FATCA stands for the Foreign Account Tax Compliance Act. It is a new piece of legislation introduced by the United States Department of Treasury and the US Internal Revenue Service (IRS). The purpose of FATCA is to encourage better tax compliance by preventing US persons from using banks and other financial organisations to avoid US taxation on their income and assets.
The legislation requires all foreign banks and other financial organisations to identify US account holders and disclose their balances, receipts and withdrawals to the US Internal Revenue Service (IRS) or are subject to a 30% withholding tax on income from US financial assets held by the banks.
CBA has registered with IRS as a Participating Foreign Financial Institution and has been allocated a Global Intermediary Identification Number (GIIN).
Impact of FATCA?
On an annual basis, banks including Commercial Bank of Africa (CBA) and other financial organizations incorporated outside of the US will be required to report information on financial accounts (e.g. current accounts, savings accounts, deposit accounts, custodial account, certain insurance policies and interests in investment funds) held directly or indirectly by US persons.
CBA has made a commitment to being fully FATCA compliant in all countries where we operate. We will therefore be reviewing our existing customer base to confirm our customers' FATCA status and where necessary contact our customers for further information and documentation.
How do I know if I am affected?
FATCA legislation will affect both personal and corporate customers who are treated as a 'US person' for US tax purposes. The FATCA legislation will also affect certain types of businesses with US owners.
The term US person includes the following:
- A citizen of the USA, including an individual born in the US but resident in another country (who has not given up their US citizenship)
- A person residing in the USA, including US Green Card holders
- Certain persons who spend a significant number of days in the USA each year
- US corporations, US partnerships, US estates and US trusts
Read more on the FATCA FAQs here
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