FATCA requires financial institutions to use enhanced due diligence procedures to identify US persons who have invested in either non-US financial accounts or non-US entities. The intent behind FATCA is to keep US persons from hiding income and assets overseas.
The US Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released on February 20, 2014 two sets of final and temporary regulations for FATCA. The first set contains changes to the provisions of Chapter 4 of the Internal Revenue Code (Code) commonly referred to as the Foreign Account Tax Compliance Act (FATCA Regulations). The second set of regulations (Link) coordinate the documentation standards, reporting and withholding rules relating to payments made to non-US and US persons (Chapters 3 and 61 and Section 3406 of the Code), with the FATCA regulations.
The regulations contain many changes with the impact varying depending on the products or services and whether a company's activities are on shore or offshore. Broadly speaking, the guidance is a compilation of many smaller changes and clarifications.
The ability to align all key stakeholders, including operations, technology, risk, legal, and tax, are critical to successfully complying with FATCA. Both financial institutions and nonfinancial multinational corporations should consider steps such as:
To help you prepare, PwC has formed a network of FATCA specialists in key markets throughout the world. These professionals are part of our Global Information Reporting (GIR) practice, which brings together specialists who know the intricacies of tax law as well as local jurisdictions, rules and regulations.