FATCA cost concerns grow
FATCA compliance is going to cost more than anticipated, research has revealed
More than half (55%) of financial organisations now expect to exceed their original budget to adhere to the new rules, while only 35% believe they will stay on budget, a survey from Thomson Reuters has found.
The Foreign Account Tax Compliance Act (FATCA) –aims to crack down on tax evasion by targeting non-tax compliance by US citizens with foreign accounts. It requires financial institutions outside the US to report information on US account holders to the US Internal Revenue Service.
According to the survey, 27% expect their spend on FATCA compliance in 2015 to cost between $100,000 and $1m compared with only 16%, who believed this to be the case when asked the same question in January 2014.
The survey was taken the day after the UK and 50 other countries from the Organisation for Economic Co-operation and Development signed an agreement on a new standard for the automatic exchange of information, the Common Reporting Standard (CRS).
“The whole problem of FATCA has just become bigger,” said Laurence Kiddle, managing director corporate market EMEA for the tax and accounting business of Thomson Reuters.
“CRS is a game-changer. It dramatically widens the reporting scope and this puts massive strain on budgets. A financial institution needs to be able to identify the tax residence of each of their customers – not just whether or not they meet the definition of ‘American Person’ – and have the ability to report this to the relevant authorities. This increase in the scope, depth and complexity of reporting is a very significant challenge.”
FATCA reporting is due from the end of March 2015.
