The US Foreign Account Tax Compliance Act (FATCA) requires non-US financial institutions to identify and report on investments held by them on behalf of US citizens or institutions. The Act is intended to make it harder for US citizens to conceal overseas assets from the Internal Revenue Service.
Non-US financial institutions that do not comply with FATCA with be penalised with a punitive 30% withholding tax on their US income. All in all, any institution that does not comply with FATCA will find it increasingly hard to do business in the United States. Furthermore, South Africa is one of the countries which has formally agreed to cooperate with the US government on FATCA implementation through an Inter-Governmental Agreement (IGA).
The first FATCA milestone is looming. By the start of July 2014, financial institutions must have a solution in place to help identify clients to whom the law applies, and begin reporting on them by 2015.
In addition to the FATCA obligations, the BAE Systems Applied Intelligence solution is well positioned to meet the upcoming OECD CRS requirements (GATCA).
“Given the large amounts of data that institutions would need to analyse, as well as onerous reporting formats, compliance could be a burden. To solve it, Bytes has put together a set of capabilities from BAE Systems Applied Intelligence that provides a solution, making compliance easy and quick,” says Mark Neethling, GM at Bytes Universal Systems.
According to Neethling, Bytes’ solution for FATCA compliance covers five main areas: accountholder management, rules-based searching of large volumes of data to uncover indicia of US tax status, case management, the ability to document and classify accountholders in terms of FATCA’s categories and subcategories, and reporting in the required format.
“FATCA is prescriptive about how the accountholder data must be categorised and the format in which it must be reported to the US Internal Revenue Service,” says Neethling. “Our range of products and services takes away the pain, allowing all affected institutions to comply with the legislation with the minimum of disruption.”
