FATCA – Region preparing for Uncle Sam

The four-year build up to the Foreign Account Tax Compliance Act (FATCA) going live is nearly over, with just eight weeks left until financial institutions have to be compliant. But the act, which is intended to rein in tax evasion by United States citizens abroad with accounts above $50,000, involves such a complex reporting and withholding regime that much of the Middle East and North Africa (MENA) will likely not be ready by the July 1 deadline, experts believe. Such an extraterritorial law puts the onus on foreign financial institutions (FFIs) to act, in essence, as unpaid agents for the US Internal Revenue System (IRS), or face a 30 percent withholding tax on US account holders. Further impetus to comply is the possibility of being cut-off from the US financial system and not being able to deal with FATCA compliant institutions. “If a country is not FATCA compliant it will