the U.S. has established a network of bilateral intergovernmental agreements (IGAs) under FATCA with many countries to facilitate the exchange of tax-related information. These IGAs might lead to some level of reciprocal exchange of information, but it is not as comprehensive or as broad-based as the CRS.
There are two main types of IGAs under FATCA:
Model 1 IGA: This is a reciprocal agreement. Under a Model 1 IGA, foreign financial institutions (FFIs) in the partner country report information about U.S. account holders to their local tax authority, which then forwards the information to the IRS. Similarly, the U.S. provides the partner country with information about its residents who hold accounts in the U.S.
Model 2 IGA: This is a non-reciprocal agreement. FFIs in the partner country report directly to the IRS, and there isn't a similar automatic exchange of information from the U.S. to the partner country.
the U.S. and UAE have not entered into a FATCA IGA. This means that while UAE financial institutions may still comply with FATCA to avoid withholding taxes on U.S.-source income, there isn't a formalized structure for reciprocal exchange of tax information between the two countries.
Hey Sols. I'm learning. Happened to see this thread. If I (non-us person) own a company in Cayman for example (non-us), and the company holds a bank account in US (assume this is the only bank it holds). Then I would expect the company is subject to no CRS rule and hence not reportable, right?
Given this setup, if your Cayman company holds its only bank account in the U.S., the U.S. bank is not obligated to report under CRS. This is because the U.S. does not participate in CRS. The bank might have FATCA-related reporting obligations, but you mentioned the entity is a non-U.S. entity, so it would be the entity's responsibility (and not the bank's) to ensure any required FATCA compliance.
So, in the scenario you presented, the U.S. bank account of your Cayman company would not be reported under the CRS
