Gearing Up for FATCA
The U.S. Foreign Account Tax Compliance Act (FATCA) was passed four years ago, but now all financial institutions are ramping up for its full implementation in July 2014. At Belize Bank International, we’re taking steps to safeguard the interests of our clients and inform them about what we have to do to comply with the law.
Myriad questions may be running through your mind. What exactly is FATCA? Why was it enacted? Who does it apply to, and when does it become effective?
The U.S. Congress enacted FATCA as part of the Hiring Incentives to Restore Employment (HIRE) Act to curb tax avoidance by U.S. persons through the use of accounts at foreign financial institutions. The law is far reaching in its scope. It applies to all financial institutions, multi-national corporations and U.S. persons with an interest in, or authority over, a foreign financial account if the aggregate account value exceeds $50,000 for individuals and $250,000 for entities.
If you’re an American expat, Green Card holder or international business owner, FATCA may apply to you. Some non-U.S. persons could be affected as well because U.S. entities may have to withhold tax on income paid to them depending on the source of the income. The list of witholdable payments includes interest, dividends, rents, royalties, salaries, wages, annunities, licensing fees, proceeds from the sale of property.
FATCA boils down to this: U.S. taxpayers holding financial assets outside the U.S must report those assets to the U.S. Internal Revenue Service (IRS). Additionally, foreign financial institutions must report to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
Rest assured that privacy and confidentially is a top priority at Belize Bank International, but as a responsible financial institution, we’re obliged to comply with FATCA. To this end, we will be reviewing our customer account files and contacting clients if it is necessary for their accounts to be retrofitted. For new accounts, all the necessary information will be gathered whilst on-boarding the client.
Our goal is to ensure this process goes as smoothly as possible, and we stand ready to answer your questions. We also encourage you to seek further advice from your legal counsel and financial planner.