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FBAR and FATCA for US Citizens

Generally, both FATCA and FBAR intend to regulate the international transactions of any US persons, be it in foreign financial assets or financial accounts.

FATCA requires non US or Foreign Financial Institutions (FFIs) to report relevant information on financial accounts held by US citizens to the US Internal Revenue Service (IRS). The Philippine Government entered into inter-governmental agreement (IGA) with US in order to facilitate FFIs compliance with FATCA. This requires Philippine financial institutions (PFIs) to report relevant information on accounts of US persons to Philippine Bureau of Internal Revenue. PFIs compliance eliminates the 30% FATCA withholding tax on gross payments from US. PFIs include banks, investment entities, custodians and insurance companies that are located in the Philippines irrespective if organized or not organized under the laws of the Republic of the Philippines. FATCA operates by way of mandating the required filer to declare its reportable assets and income, and obliged the foreign financial institution to supply the required information.

FBAR meanwhile calls for every US person that has financial interest in, or signature or other authority over a bank, securities, or other financial account in a foreign country to report any financial interest or signature authority of at least US $10,000 directly with the office of Financial Crimes Enforcement Network (FinCEN).

Click here to view RMC 27-2017 for your reference.