UAE - FATCA agreement pending signature
5th February 2014
Reports from the United Arab Emirates reveal that in late January 2014, representatives of the United States and the UAE were preparing to sign an intergovernmental agreement (IGA) to implement provisions under U.S. law known as “FATCA” (Foreign Account Tax Compliance Act).
It is reported that the FATCA intergovernmental agreement (IGA) to be signed is the IGA Model 1.
Background:
Unlike many other developed countries, the United States levies income taxes onits citizens, regardless of residency, and therefore requires Americans living abroad to pay U.S. taxes on foreign income.
The Foreign Account Tax Compliance Act (FATCA) requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their American clients. FATCA was meant to combat offshore tax evasion and to recoup federal tax revenues. The FATCA is a portion of the 2010 Hiring Incentives to Restore Employment (HIRE) Act.
The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.
Reports from the United Arab Emirates reveal that in late January 2014, representatives of the United States and the UAE were preparing to sign an intergovernmental agreement (IGA) to implement provisions under U.S. law known as “FATCA” (Foreign Account Tax Compliance Act).
It is reported that the FATCA intergovernmental agreement (IGA) to be signed is the IGA Model 1.
Background:
Unlike many other developed countries, the United States levies income taxes onits citizens, regardless of residency, and therefore requires Americans living abroad to pay U.S. taxes on foreign income.
The Foreign Account Tax Compliance Act (FATCA) requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their American clients. FATCA was meant to combat offshore tax evasion and to recoup federal tax revenues. The FATCA is a portion of the 2010 Hiring Incentives to Restore Employment (HIRE) Act.
The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.
- FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
- FATCA focuses on reporting:
- By U.S. taxpayers about certain foreign financial accounts and offshore assets
- By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest
- The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.
