation. This documentation could be an HSBC declaration or a US tax form from the IRS. We will be communicating with affected customers that need to complete these forms, detailing when they will need to be completed by.

Does FATCA replace existing tax rules I already follow?

FATCA does not replace the existing US tax regimes, it may however add additional requirements and complexity to the existing tax rules you may already follow. Should you need further advice on your tax status or FATCA classification/status, you should contact a professional tax and/or legal adviser.

Why has my other Bank asked for different documentation than HSBC?

The way in which Banks and Financial Organisations collect information from their customers in order to confirm their tax status under FATCA may vary. This may mean that in some instances you are asked for different documentation from HSBC than another Bank.

HSBC cannot offer advice on your FATCA tax status or classification. If you need further support you should visit the IRS website: External site: Link opens in an overlay or contact a professional tax adviser.

How frequently will I be engaged in order to comply with FATCA?

FATCA is an ongoing process. If your account information changes, we may need to engage you from time to time to help us understand you better including requiring you to provide us with further information and documentation so that we are able to update your account status under FATCA.

Under what circumstances would HSBC need to report information about my account to my local tax authority or to the IRS?

The purpose of FATCA is to prevent US Persons (see glossary) from using banks and other financial organisations to avoid US taxation on their global income and assets. HSBC will therefore report information to the IRS or local tax authority on all accounts held directly or indirectly by US Persons. In addition, HSBC may also need to report information about customers who do not provide the required documentation to us.

What information will HSBC report to the local tax authority or the IRS?

The information reported to the IRS or the local tax authority will depend on the FATCA status of the customer. This information will typically be of a personal nature in relation to the substantial US owners of a business (for example, name, address, US Taxpayer Identification Number), and of a financial nature (e.g. account number, account balance/value). We will be communicating with the affected customers in detail on these requirements.

If I run a partnership firm with my wife (with more than 10% interest) and both of us are US persons, do we need to report individually or report under the categorisation of “Partnership” as a whole? Your firm will be classified as a reportable legal entity under FATCA.

What do I need to prepare to respond to HSBC?

We will advise customers of FATCA documentation requirement. Documents may include US tax forms (also referred to as withholding certificates or W forms) or self-declarations of FATCA status.

Will HSBC supply me with all the forms I need to complete?

Yes. HSBC will send you the relevant forms or direct you to a website where you can download them.

If I am a US person, when and how will HSBC engage me? What should I do if I do not receive any FATCA related correspondence?

If you are considered as a US person, we may need to engage you from time to time to help us understand you better including requiring you to provide us with further information and documentation. Please visit the IRS website for further information. Letters will be sent in batches in second half of Year 2014. In case you do not receive any FATCA related correspondence by the end of March 2015, please contact us by calling (852) 2233 3322 for HSBC Premier customers, (852) 2748 8333 for HSBC Advance customers, (852) 2233 3000 for other Personal Banking customers, (852) 2748 8288 for Commercial Banking customers or send an email to dfv.enquiry@hsbc.com.hk for all Personal Banking customers, commercialbanking@hsbc.com.hk for Commercial Banking customers. Please do not provide your account or disclose any confidential information or banking instructions in your e-mail.

While we will communicate with affected customers in due course, HSBC cannot offer any advice relating to FATCA and we recommend you contact a professional tax adviser to discuss your personal tax situation.

When do I have to respond to the request for FATCA documentation?

In general, customers should respond to the request for FATCA documentation by the date contained within the communication.

What will HSBC do if I do not provide the information required under FATCA?

HSBC is committed to be fully compliant with FATCA.

HSBC Group may not open new accounts or offer additional products and services to customers who choose not to comply with HSBC’s requests for documentation to establish a customer’s status under FATCA.

In accordance with the FATCA regulations, HSBC may exit the relationship with customers who decide not to provide the necessary information and documentation within the regulatory timeframe.

HSBC may also need to report information about customers who do not provide the required documentation to us.

In addition, we may also be required to withhold tax on certain US-source payments coming into your account. (Please see the glossary for further information on Withholding tax).

What do I need to do if I am affected by FATCA?

Over the next few months we will continue to review the impact of the legislation for our customers and will correspond with affected customers in due course. For more information regarding FATCA, please visit the IRS website: External site: Link opens in an overlay, or contact your professional tax adviser for advice.

If you have multiple relationships with us, you may be approached by different members or businesses of the HSBC Group. To help us serve you better and capture your information accurately, in light of different laws or regulations in different countries/territories, your response to all our requests will be much appreciated.

Please note that HSBC is unable to offer tax advice. For tax-related questions please contact your professional tax adviser or refer to the IRS website: External site: Link opens in an overlay