What is FATCA?

July 2014
FATCA
What is FATCA?
Foreign Account Tax Compliance Act (FATCA) rules are provisions of the U.S. HIRE (Hiring Incentives to Restore
Employment) Act, signed into U.S. law 18 March 2010. Expansive information reporting rules aimed at ensuring
that U.S. persons with financial assets outside the U.S. are paying the correct amount of U.S. tax.
Contact
Should you have any queries or
comments, please contact your usual
EY contact in Africa or:
FATCA regime to be administered by U.S. financial institutions and foreign (non-U.S.) financial institutions
(FFIs). Main objective is to counter offshore tax avoidance by U.S. persons by strengthening the information
reporting and compliance requirements around U.S. persons who have money invested outside of the U.S.
FATCA Advisory Leader
Mike Kane
+27 11 772 5121
[email protected]
FATCA Africa & Asset Management Lead
Eugene Skrynnyk
+27 82 294 1925
[email protected]
EY, The Democratic Republic of Congo
Baraka Kabemba
+243 993 435 296
[email protected]
Raïssa Rwigema
+243 972 003 904
[email protected]
Why is FATCA important?
FATCA requires FFIs to:
•► Identify, document and report U.S. - owned accounts (existing and new customers) to the U.S. Internal Revenue
Service (IRS).
•► Appoint a Responsible Officer, who will have to make a number of certifications to the IRS.
•► Enter into an agreement and register with the IRS.
•► Phase-in implementation of requirements between 2014 and 2017, with first requirements already effective
1 July 2014.
•► Apply withholding to non-compliant customers and counterparties.
•► Become compliant or otherwise be subject to a 30% withholding tax on certain U.S. source income and gross
proceeds a financial institution receives on U.S. investments.
Non-compliance may make it difficult to do business with other financial institutions that are FATCA compliant.
EY, Ghana
Djabanor Narh
+233 244 968 911
[email protected]
Competitive disadvantage due to the application of the 30% withholding tax.
FATCA affects the whole operating model, including legal entities and business units, products, processes,
systems, etc.
Nii Teiko Aryee
233 302 779429
[email protected]
EY, Kenya
Amaha Bekele
+254 786397198
[email protected]
Akshay Shah
+254 788 644 806
[email protected]
EY, Mauritius
Shailen Ramgoolam
+230 255 2514
[email protected]
EY, Nigeria
Ben Afudego
+234 812 287 7880
[email protected]
EY, South Africa
Megan Couzyn
+27 83 235 7326
[email protected]
Pieter Boer
+27 82 601 5085
[email protected]
Who does FATCA impact?
•► FFIs:
• Will generally include any entity that accepts deposits; holds financial assets for the account of others; is
engaged in investing, reinvesting, or trading in securities, commodities or derivatives; or has cash value
insurance products.
• In practice: banks, investment companies, investment or fund managers, brokers, insurance companies.
• Includes all the entity’s global affiliated financial institutions (> 50% common shareholding).
•► Non-Financial Foreign Entities: investment groups, family offices, certain holding companies, certain start-ups,
etc.
•► U.S. persons: account holder or customer who is a citizen or resident of the U.S. or an entity formed under U.S.
law.
EY service offering:
►
• Provide technical guidance on the FATCA regulations, project mobilization and tools.
•► Conduct an impact assessment for your organization to understand and quantify the level of FATCA impact.
•► Support solution optimization and efficient implementation of FATCA requirements.
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