ANALYSIS
U.S. Foreign Account Tax Compliance
Act 101
FATCA became U.S. law in March 2010. The U.S.
Internal Revenue Service (IRS) is treating 2014-2015
as a transition period for FATCA enforcement and
administration. In short, FATCA:
• Targets tax non-compliance by U.S. taxpayers
with non-U.S. accounts
What it means for….
• Focuses on reporting:
0 By U.S. taxpayers about certain non-U.S.
financial accounts and offshore assets
0 By non-U.S. financial institutions about financial accounts held by U.S. taxpayers or nonU.S. entities in which U.S. taxpayers hold a
substantial ownership interest
• Aims to improve reporting of non-U.S. financial
assets; withholding is the cost of not reporting.
U.S. Individual
Taxpayers
Non-U.S. Financial
Institutions
U.S. Financial
Institutions
Must report
information about
certain foreign financial
accounts and offshore
assets, if the total asset
value exceeds the
appropriate reporting
threshold.
To avoid being
withheld upon,
non-U.S. financial
institutions must report
certain information on
U.S. accounts to the
IRS.
U.S. financial
institutions and other
U.S. withholding
agents must withhold
30% on certain
payments to non-U.S.
entities that do not
document their FATCA
status and report on
certain non-financial,
non-U.S. entities.
Governments Around
the World
If a jurisdiction
enters into an
Intergovernmental
Agreement* to
implement FATCA,
the reporting & other
compliance burdens
on the financial
institutions in the
jurisdiction may be
simplified and they
will not be subject to
FATCA withholding.
* At the time of publication Emerging Macedonia could not find any information with regard to the Macedonian Government’s efforts or
plans on signing an Intergovernmental Agreement to implement FATCA.
Source: http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA
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Emerging Macedonia Summer 2014 Issue 42
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