Provisions of Foreign Account Tax Compliance Act - General Economics & Indian Economy
Q. Consider the following statements about Foreign Account Tax Compliance Act (FATCA)
1. Government that do not comply with this agreement will face a 30% withholding tax on all payments from the U.S.
2. This automatic exchange of information is scheduled to begin on September 30.
Which of the above statements is/are correct?- Published on 10 Jul 15a. Only 1
b. Only 2
c. Both
d. None
ANSWER: Only 2
Financial institutions such as banks, brokerages or mutual funds that do not comply with this agreement will face a 30% withholding tax on all payments from the U.S. Any entity failing to register will face a higher withholding tax rate of 30% on payments from all US firms that they deal with. But Indian financial entities will not face this trouble as the government will directly share information with the US authorities.
