The purpose of the Foreign Account Tax Compliance Act (FATCA) is to ensure that non-U.S. financial institutions provide the U.S. government with information about customers who could be subject to U.S. tax laws. The Act requires non-U.S. financial institutions to report overseas assets held directly by U.S. taxpayers or as beneficial owners of a company to the Internal Revenue Service (IRS). Non-U.S. financial institutions that fail to comply are subject to a 30% withholding tax by U.S. authorities on U.S. source payments paid to the financial institution or its customers.
One of the major challenges for a financial institution in complying with FATCA is the need for extensive data collection and the required accuracy of the information. Financial firms must accurately determine whether the account holder is a U.S. entity or individual, and they must also obtain a clear assessment of all the assets the account holds. The ability to gain centralized customer data is imperative. However, once the correct technology and processes are in place, not only does FATCA compliance become easier, but the information gathered for this purpose can also provide you with a better understanding of who your clients are, the products they use, and what other products they may have an interest in.
Innovative Systems' FATCA solution allows financial institutions to efficiently comply with FATCA regulations. With our FATCA offering, you can: