Compliance, Legislative & Regulatory Standards
Regulatory Environment - Part 8
The Foreign Account Tax Compliance Act (FATCA) is a controversial and unpopular piece of legislation, but the US government deems it necessary in order to ensure that its ability to determine the ownership of US assets in foreign accounts is not hindered. Through enhanced reporting requirements, FATCA is designed to combat tax evasion that the government believes is the result of the use of offshore accounts by US taxpayers.
This tutorial will provide you with a detailed overview of the Act, including two major elements of the legislation – the requirements that must be satisfied for foreign entities to avoid withholding taxes and the requirements that US taxpayers must satisfy.
On completion of this tutorial, you will be able to:
- Define important FATCA-related terms and concepts
- Describe the requirements that must be satisfied to avoid withholding taxes, including exceptions and exemptions
- Outline the registration process that foreign financial institutions (FFIs) must follow
- Describe the reporting requirement that US taxpayers must satisfy
- Define “passthru” payments and explain why such payments face a withholding tax
- Explain the need for multilateral agreements into which the US Department of the Treasury has entered into with other countries
Topic 1: Key Definitions
Topic 2: Requirements for Avoiding Withholding Taxes
Topic 3: Registration Process for FFIs
Topic 4: Reporting Requirements for US Taxpayers
Topic 5: Implementation of FATCA