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FATCA for Multinationals: What Treasurers Need to Know

Corporate treasurers should be analyzing which of their entities, transactions, and banking relationships fall under the scope of the law. They may be surprised.

By Rebecca E. Lee | Updated on July 02, 2013
The Foreign Account Tax Compliance Act (FATCA) is a new set of U.S. tax rules that will affect many aspects of the day-to-day activities of the corporate treasury function. FATCA was enacted by Congress in 2010 to detect and deter tax evasion by U.S. citizens and businesses hiding money in foreign countries.

The legislation, which has a general effective date of January 1, 2014, is creating a new tax information reporting and withholding regime through which foreign financial institutions (FFIs) are expected to identify their U.S. account holders and report their account balances and other information.

For corporations with operations, activities, business partners, or counterparties outside of the United States, FATCA is creating an array of issues, starting with the fact that some of their entities may qualify as FFIs under the law.

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