Only a third of financial institutions now believe that their FATCA compliance efforts will now be completed within budget, according to a new survey by Thomson Reuters.
Undermining the costs involved appears to be a common problem, with 27% of organisations surveyed saying that they expect their FATCA compliance spend in 2015 to be between $100,000 and $1m, compared to just 16% of those asked the same question at the beginning of the year. Over half (55%) expect the costs of meeting the new rules to exceed their original budget.
Last month, the UK and 50 other countries from the Organisation for Economic Co-operation and Development (OECD) signed up as early adapters of the Common Reporting Standard (CRS), an international agreement to create a new standard for the automatic exchange of information.
“The whole problem of FATCA has just become bigger,” commented Laurence Kiddle, managing director of corporate market EMEA for the tax and accounting business of Thomson Reuters.
“CRS is a game-changer. It dramatically widens the reporting scope and this puts massive strain on budgets. A financial institution needs to be able to identify the tax residence of each of their customers – not just whether or not they meet the definition of ‘American Person’ – and have the ability to report this to the relevant authorities. This increase in the scope, depth and complexity of reporting is a very significant challenge.”
Financial organisations will be required to submit FATCA reporting from the end of March 2015.
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