Unravelling the Complexity of FATCA Reporting
With tremendous and complex changes sweeping tax regulations and information reporting, financial institutions face major challenges in complying with FATCA regulations. FATCA, which stands for Foreign Account Tax Compliance Act, requires foreign financial institutions to report to the Internal Revenue Service of US regarding their U.S. clients. To comply with the FATCA requirement, a financial institution should have a process in place to identify the eligible accounts, carry out due diligence on them and report them as required under the Act. For non-compliance, the foreign entities shall be liable to pay 30 percent tax on income earned through various U.S. sources.