The US Department of the Treasury and the Internal Revenue Service have delayed the Foreign Account Tax Compliance Act (FATCA) compliance deadline by six months, until July 1, 2014, to allow more time to complete agreements with foreign jurisdictions.
Enacted by Congress in 2010, FATCA targets non-compliance by US taxpayers using foreign accounts and establishes a global approach to combating offshore tax evasion. FATCA requires US financial institutions to withhold a portion of payments made to FFIs who do not agree to identify and report information on US account holders.
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"Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe, before withholding begins," said Treasury deputy assistant secretary for international tax affairs Robert Stack.
"The high volume of international participation in this effort represents a quintessential race to the top. Every additional country we bring on board means we are one step closer to winning the fight against offshore tax evasion," Stack said.
To make compliance with the reporting requirements of FATCA feasible, particularly for FFIs in jurisdictions where existing laws prohibit this type of reporting, Treasury has developed intergovernmental agreements (IGAs) that rely on governmental cooperation to facilitate the exchange of FATCA information.
To date, Treasury has signed nine IGAs, and is engaged in related conversations with more than 80 other jurisdictions.
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By GlobalData
