The US is planning is new law aimed at American taxpayers who hold unreported foreign financial assets, according to a report.

Expatriates in the US who have accounts with financial institutions in the GCC will face a broad-based impact on account of the new law to be implemented by the country’s Internal Revenue Service (IRS), said the report in Arab News.

The Foreign Account Tax Compliance Act (Fatca), which becomes effective on July 1, 2014, makes it mandatory for foreign financial institutions to report the name, address, account number and financial activity of US taxpayers who have assets exceeding $50,000 to the IRS, the report said.

Foreign banks and other financial institutions that do not sign the agreement will have a 30 per cent tax withheld on US-source income deposited in their accounts, according to the report.

Saudi Arabia has already signed agreements with accounting firms Ernst & Young, Pricewater-houseCoopers and KPMG to participate in the implementation, the report said.