Author

Syed Asad Ali

Degree

Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award

2015

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Executive Summary

Was Foreign Account Tax Compliance Act (FATCA) ever an option for Financial Institutions (FIs)? Probably, fact that Internal Revenue Service (IRS) has aliowed a free will to FIs to participate or not is a deception. FATCA is United States 'imperative advancement in the efforts to curtail tax evasion by keeping a check on foreign financial assets and offshore accounts to bring to trial,.all tax dodgers and cheaters.

From foreign financial institutions, FATCA requires a comprehensive reporting of all foreign financial assets maintained by accountholders whenever the threshold of US$50,000 meets. Participation in FATCA though is not mandatory, 80% of FFIs around the world still have gotten themselves duly registered as non participating FFIs are liable to 30% withholding cost for not reporting the required information on the account holders.

Within Pakistan, the central bank has issued directives that bind local financial institution to maneuver their operations and banking practices in accordance with FATCA. Majorly all banks operating in Pakistan have gotten themselves registered with IRS. However, the entire project demands comprehensive implementation and foolproof reporting. Incorporating FATCA due diligence and withholding operations in core banking system remains the major challenge for local FIs.

Nevertheless, financial institutions have taken up the FATCA implementation task well enough. Therefore, amidst all challenges and problems FATCA has been successfully implemented at local banks and customers have been well informed regarding the IRS reporting requirements and new reporting system.

Pages

43

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