Business
U.S. issues “final” FATCA regulations on Caribbean and other offshore tax havens
The FATCA was enacted in 2010 by the US Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. The FATCA requires foreign financial institutions to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a “substantial ownership interest”.
In order to avoid withholding under FATCA, the Treasury Department said a participating foreign financial institution will have to enter into an agreement with the IRS to identify US accounts, report certain information to the IRS regarding US accounts, and withhold a 30 percent tax on certain US-connected payments to non-participating foreign financial institutions and account holders, “who are unwilling to provide the required information”.
The Treasury Department said registration will take place through an online system.
It said that foreign financial institutions that do not register and enter into an agreement with the IRS “will be subject to withholding on certain types of payments relating to US investments.
“Treasury and IRS will continue to work closely with businesses and foreign governments to implement FATCA effectively,” the statement said. -(CMC)
