2. What is the objective of the Foreign Account Tax Compliance Act (FATCA)?

FATCA's objective is the prevention of tax evasion by identifying US persons* who invest directly in offshore accounts, or indirectly through the ownership of foreign passive income generating entities.

FATCA will require foreign financial institutions (FFIs)* to provide information to the US Internal Revenue Service (IRS) on accounts held by US persons*. In addition, passive non-financial foreign entities (NFFEs)* will be required to provide information on their substantial US* owners to their FFIs where the passive NFFE holds its accounts.

To enforce compliance, a 30% withholding tax will be imposed on certain payments.

*For any defined terms please see the Table of terms and definitions.