Foreign Account Tax Compliance Act (FATCA)
 

What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is intended to detect and deter the evasion of US tax by US persons who hide money outside the US. FATCA creates greater transparency by strengthening information reporting and compliance by providing rules around the processes of documenting, reporting and withholding on a payee These rules not only impact the financial services sector, but also affect many entities outside of the traditional financial services sector with operations both in and outside of the United States.

Who is United State Person?
The term ”United States person” means:
• A U.S. citizen (including dual citizen)
• A U.S. resident alien for tax purposes
• A domestic partnership
• A domestic corporation
• Any estate other than a foreign estate
• Any trust if:
1. A court within the United States is able to exercise primary supervision over the administration of the trust, and
2. One or more United States persons have the authority to control all substantial decisions of the trust
3. Any other person that is not a foreign person.

What documentation Bank must collect if it has an account with indicia of U.S. status?
Notice 2011-34 provides details of the required documentation associated with each indicia as under;

S.No U.S Indicia’s Additional Document to be obtained
1 A U.S Citizen or Lawful permanent Resident of U.S.A. 1. Obtain form W–9*
2 A person having U.S. birthplace. 1. Obtain W-9 or W-8BEN*; and
2. Non–US passport or similar documentation establishing foreign citizenship; and
3. Written undertaking regarding U.S. citizenship.
3 A U.S. residence Addressor or person having U.S. Correspondence Address including P.O Box number. 1. Obtain W-9 or W-8BEN; and
2. Non–US passport or similar documentation establishing foreign citizenship.
4 A person having U.S. Telephone Number. 1. The international numbers along with country, area code and complete address shall be recorded on the Account Opening Form and KYC form.
5 Have given Standing Instructions to Transfer Funds to an account maintained in U.S. 1. Obtain W-9 or W–8BEN; and
2. Documentary evidence establishing non–US status.
6 A Power of Attorney or Signatory Authority granted to a person with U.S Address. 1. Obtain W-9 or W–8BEN; and
2. Documentary evidence establishing non–US status.
7 An “In care of” or “Hold mail” address in the U.S. 1. Obtain W-9 or W–8BEN; and
2. Documentary evidence establishing non–US status.


Notes:
* If account holder is US taxpayer (for example a US corporation, a US partnership, a US citizen or a US resident alien) the branch shall obtain Form W-9.
* If account holder is Non-US Taxpayers, then the branch shall obtain Form W-8BEN.


FATCA FAQ’s:
http://www.irs.gov/Businesses/Corporations/FATCAFAQs

Forms:
FATCA Declaration Form
FATCA W-8BEN form
W-8BEN-E
W-9 form




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