RBC Dexia Investor Services said today that 26% of financial institutions worldwide have little or no awareness of the Foreign Account Tax Compliance Act (FATCA)despite the fact that the act was passed in 2010, according to a survey conducted by the company.
FATCA is the cornerstone of US tax legislation relating to foreign accounts held by US citizens. The intent of FATCA is to capture all potential tax revenue that is payable on the worldwide income of US persons.
The message from this report is with all the FATCA rules and regulations yet to be finalizedincluding any granted exemptionsfinancial institutions can only take a measured approach to preparation, Jean-Michel Loehr, chief of industry and government relations at RBC Dexia Investor Services, says. The good news is that awareness is gaining traction; the bad news is that the market needs much more clarification before any program can truly be finalized.
The survey noted that European financial institutions appear to be paying much closer attention with 86% of respondents confirming strong levels of FATCA awareness. Larger organizations also see this as an area of focus as 81% of respondents with more than $1 billion in assets rated some or significant awareness.
Despite a lack of clarity about the full scope and impact of FATCA, survey participants who are aware of FATCA are getting ready for its eventual implementation. A majority, 54% of respondents, classified themselves as moderately to very prepared, while 36% considered themselves moderately prepared. Meanwhile, 21% of overall respondents admitted they were not prepared at all.
Early projections from survey respondents reveal that 85% put the cost of implementing FATCA at $1 million or less, with the majority (54%) expecting a bargain expenditure of less than $100,000. Only 5% of respondents are anticipating expenses greater than $5 million. There were no significant response variations based on region or size of organization.
(CM)