What is The Foreign Account Tax Compliance Act (FATCA)?
FATCA, which is US legislation, is
the latest in a number of measures being introduced around the
world taking a more draconian view on matters of tax compliance and
regulation.
FATCA is extremely wide reaching and
is designed to ensure that the US Internal Revenue Service (IRS) is
able to catch all overseas income and gains that should be liable
to US taxation.
What does FATCA do?
At this stage, the US authorities
have only issued guidelines but it is expected that these will
remain largely unchanged.
Under the guidelines, all payments
of US source income and capital to Foreign Financial Institutions
(FFIs) and Non Financial Foreign Entities (NFFE) will be subject to
a withholding tax (WHT) penalty of 30 per cent unless the
institution or entity concerned has entered into an agreement with
the IRS.
