The US government has struck a deal with China as part of its efforts to combat offshore tax dodging by the US citizens and implement Foreign Account Tax Compliance Act (FATCA), reported Reuters.
The US is set to introduce Foreign Account Tax Compliance Act of 2010 (FATCA) starting 1 July 2014, under which, overseas banks, investment funds and other institutions are liable to provide IRS with information about Americans accounts with more than US$50,000.
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Currently, the US has signed FATCA agreements with more than 80 jurisdictions.
As per the FATCA law, failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30% tax on payments of US-sourced income.
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