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How compliance with FATCA could benefit treasury

We've all heard of FATCA, the Foreign Account Tax Compliance Act, which requires US citizens and businesses to report foreign assets in foreign bank accounts for tax purposes. But can data generated and made public by the US's Internal Revenue Service (IRS) benefit corporate treasury departments? The US law aims to detect US taxpayers with offshore assets and does this by entering into agreements with non-US financial institutions, asking them to scan their records for suspected US account holders.

While complying with FATCA is mainly an issue for banks, a recent article in Corporate Treasurer, looks at how the regulation can provide useful data for companies. As of 25 March 2015, the US's Internal Revenue Service (IRS) said it had 160,000 entities registered on its database. But the potential number of registrants is as high as 500,000, the IRS estimates.

Each entity on the database is identifiable by its Global Intermediary Identification Number (GIIN), which provides information on country, status of entity in relation to group entities and the type of financial entity. The latter can include cash pooling structures, treasury centres, captive finance companies, in-house banks, factoring and forfeiting companies as well as hedging activities.

This is useful market intelligence for banks, who can tailor their services by country. However, according to Corporate Treasurer, CFOs and treasurers can also make use of this information to “better quantify how many financial institutions of a certain type exist already, who they are, and type of financial services available in any reporting country.”

Read more in the full article - recommended - here.

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