What is FATCA?

Foreign Accounts Tax Compliance Act  (FATCA) was enacted on March 18, 2010 by the US Department of the Treasury and Internal Revenue Service (IRS) and went into effect as of July 1, 2014. The objective of the act is to prevent tax avoidance by natural and legal entities who are taxpayers in the US with respect to US taxation on their income and assets, and to establish a transparent and trackable tax system.

Within the scope of compliance with FATCA, bilateral agreements have been signed between the US and other countries for mutual information exchange purposes. Turkey and the US have also reached an agreement in principle on June 3, 2014. In the case that an international agreement is signed between Turkey and the US, and approved by the Turkish Grand National Assembly, the international agreement will have the force of law, and thus, compliance with FATCA will become our national legislation.

In accordance with FATCA, financial entities outside the US must identify their customers who may be taxpayers in the US, and report the asset information of these customers to the Turkish Ministry of Finance - Revenue Administration.

Garanti Bank's responsibility within the scope of FATCA

As Garanti Bank, we are showing ultimate attention to comply with all national and international laws and other legal regulations to the extend allowed by local legislation.

Within the scope of FATCA, we must identify our customers who may be taxpayers in the US in accordance with the procedures in the legislation, obtain required information and documents from our customers, and submit this information to the Revenue Administration. Accordingly, we, just like all other banks, are requesting certain information and documents from our customers to verify their status within the scope of FATCA.

When will FATCA go into effect?
The aforesaid regulation went into effect as of July 1, 2014. Nevertheless, the transition dates of the implementation may vary on a country basis according to the bilateral agreements signed between the US and other countries. On June, 2014, it has been announced that Turkey and the US have also reached an agreement in principle. Information about the signing of the agreement between the two countries and the enforcement of the agreement is expected from the Turkish Ministry of Finance.

As Garanti Bank, we will start obtaining the information and declarations required by the legislation starting from January 1, 2015. Nevertheless, we will not share the information we have obtained from our customers within the scope of FATCA until the bilateral agreement that will be signed between Turkey and the US goes into effect. We will submit he information we have obtained to the Turkish Ministry of Finance in accordance with the procedures specified in the agreement after the bilateral agreement is signed and accepted as our national legislation.

Who will be impacted by FATCA?
In general, we don't expect the majority of our customers to be impacted by FATCA. Individuals and entities that may be directly or indirectly impacted by FATCA can be summarized as follows;
• Real persons who are associated with the US (US citizens, those who were born in the US, greencard holders, those who have a US contact/residence address or telephone number, those who reside in the US, those who make money transfers to the US with a standing payment order)
• Legal entities that are associated with the US (those that have a US address, those established or headquartered in the US, for passive entities [1], those for which at least one of the controlling real persons [2] is a US citizen or resident).
• Certain financial entities (Financial entities that hold any type of account in the name of the customer that can be considered as an asset. e.g. banks, investment companies)


(1) Passive entity: can be summed up as a company not engaged in an active business such as production or service in general, and for which more than 50% of the gross income within a calendar year is made up of passive income (such as interest, royalties, dividends), or more than 50% of the assets held during the calendar year are used or otherwise held for the production of passive income. For exceptions and more detailed description, the regulations of US Department of the Treasury and Internal Revenue Service (IRS), and the descriptions in the international bilateral agreement must be referred to.

(2) Controlling person: is defined as a real person who possesses one of the qualifications below:
a) Owning at least 25% of the shares of the company
b) Directly or indirectly exercising ultimate control over the decisions made in the company
c) Having a high level of authorization for representation in the company

What is expected from our customers within the scope of the regulation?
Our customers who are taxpayers in the US (US citizens, US residents, greencard holders etc. as specified above) must declare their status to Garanti Bank. On the other hand, our customers who are identified to be associated with the US in the manner specified above, however have declared that they are not taxpayers in the US, are required to provide relevant documents along with the form they will sign to support their declaration. Sharing of the documents requested from our customers in a complete, accurate and timely manner is of great importance in preventing possible sanctions that may be imposed on our customers by authorized bodies due to incorrect or incomplete information/document sharing.

