China

Details

  • Service: Tax, US Corporate Tax, Advisory
  • Type: Business and industry issue, Publication series
  • Date: 4/27/2011

FATCA: Typhoon on the horizon? 

China Executive Insight - Issue 2, 2011/04

 

In March 2010, President Obama signed the Foreign Account Tax Compliance Act (FATCA) into law. This legislation was created to prevent offshore tax abuses by U.S. citizens and residents. The U.S. Congress believes such abuses cost the U.S. treasury billions of dollars every year.

 

The Act, which will come into effect on 1 January 2013, introduces a new withholding regime that is designed to compel foreign financial institutions to disclose certain details of their U.S. customers by imposing a 30 percent withholding tax on entities that that do not comply with reporting and enhanced Know Your Client (KYC) requirements.

 

Congress passed on much of the job of developing and implementing this new regime to the Department of the Treasury. The implications of FATCA, and in particular its withholding and reporting regimes, are wide-ranging for financial institutions, investment entities, and many other global organisations.

China Executive Insight
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