Fund houses to comply with FATCA

India Infoline News Service | Mumbai |

The objective is to control possible tax evasion by Americans through Indian financial entities

Mutual fund industry is preparing to comply with the Foreign Account Tax Compliance Act (FATCA), according to a media report.
The objective is to control possible tax evasion by Americans through Indian financial entities, the report said.
The FATCA requires the US government to sign Inter-governmental Agreement (IGA) with various countries, including India, where American individuals and companies may hold accounts and other assets.
FATCA is designed to increase compliance by US taxpayers rather than to enforce collection from foreigners. FATCA requires foreign financial institutions to report information related to the ownership by US persons of assets held overseas.
The implementation of the new tax evasion law is expected to increase legal and compliance costs for the Indian mutual fund houses.
Besides mutual funds, broking, wealth management and portfolio management services services would also be impacted by the FATCA guidelines.
India signed an 'in substance' agreement with the US to prevent possible tax evasion by Americans through Indian financial entities in April, the report added.
 

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