Frequently asked questions about FATCA
Commercial Banking – Mexico
To assist you, we have put together some frequently asked questions about FATCA.
Please note that HSBC is unable to offer tax advice. For tax related questions please contact your tax advisor.
What is FATCA?
FATCA stands for the Foreign Account Tax Compliance Act. It is a piece of US legislation, the purpose of which is to prevent US persons (both individuals and legal entities) from using foreign financial institutions to avoid taxation on their income and assets.
This applies in Mexico, as the Mexican government has signed an inter-governmental agreement (IGA) with the United States government (see glossary). This will result in the FATCA legislation becoming a local regulation, which means we will be required to request information and report it to the Mexican authorities.
How do I know if I am affected?
FATCA legislation will affect both personal and business customers who are treated as ‘US persons’ 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 or territory (who has not given up their US citizenship)
- a person residing in the US, including those who hold an official identification issued by the United States government
- certain persons who spend a significant number of days in the US each year.
When will the FATCA legislation become effective?
The FATCA legislation became effective on 1 July 2014.
Is HSBC the only bank to be affected by FATCA?
No. Banks and other financial institutions worldwide will be affected by FATCA.
Is FATCA applicable to individuals and legal entities?
Yes, the FATCA legislation will impact both individuals and legal entities which have any US indicia (see glossary).
Am I only affected if I am a US company?
No. The impacts of FATCA are wider than just US companies. Those identified as reportable under FATCA will be contacted to provide additional information or documentation. This documentation could be an HSBC declaration or a US tax form from the IRS.
How frequently will I have to provide information for FATCA purposes?
If your account information changes, we may be required to contact you to obtain additional information.
What types of information and/or documents can I expect to supply to HSBC?
We will be communicating with the affected customers to provide full details of the documentation HSBC needs for FATCA purposes. Documents may include US tax forms, also referred to as W-9/W-8 series forms that it is required (see glossary).
Will HSBC supply me with all the forms I need to complete?
Yes. Your account executive will provide you with the information required to obtain them.
When do I have to provide the requested information and/or documentation for FATCA?
In general, customers should supply the requested documentation and information by the date contained within the communication.
In accordance with the FATCA regulations, will Mexico apply withholding tax?
No. The inter-governmental agreement (IGA) signed between Mexico and the US establishes no tax withholding for income generated in Mexico.
(Page last updated August 2018)