The Foreign Account Tax Compliance Act is a US tax rule that requires financial institutions to report transactions of US citizens to cut tax cheats. However, reports are coming in that it makes American expats banking transactions more difficult.
In a report by News Max, all Americans working and living abroad are required to report all their non-US financial accounts to the government of the United States of America. Many expats, not all of whom are wealthy, have to pay thousands of dollars annually to comply with this law.
Banks that do not follow FACTA's standards in reported will have to pay 30 percent in tax on all profit it makes in the US. With this guideline, 77,000 financial institutions are forced to report information to the IRS. To avoid the risk of non-compliance, more banks are opting not to do business with Americans.
Many Americans can't open accounts abroad because of FATCA. Some accounts were even closed due to this guideline. There are other Americans who were denied position in their company due to this standard.
Meanwhile, in a report by the Business Standard, less than a quarter of mutual funds investors have reported details for FATCA. An MF official said, "From next year, purchasing new units and switching between schemes will require investors to be FATCA-compliant."
One of the latest new regarding FATCA, as reported by the Indian Express, is that Indian and the US has agreed on an inter-government deal to implement the standard. A Central Board of Direct Taxes (CBDT) announced Thursday that India is now part of the Multilateral Competent Authority Agreement (MCAA) for Automatic Exchange of Information based on the Common Reporting Standard (CRS).
The new agreement states the implementation of FATCA and CRS with legislative changes in the income-tax Act, 1961 and the income-tax Rules, 1962. The accounts are reported more efficiently through the 114F, 114G, and 114H of the Form 61B Rules. The new agreement was released August 31, 2015.
