What is the primary purpose of the Foreign Account Tax

Solution

The Foreign Account Tax Compliance Act (FATCA) is a U.S. law that requires foreign financial institutions (FFIs) to report information about: • Financial accounts held by U.S. taxpayers, or • Foreign entities in which U.S. taxpayers have substantial ownership. The objective is to improve tax compliance and curb tax evasion through offshore accounts. FATCA operates through Inter-Governmental Agreements (IGAs) between the U.S. and other countries (such as India), which enable information sharing on financial assets held abroad. It does not aim to regulate U.S. markets or impose blanket taxes on FFIs but focuses strictly on international tax transparency and compliance.