What happens if the information, documents and declarations required within the scope of FATCA are not submitted?
The information of our customers who are identified to be associated with the US in the manner specified above, however have not declared whether or not they are taxpayers in the US (have not signed the Request for Taxpayer Identification Number and Certification (W9 Form) or Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (W8 Form)), and have not provided the required documents to our bank, will be submitted to the Revenue Administration. The Revenue Administration will report this information to the US Internal Revenue Service within the scope of the agreement that will be signed between the US and Turkey to regulate mutual information exchange.

In accordance with FATCA and the agreement that will be signed between the US and Turkey to regulate mutual information exchange, for natural and legal entities who do not provide the information and documents required to identify whether or not they are taxpayers in the US, and refuse to declare their taxpayer status, a 30% withholding tax over their US source income may be imposed by the US or the authorized bodies entitled to withhold tax on behalf of the US.

Who will carry out the possible withholding of tax?
Within the scope of FATCA, we, as Garanti Bank, are not under any obligation to withhold tax. Withholding of tax will be carried out by authorized bodies that are entitled to withhold tax on behalf of the US.

Which customers and which information about these customers will be submitted to the Revenue Administration within the scope of FATCA?
Natural and legal entities who will be the subject of notification within the scope of FATCA:
• Customers who have declared that they are taxpayers in the US and signed the relevant declaration form (Request for Taxpayer Identification Number and Certification - W9)
• Customers who are identified to be associated with the US in the manner specified above, however have refused to provide the relevant information, declarations and documents
• Non-participating Financial Institutions (financial institutions who do not comply with FATCA)

Note: Customers who have declared that they are not taxpayers in the US and have signed the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (W8 Form) will not be included within the scope of notifications that will be sent periodically to the Revenue Administration. Nevertheless, if requested by the official bodies authorized by the legislation, sharing of information about the customers who are included within this scope may also be a possibility.

Information that will be submitted within the scope of FATCA:
Customers' demographic information (e.g. Name, Address, US Tax Identification Number) and financial information (e.g. Customer Number, total value of the balances of assets held at our bank) will be submitted to the Turkish Ministry of Finance Revenue Administration.

Balance limits regarding the customers who will be the subject of notification:
Persons who became a customer of our Bank on and after January 1, 2015 are considered to be "new" customers, and persons who became a customer of our Bank before this date are considered to be "current" customers.
• For "current and new personal customers"; those who have a total asset balance of over 50.000 USD will be included within the scope of notification.
• For " current corporate customers"; those who have a total asset balance of over 250.000 USD will be included within the scope of notification.
• For "new corporate customers"; those who have a total asset balance of over 50.000 USD will be included within the scope of notification
Note: The limits specified, the definition and scope of "current" and "new" customers may vary based on the regulations that will be carried out by the Ministry of Finance.

Where can I refer to for more detailed information about FATCA?
As Garanti Bank, we are unable to carry out a detailed assessment about our customers' US-related tax obligations and possible tax sanctions that they may face. We are only fulfilling our obligations required by the relevant legislation with regards to compliance with FATCA.  Therefore, we recommend you to contact a professional tax consultant for more detailed information and advice. In general, you can find detailed information about FATCA through the US Internet Revenue Service internet website at http://www.irs.gov.

NOTE: This document about FATCA, prepared for our customers, is intended for informative purposes only, and will be updated based on the regulations, announcements and guides that have been issued and will be issued by the authorized bodies (Turkish Ministry of Finance Revenue Administration, US Internal Revenue Service). As Garanti Bank, we are unable to make a detailed assessment about our customers' US-related tax obligations and possible tax sanctions that they may face. Therefore, we recommend you to contact a professional tax consultant for more detailed information and advice.
Yours Sincerely,
Garanti Bank


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