Search
 

FATCA Changes Ahead

The new law affects processes for payments to non-U.S. entities.

By Denise Bedell | Updated on June 01, 2011

Finance executives busy with the many ramifications of Dodd-Frank see more potential problems looming with the Foreign Account Tax Compliance Act (FATCA). When FATCA goes into effect in 2013, it will require foreign financial institutions (FFIs) to provide much more information on payments for activities that originate in the U.S. and could subject such institutions to a 30% U.S. withholding tax on those payments. The most direct issue for U.S. companies is how FATCA will change processes and documentation for their payments to non-U.S. entities, such as directors’ fees paid to foreign board members who attend board meetings in the U.S., or dividends and royalties to a foreign parent company. There is also the issue of whether non-U.S. entities owned by a U.S. company are considered FFIs.

Companies “need to begin to identify whether they make payments to non-U.S. businesses that would potentially be subject to FATCA’s withholding tax and whether their subsidiaries qualify as foreign financial institutions,” says Jonathan Sambur, a lawyer at Mayer Brown. The definition of an FFI has been dramatically expanded to include hedge funds, private equity funds, certain insurance companies and other collective investment entities.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.