Foreign account tax compliance services - Get ready now | Brochure
To accelerate the ongoing crackdown on U.S. persons thought to be hiding assets overseas, the Foreign Account Tax Compliance Act (FATCA) threatens to impose a 30% withholding tax on income and capital payments from the U.S. unless financial institutions enter into an agreement with the IRS to report all U.S. customers.
Enacted on 18 March 2010, FATCA undermines the commercial basis on which financial institutions hold U.S. assets and deal with U.S. customers. While regulations are yet to be drafted to give practical effect to the legislation which applies to payments made on or after 31 December 2012, the political pressure for this law to take effect is significant and dates as far back as the 2007 Stop Tax Haven Abuse bill co-sponsored by the then Senator Obama.
Most institutions have concluded that the extent of the changes demanded by the legislation means that the time available to become compliant is insufficient. FATCA requires foreign financial institutions to obtain information about every holder of every account across all of their affiliated entities, to comply with verification and due diligence procedures to identify U.S. accounts and to report annually with respect to any U.S. account or suffer the new 30% withholding.
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