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The Facts on FATCA

September 26, 2014  |   Tax News   |   Tags: , ,  

The foreign account tax compliance ac has become America’s global tax law. Its enactment was done in 2010 and quietly building up till now. Ultimately it is in effect.  What people do not know is that this will not only affect American’s but the whole world will be under its affect. FATCA has reached over and it is astounding for an American tax law to be so influential. What FATCA requires is for foreign banks to reveal Americans with accounts over $50,000.  And no one can deny because if they do then the non-compliant institutions could be frozen out of the US markets, so everyone is complying.

facts on fatca

Here are some facts about FATCA:

1.    There is power here. You do not want to mess with the IRS and the treasury. They have wide discretion to write the implementing regulations.

2.    They want the world transparent. This is not supposed to be about generating revenue but compel disclosures. The IRS has publicly claimed this.

3.    It will literally affect everyone. FATCA is not just for financial institutions but also US multinationals. You need to choose whether to comply or not but there is no choice as you would have to avoid US source income and investments altogether.

4.    Be ready for withholds on all proceedings. There was 30% of withholding on proceeds of the sale of US securities by foreign persons which was not needed before

5.    Compliance is your best option, because if you do not you face dire repercussions. Which we can see as more than 77,000 financial institutions and 80 nations have signed in, including Russia and china, who are supposed to be the most difficult.

There is no way to get around it, you cannot count on other passports, and repeal or dismantling it is out of the question now.