ARTICLE · 05 SEPTEMBER 2012

Foreign Account Tax Compliance Act (FATCA) effective date is fast approaching

Clayton Utz

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FATCA provisions were introduced by the US to combat tax evasion by US persons holding investments in non-US accounts.

AustraliaTax

Louise McCoach

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The Australian Government announced on 28 August that it is exploring the feasibility of an intergovernmental agreement (IGA) with the US to minimise the costs for Australian stakeholders of complying with Foreign Account Tax Compliance Act (FATCA).

What is FATCA?

FATCA provisions were introduced by the US Government in March 2010 to combat tax evasion by US persons holding investments in non-US accounts.

FATCA imposes a 30% withholding tax on an extensive list of payments, including payments to non-participating foreign financial institutions (FFIs) and other payees that have not complied with the FATCA requirements. FATCA also imposes a broad range of other obligations on FFIs including reporting and due diligence obligations. The IRS website explains the FATCA compliance obligations in further detail.

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