The U.S has enacted the Foreign Account Tax Compliance Act (“FATCA”) principally with the aim of curbing tax evasion thereby maximising tax revenue. More specifically, it is designed to address the “deliberate and illegal hiding of assets and income from the U.S Inland Revenue Service (“IRS”) by U.S. citizens and residents.” FATCA came into force on 1st January 2013. FATCA requires foreign financial institutions (“FFIs”) to provide information on a regular basis directly to the IRS regarding: (1) financial accounts held for U.S taxpayers and (2) U.S shareholders in non-financial foreign entities (“NFFEs”) in which U.S persons have a ‘substantial ownership’ that is, where 10% or more of the shareholders are U.S.
This topic and many more are covered in the ‘Spring 2013’ issue of the Law Digest. Click to subscribe.