The 2017 qi agreement contains amendments that were previewed in the 2016-76 press release in December, as well as amendments in response to comments on the draft qi agreement contained in the 2016-42 communication (proposed agreement on qi). These changes are expected to be in addition to other amendments to the revised final regulations under Section 871 (m), which are expected this month. The FFI agreement expired on December 31, 2016 and this updated draft contains a number of substantial amendments consistent with the new Chapter 4 provisions. For QDDs overtime for calculating the code-S. 871 (m) in the 2016-76 press release, a QDD is not taxable and is deducted from dividends on physical shares or shared equivalents that a QDD receives in 2017 as a stock derivative trader. The QDD is required to calculate the amount of code art.871 (m) from 2018 according to the net delta approach and is subject to withholding dividends, including dividends received on January 1, 2018 or after January 1, 2018. As periodic certification deadlines approach July 1 and December 31, many IQs have either begun or are conducting periodic audits. This point should allow for a timely discussion of the independence standard for external auditors conducting regular audits as part of the 2017 qi agreement. It traces the evolution of the external independence standard for verification and provides an interpretation of existing rules. In addition, the 2017 IQ agreement broadens the base of companies that have the right to obtain QDDs to include holding bank companies, 100% subsidiaries and any other entity acceptable to the IRS, regardless of whether, otherwise, this entity could become QDD under the terms of the agreement. It also specifies certain aspects of the guidelines for branches of non-U.S. companies and intermediaries of securities lending agencies that act exclusively within the framework of an agency. Under the 2017 IQ agreement, an IQ that also acts as qDD is required to submit separate 1042-S forms in order to report payments in any capacity by identifying its Chapter 3 specific status code as IQ or QDD.
The IRS has concluded the final agreement on qualified intermediaries (IQs) in accordance with the reg. 1.1441-1 (e) (5). An IQ allows foreign individuals to simplify their obligations as withholding agents in accordance with Chapters 3 and 4 and as payers for amounts paid to account holders under Chapter 61 and Code S. 3406. The IQ agreement will enter into force on January 1, 2017 or after January 1, 2017 and will be valid for a period of six years. In the absence of a formal certificate, the new standard replaces, instead of traditional quality assessment standards, a more general requirement that the examiner has sufficient independence “to conduct the audit objectively and not be able to verify his or her own work” (Rev. Proc. 2017-15, 4.02(7)). Industry stakeholders remain uncertain, which requires the importance of the new rules and the standard of living required by an external evaluator to conduct a periodic review on behalf of a qi. As provided for in the 2016-42 communication, the 2017 qi agreement brings back sampling and sampling techniques similar to the old qi audit rules that IQs can use as a refuge for periodic monitoring.