Foreign Account Tax Compliance Act (FATCA) - And why it is important to my institution?
The Foreign Account Tax Compliance Act (FATCA) will impact many foreign (i.e., non-US) financial institutions (FFIs). FATCA is a response to the perception that US individuals are not reporting all US income earned outside the US either due to the lax standards or intentional actions of certain foreign entities.
FATCA preparation - Mark Jansen explains the latest progress in terms of FATCA, as well as the timelines that financial institutions must be aware of in order to get prepared and avoid the consequences of non-compliance.
Understanding FATCA - Mark Jansen of PwC explains the main details and implications for both financial institutions and customers of the Foreign Account Tax Compliance Act (FATCA) enacted in the US.
Preparing for FATCA - Mark Jansen of PwC looks at the issues for financial institutions - and customers - of the Foreign Account Tax Compliance Act (FATCA), and considers what preparation is necessary now.
The Foreign Account Tax Compliance Act of 2009 (FATCA) was included in the Hiring Incentives to Restore Employment (HIRE) Act enacted in March 2010, and is generally effective for payments made after 31 December 2013. FATCA was enacted in response to the continued perception that US individuals are not reporting all of their income earned outside of the US either due to tax standards or intentional actions of certain foreign entities.
FATCA imposes a 30 percent withholding tax on any "withholdable payment" made to, among others, a Foreign Financial Institution (FFI). To avoid the withholding tax the FFI must comply with the new customer identification, reporting, tax withholding, and related requirements.
In February, 2012, the US Treasury Department issued proposed regulations that outline its intended approach to FATCA. These regulations, although not final, provide a roadmap to affected institutions so that they have sufficient time to implement the systems and processes changes necessary to comply fully with the new withholding, documentation and reporting obligations that will result from FATCA.
Many multinational organisations will need to make significant changes to be compliant with FATCA. The FATCA provisions will begin to take effect in 2013, and financial institutions have begun to assess the potential impact and identify the potential changes that may need to be made to processes and controls (i.e., customer onboarding, know-your-customer, etc), technology and systems and determine the data that will be needed to comply with the due diligence and reporting requirements.