From 1 January 2017, jurisdictions that have not yet brought their Intergovernmental Agreement (IGA) into force, will no longer be seen to have an IGA in the eyes of the US Department of Treasury.


Notice no. 2013-43 released by the US Department of Treasury in 2012 permitted a jurisdiction that had signed but not brought into force its IGA, to be treated as if it had an IGA in effect. This was as long as the jurisdictions took the necessary steps to make it so within a reasonable amount of time.

This ‘grace period’ will cease from 1 January 2017, as the US Department of Treasury updates the IGA list. Each jurisdiction with an IGA not yet in force, that wishes to continue to be treated as having an IGA in effect, must submit an explanation and step-by-step plan.

Which jurisdictions are affected?

Of the 83 jurisdictions that have signed an IGA, 61 are currently in force. 30 jurisdictions have reached agreements in substance. The US Treasury is urging the remaining 53 countries to effectuate their IGAs by 31 December 2016.

Consequences for FFIs located in countries that cease to be treated as if an IGA is in effect

Foreign Financial Institutions (FFIs) located in countries that cease to be treated as if an IGA is in effect will no longer be able to rely on the IGA to be treated as complying with, and exempt from, withholding under FATCA.

Unless they qualify for an exemption under the FATCA regulations, the concerned FFIs will have to enter into FFI agreements with the IRS in order to comply with their FATCA obligations; including reporting information to the IRS and withholding pursuant to the terms of the FFI Agreement.

A jurisdiction will be treated as having an IGA in effect for at least 60 days after the jurisdiction’s status on the IGA is updated in the IRS website.


FFIs must check if they are located in one of the jurisdictions that will cease to have an IGA in effect from next year. If this is the case, they should consider entering into an agreement with the IRS. Although the governments are responsible for the legislative process, FFIs will be impacted if there is no IGA in force as per 1 January 2017, so the FFI should enter into an FFI agreement in a timely manner in order to comply.