Foreign Account Tax Compliance Act

History of the law

• The US Foreign Tax Liability Act was signed by President Obama on March 18, 2010 as part of the Employment Incentives Act (HIRE ACT).
• Draft of the system was issued in February 2012, and the final instructions were on 17 January 2013.
• The final text of the Convention on Law was released on 26 December 2013.

Objectives of the law

• The law aims to combat tax evasion by U.S. people who have financial accounts outside the United States, either directly or through foreign company ownership.

Law requirements

• FATCA forces previously mentioned institutions to provide information that determines the accounts of U.S. citizens to U.S. tax authorities.

Non-compliance penalties

• In case of non-compliance, a 30% penalty will be imposed on income and assets registered in the United States of America as a withholding tax on foreign financial institutions and foreign non-financial institutions.