1.6 Process FATCA Tax for Referred Transactions

This topic describes the systematic instruction to process FATCA tax for referred transactions.

The system will evaluate the tax rule applicable at the product level. The rule evaluation process is as follows:

The FATCA evaluation will be triggered by the transaction to which the tax rule ID is linked. While evaluating the tax rule, its FATCA flag will be checked. If the tax rule has a FATCA flag, then the associated FATCA rule will be evaluated before the tax is computed by the tax rule.

The system will evaluate expression number 1 first, if it is not satisfied, then expression number 2 will be evaluated. If expression number 1 is satisfied, then the system will not evaluate expression 2. If none of the expressions are satisfied, then the rule will return the result maintained at the ELSE part.

The result of the evaluation of the FATCA Rule will be as follows:

• If the Withhold option is returned, then the tax will be withheld. Thus the tax rule will proceed to calculate the tax and liquidate the tax during the linked event using the FATCA Tax Payable GL maintained in the role to head mapping of the product, for credit. The tax entries cannot be netted as the customer has to be aware that FATCA tax is being charged to him.
• If the No Withhold option is returned, then FATCA withhold is required. The tax rule will not compute the tax and 0 (zero) should be returned as the tax. While no accounting entry is posted for the tax. In this case, the tax amount will be zero and decision would have NO WITHHOLD.
• If the Referral option is returned, then the system will not be able to take decision on withholding. The system will compute the tax amount but will be credited to the escrow GL maintained in the role to head mapping of the product, instead of the tax payable GL.