FATCA (Foreign Account Tax Compliance Act) is moving into focus for insurance companies as one more regulatory issue requiring urgent action. The U.S. government is expanding its regulatory instruments with FATCA to close loopholes in the tax system. This will be achieved in particular by expanding the reporting requirements for financial institutions outside the United States.
In future, to comply with the new reporting requirements, insurance companies will need to distinguish between the U.S. and non-US persons, collect and report relevant data from U.S. customers and -- if applicable – apply a withholding tax at source. Accordingly, insurers will be obliged to: