Foreign Account Tax Compliance Act (FATCA) | |||||||||||||||||||||
FATCA stands for the Foreign Account Tax Compliance Act. It was introduced in October 2009 but ultimately enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act on March 18, 2010. It adds a new chapter to the Internal Revenue Code (Chapter 4) aimed at addressing perceived tax abuse by U.S. persons through the use of offshore accounts. The new rules require foreign financial institutions (FFI’s) to provide the Internal Revenue Service (IRS) with information on certain U.S. persons invested in accounts outside of the U.S. and for certain non-U.S. entities to provide information about any U.S. owners. While the primary goal of FATCA is to gain information about US persons, FATCA imposes a punitive tax withholding where the applicable documentation and reporting requirements are not met. Scope of FATCA FATCA is far reaching and can impact any person, US or foreign, to the extent that such person is involved in making or receiving payments that fall within the scope of FATCA. While FATCA certainly affects US withholding agents and US multinational companies, the greatest impact will likely be to foreign financial institutions (FFIs). FATCA also contains new requirements in section 502 of the Internal Revenue Code applicable to issuers subject to US tax law. The amendments to section 502 repeal the relevant tax exemptions that were granted for foreign-targeted bearer bonds by the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982. For further detailed information, please refer to the 'Operating Guidelines' jointly issued by Clearstream, Euroclear and the ICMSA.
FATCA requirements Requirements must still be further clarified by the IRS. It is expected to publish the last draft of FATCA regulations on January 17th 2012 and final regulations by end of summer 2012.
Further information and updates Whenever new information is made available by the IRS, we will reflect it on our website. Therefore we invite you to regularly consult this page as well as the FATCA pages in our Information Center. This area will provide you with:
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