South African Revenue Service Fatca, In 2010 the United States in an effort to enhance tax compliance by US citizens in foreign jurisdictions or those with offshore accounts, introduced the Foreign Account Tax Compliance Act (FATCA).
The reporting regime under FATCA requires foreign financial institutions (FFIs) to report information to the US Internal Revenue Service (IRS) relating to US account holders. To effect this, the US introduced a model intergovernmental agreement (IGA).
The FATCA IGA is an agreement between the government (tax administration) of the US and those of other countries. Such an IGA was signed between South Africa and the US and reporting South African financial institutions must comply with the requirements and obligations set out in the IGA from 1 July 2014.
DIFFERENCES BETWEEN FATCA AND CRS
The main differences between FATCA and the CRS regarding which FIs must report are as follows:
| Issue | CRS versus FATCA IGA |
| Reporting nexus | CRS uses residence of the Entity while IGA uses residence or where organised |
| Investment Entity | Definition differs between CRS and IGA |
| Non-reporting FIs | IGA includes Exempt Beneficial Owners and Deemed Compliant FFIs and other categories not in the CRS |
There are some variations in terminology between FATCA and CRS. When the context requires, the following CRS terms should be read interchangeably with FATCA terms:
| CRS | FATCA |
| Reporting Financial Institution (RFI) | Reporting South African Financial Institution |
| Non-Reporting Financial Institution | Non-Reporting South African Financial Institution |
| Non-Financial Entity (NFE) | Non-Financial Foreign Entity (NFFE) |
| Reportable Person | Specified US Person |
| Reportable Account | US Reportable Account |