More than 200 legal, accounting and financial firms were asked how they were coping with FATCA – and more than 50% had no idea how they would affect their businesses.
Many are still in the dark over the rules and admit they are not ready to comply with the reporting requirements that start on January 1.
Around 60% reckon the rules will affect their profits, while a similar number have no budget to implement FATCA compliance, according to research by Thomson Reuters.
Managers remain confused about their obligations, with one in three claiming FATCA had not been discussed in the boardroom – or just once.
Many companies (43%) are still considering how to cope with FATCA, while just over half (51%) trading in the US do not understand how the rules affect their US clients.
Worringly for clients, 8% said FATCA will impact so much on their US operations that they will stop offering services to US citizens.
FATCA – the US Foreign Account Tax Compliance Act – requires foreign financial institutions with US resident clients holding accounts worth US$50,000 or more to report their financial information to the Internal Revenue Service from January 2013.
The IRS wants to make sure US taxpayers declare offshore earnings and pay tax on the income.
The US government expects FATCA to generate tax revenues of around US$1 billion – but the law will cost the IRS and foreign financial institutions up to US$500 billion to implement and then US$10 billion a year to run.
“The survey has shown a significant divide in the extent and state of preparations being undertaken for the new FATCA rules,” said Mark Schlageter, managing director for governance, risk and compliance at Thomson Reuters.
“While this has been driven predominantly by continued lack of clarity about what the final practical requirements will entail, financial firms must ensure they fully understand the detailed impact the final FATCA requirements will have on their businesses.”
