FATCA update — what is FATCA and what do you need to do about FATCA?
The US Foreign Account Tax Compliance Act (FATCA) was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act on 18 March 2010. FATCA creates a new tax information reporting and withholding regime for payments made to certain Foreign Financial Institutions (FFIs) and other ‘foreign’ persons. Implementation of FATCA is phased, and the first changes will take effect from 1 July 2014, with certain withholding requirements also taking effect from 1 July 2014 and reporting from 2015 for the 2014 calendar year.
FATCA is intended to identify US persons, to the Internal Revenue Service (IRS), who may be investing and earning income through FFIs, and it requires those FFIs to report certain information on those accounts, with the aim of reducing tax evasion. Failure to report could result in 30 per cent withholding tax being deducted on US source income and payments.
Many countries have negotiated, or are negotiating, intergovernmental agreements (IGA) with the US (partner jurisdictions) and this includes all of the jurisdictions in which Ogier Fiduciary Services operates, so our focus is on becoming compliant where an IGA is, or will be, in place…
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