FATCA focus is switching to Asia as countries in the West are toeing the tax reporting line set out by the US government.
The US has far less financial influence in the Asia Pacific than China- the world’s second most powerful economy.
But the government intends to drive FATCA – the Foreign Account Compliance Tax Act – home worldwide, a seminar in Hong Kong was told.
The US has tax teams at work in many major cities, including Hong Kong and Beijing, the conference was told by lawyer Scott Michel, of Washington lawyers Caplin and Drysdale.
The teams are working hard at making sure financial institutions around the Asia Pacific understand that their ability to conduct business in the US will be seriously curtailed if they do not sign up to FATCA, even if their governments do not.
FATCA compliance
Many foreign financial institutions (FFIs) are worried about direct FATCA agreements with the US Internal Revenue Service (IRS) because compliance may lead them to breach local privacy and data protection laws.
To work around the problem, the US has negotiated intergovernmental agreements with some countries. These IGAs allow FFIs to report the financial activity of their US taxpayer clients to the government, which then passes the information to the US.
In most cases a reciprocal financial information swapping arrangement applies.
Failure for a bank or investment fund to co-operate with FATCA could lead to a 30% withholding tax on income generated in the US – while continued non-compliance could lead to a ban on the FFI trading in the US.
FATCA starts from January 1, 2014.
Green card
To push home the point, a recent prosecution in Maryland concerned a US taxpayer who had neglected to tell the IRS of income earned from bank accounts in Hong Kong and Switzerland that were managed by a Hong Kong company.
At the seminar in Hong Kong, Michel explained the IRS already had extensive financial intelligence gathering at work in the Asia Pacific region that was building files on banks, bankers and their customers.
The seminar heard that many tax cases involving Asian financial accounts were unintentional, with Green Card holders failing to report their holdings because they did not understand US tax law.
“Either way, deliberate evasion or not, FATCA is coming and eventually Asia nations like China, Singapore and Korea will sign intergovernmental agreements with the US,” said Michel.
“It’s better everyone gets their affairs in order sooner rather than later because the IRS will find out about income and bank accounts US taxpayers have in Asia.”
This is TERRORISM. The US government is THREATENING banks in foreign countries, and BYPASSING the authority of local governments.
How would the USA like it if China said the USA has to spy on all Chinese citizens in America or else China will ask for the US to repay the trillions it owes?
Then if the USA refused, how would the USA like it if China then started negotiating with individual corporations, say Wal-Mart, and blackmail them into spying on Chinese citizens in the USA on China’s behalf? It’s essentially the same.
The USA is threatening a doomsday scenario, that it will stop all US-Asia banking transactions if banks don’t agree to spy on all US citizens and hand over the information, EVEN when their governments have refused.
It’s literally financial terrorism.
“The teams are working hard at making sure financial institutions around
the Asia Pacific understand that their ability to conduct business in
the US will be seriously curtailed if they do not sign up to FATCA, even
if their governments do not.”
That is terrorism and blackmail. They are threatening corporations in foreign countries even when their governments refuse to comply with a US law.
It’s like how the USA tried to force Sweden to accept US copyright law and threatened sanctions if the refused to prosecute PirateBay. Apparently the USA thinks it can pass a law in the USA and ENFORCE IT ON THE WHOLE WORLD. America thinks it is the global policeman.
Also, the number of people renouncing US citizenship has more than quadrupled in the past few years. I expect it to grow rapidly in the future and the USA will start losing more and more tax revenue, and the USA will collapse for certain.