Gibraltar has become the latest territory to sign up to The Foreign Tax Compliance Act or FACTA.

FATCA is a new law being introduced by the US that hopes to improve international tax compliance.

The signing took place at the US Embassy in London.

“The international community considers automatic exchange of information to be the most effective way to tackle tax evasion while minimising costs for governments and businesses,” said Albert Isola, Minister for Financial Services and Gaming in Gibraltar.

It will supposedly ensure that US persons, wherever they are located and in whatever investment vehicle they hold their assets, are paying the correct amount of US tax.

It requires foreign financial institutions to report information to the Internal Revenue Service about financial accounts held by US taxpayers or by foreign entities in which US taxpayers hold a substantial ownership interest.

When the act comes into force in July, those who are not compliant will suffer a 30 per cent withholding tax on income and gross proceeds.

Yet despite the looming deadline more than a third of global investment managers have failed to establish a plan for the completion of investor due diligence, according to US based financial services company SEI Investments.