Firms that fail to comply with FATCA, the Foreign Account Tax Compliance Act will be subjected to a stringent 30% withholding tax on any US sourced income even if they do not have any US customers. FATCA, designed to crack down on tax avoidance by wealthy US citizens investing offshore, represents a complex and costly compliance task being forced upon financial services firms globally by the US tax authorities. It will take effect from July 2013 but preparations for the deadline are complex.
Given the scale and complexity of change involved, and if not done so already, we believe firms must quickly focus on ensuring the following:
- Senior management is engaged and providing active sponsorship of the FATCA programme.
- There is cross-business awareness of the impact of FATCA underpinned by formal enterprise-wide governance to ensure all affected areas are involved in work to comply with the new regime.
- A detailed impact assessment has been completed to identify how FATCA will affect the business and the strategic options that may be available.
The IT and operational effort required to comply is fully built into the firm’s budget and change portfolio.
- The Executive who will have formal sign-off responsibility for FATCA compliance has been identified and they are considering the audit and assurance processes they will need to have in place to allow sign-off
Financial Services firms need to take action now by accepting that this is much more than a tax compliance issue. They must conduct a thorough impact assessment into how the FATCA requirements will affect their strategy, customers, products, processes, systems and their people.
BDO can provide comprehensive support for your FATCA preparation and compliance efforts that draws together the expertise of our multi-disciplinary FATCA team comprising specialists in Risk & Regulatory Services, Tax, Forensics and Technology Advisory Services. We can help you to ensure that the strategic, governance, operational, technology, taxation and reporting aspects of the regime are all addressed in a cohesive manner.
Please click here to contact one of the team who can help you with any FATCA related queries you may have.
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