MFs get ready for FATCA rules

India Infoline News Service | Mumbai |

The new rules require more stringent compliance practices and is likely to increase costs for the mutual fund industry

Asset management companies (AMCs) are keenly watch on the Foreign Account Tax Compliance Act (FATCA).

FATCA requires foreign financial institutions, including mutual funds, to register with the American tax authorities and provide details on any assets held by American citizens.

Despite the fact that it is US legislation, FATCA has global implications for all financial institutions. US financial institutions, acting as withholding agents, need to be compliant by July 2014, while financial institutions operating outside of the US – termed Foreign Financial Institutions (FFIs) – should implement new procedures for account opening and existing account review by July 2014, but will begin reporting by March 31, 2015. Institutions need to adopt procedures, processes, and systems necessary for U.S. account and US owner identification.

The new rules require more stringent compliance practices and is likely to increase costs for the mutual fund industry, roughly half of whom are currently running losses, according to a media report.


 

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