The State Bank of Pakistan has issued advice to financial institutions to ensure that they register with the US IRS in respect of the Foreign Account Tax Compliance Act (FATCA). They have given this advice because the intergovernmental agreement (IGA) that is being negotiated with the US to facilitate the compliance of Pakistan financial institutions with FATCA has been delayed. The advice from the State Bank is intended to ensure that financial institutions do not encounter problems after the FATCA rules come into effect on 1 July 2014. If a financial institution fails to register with the IRS and share the required data it will have to withhold tax of 30 percent on US source income.
