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Pros And Cons Of FATCA

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Foreign Account Tax Compliance Act (FATCA) is a United States federal law, and it intends to detect and deter the evasion of US taxpayers with foreign accounts and offshore assets. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Failure to comply results in US imposing a 30% withholding tax on all its transactions concerning US securities, including the proceeds of sale of securities. In addition, FATCA requires any foreign company not listed on a stock exchange or any foreign partnership which has 10% US ownership to report to the IRS the names and tax ID number (TIN) of …show more content…

The drawbacks presented by this law can discourage foreign companies from hiring Americans, and by extent, the domestic unemployment rate might increase in the foreseeable future. Moreover, it has the potential to disrupt the free flow of money in and out of the country. If future financial transfers out of the United States are disturbed by FATCA, the direct investment component of the US economy may suffer as well. A pull back in foreign direct investment in the US would impact the growth of the …show more content…

FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Failure to comply results in US imposing a 30% withholding tax on all its transactions concerning US securities, including the proceeds of sale of securities. In addition, FATCA requires any foreign company not listed on a stock exchange or any foreign partnership which has 10% US ownership to report to the IRS the names and tax ID number (TIN) of any US owner. FATCA also requires US citizens and green card holders who have foreign financial assets in excess of $50,000 to complete a new Form 8938 to be filed with the 1040 tax return, starting with fiscal year

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