Passed in 2010, the U.S. Foreign Account Tax Compliance Act (FATCA) is designed to detect offshore banking activities geared toward evading U.S. taxes. The law requires foreign financial institutions and other organizations that accept deposits to identify account holders who may be U.S. taxpayers, then pass on information about those individuals to the IRS so that agency can root out taxes owed. Transactions that involve an undocumented account holder and/or a noncompliant foreign financial institution will be subject to a 30 percent withholding tax.
FATCA will have a large impact on foreign financial institutions. Treasury & Risk sat down with Erick Christensen, vice president and head of the compliance practice at CapGemini, to find out how the law will impact corporate treasurers and other finance managers.
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