The Foreign Account Tax Compliance Act (FATCA) is a US law designed to prevent tax evasion by US citizens using offshore banking facilities. FATCA creates a new tax information and reporting and withholding regime, designed to gain information about US persons to check tax evasion using global channels. The law necessitates foreign financial institutions to keep and furnish information about US tax payers.
Matching reporting standards are also to be adopted for its effective implementation. Hence, financial institutions in other countries have to adopt a Common Reporting Standard (CRS). For the implementation of FATCA, the US is signing intergovernmental agreement (IGA)with other countries.
