Foreign Account Tax Compliance Act (FATCA)

What is FATCA?

FATCA is a law that requires American citizens to report to the IRS the details of their financial accounts outside of the United States. The law aims to prevent the US taxpayers' natural and legal persons from avoiding US-based taxation over their incomes and assets and establish a transparent, traceable tax system. Under this agreement, even if the income is generated in a foreign country, the income tax must be paid to the US government.

Bilateral agreements have been signed between the US and other countries for mutual exchange of information between the states as part of the adoption of FATCA.

Under FATCA, financial institutions should determine their taxpayers in accordance with the criteria in the legislation, provide the necessary information and documents, and transmit the information of those concerned by the declaration to the authorized institutions.

Who is affected by FATCA?

Natural persons with ties in the United States (US citizens, US birthplace, Greencard owners, US contact/residence address or US telephone number, resident in the US).

Legal persons with ties in the USA (those with US address, based in the US, for non-operative companies, at least one of the natural persons controlling the institution is a US citizen or resident).

Specific financial institutions (financial institutions that hold an account that can be considered an asset on behalf of their customers, for example; banks, investment companies).

Information of persons who do not submit documents to the institution will be transmitted to the IRS. Information to be transmitted: Name, address, tax identification number and financial information will be provided.

Protect your business with our growing sanction screening tool. Ensure transparency in your business by scanning regularly with our PEP & Sanction lists. Please don’t hesitate to contact us for more information.

Previous Post
Artificial Intelligence and Anti-Money Laundering
Next Post
What is Sanction Check?