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How US Tax Rules Will Affect Local Finance Institutions

Wednesday, 07 August 2013   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (MoneywebTax)

All you need to know about FATCA.

The regulatory compliance burden on South Africa's financial institutions is set to increase.

Following the introduction of the Foreign Accounts Tax Compliance Act (FATCA), an US piece of legislation that aims to reduce US offshore tax evasion, foreign financial institutions will need to report account details of their American customers to the US Inland Revenue Service (IRS).

Finn Elliot, associate director, corporate law advisory practice at KPMG, says a failure to comply with FATCA may result in punitive withholding tax of 30% on US source income payable to non-compliant foreign financial institutions.

Laurence Kiddle, commercial director, FATCA at Thomson Reuters, says a failure to comply with FATCA could leave a company at a significant disadvantage and most jurisdictions around the world - including South Africa - have signaled their intention to comply.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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