Georgia informs United States of its residents’ financial assets

The Georgian side has taken responsibility to inform the Revenue Office of the United States (US) about the financial assets of US residents living in Georgia.

From September 18, when Parliament of Georgia ratified an agreement on Foreign Account Tax Compliance Act (FATCA) with the US, all Georgian financial institutions, commercial banks, insurance companies and others became obliged to send information about the assets of American individual and legal entities to relevant bodies in the US.

Through the Act the US aimed to avoid its residents living abroad the ability to hide their tax obligations.

The Georgian side signed the FATCA memorandum in July 2010 and last Friday the memorandum was ratified by Parliament. The Act envisaged enforcing amendments to 10 different Georgian laws.

Seventy-three countries have already signed the FATCA memorandum with the US.

The FATCA became law in March 2010 in the United States.

The FATCA targeted tax non-compliance by US taxpayers with foreign accounts and focused on reporting:

• By US taxpayers about certain foreign financial accounts and offshore assets;
• By foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.

The objective of the FATCA was about reporting of foreign assets; withholding was the cost of not reporting.