By now most financial professionals are well aware of what Fatca – the Foreign Account Tax Compliance Act – is and how it might affect them.

It's a topic covered many times already on CTMfile, from how it could benefit treasury (How compliance with FATCA could benefit treasury) to additional reporting regulations being lined up for future (Corporates can expect greater global tax reporting from January 2016), criticism of the act's requirements (Fatca comes in for tough criticism) as well as clarification on the requirements for dividend and income reporting for financial institutions (What your banks are reading: help on complying with Fatca).

To recap, Fatca requires banks outside the US to scan their records and send data on US account holders (also outside the US) to the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury. US tax payers must report their non-US financial accounts annually. The law was enacted in 2010 and is now coming into effect.

As well as reading up on what the act entails, treasurers should also consider the following factors so there are no surprises when their banks start complying with Fatca:

• Check if there is an intergovernmental agreement (IGA) where your operations are based and also where your suppliers are based. If you are based in a country with an IGA to exchange payment reporting with a supplier, this adds a layer of complexity and may require additional tax forms and declarations.
• Find out if you have the right tax forms for your foreign suppliers. This is a very complex area and many suppliers are likely to get this wrong so you might want to double check.
• If you are paying suppliers, it's your responsibility, as the paying company, to ensure that the right form and correct data is submitted to the IRS.
• Withholding tax may apply to certain suppliers, depending on their industry sector, company structure and where they are based. The onus is on the paying company to withhold a part of payment to the supplier if such conditions apply.
• Reporting on Fatca is technical and challenging. You may need special software or external specialist support.

This article, written by Chen Amit of Tipalti, provides further details on getting ready for Fatca.