It’s F-Day – the day half the world has awaited with bated breath for the past two years.
F-Day is FATCA DAY, July 1, 2014, the day the much criticised American tax law comes into force.
From today, the tax landscape of the world changes for good.
FATCA is a network of 112 countries and 77,000 foreign financial institutions which have agreed to provide information about US taxpayers to the Internal Revenue Service (IRS).
It’s also much more.
In return for giving information to the IRS, most countries have a reciprocal agreement with the US Treasury to receive financial details of bank accounts and investments held by their taxpayers in the USA.
Millions of people worldwide are affected. Expats or not.
Millions of taxpayers affected
Any American with an overseas bank account or investments totalling more than $50,000 comes into the FATCA net.
Likewise, any taxpayer from outside the US with a bank account or investments in the US risks the IRS passing their financial details to their home tax authority.
FATCA started life as a way for the IRS to bring US taxpayers hiding their assets and income offshore into the tax fold.
Over the past two years, many have tried to insinuate FATCA would never come into force and the start has been delayed at least twice.
But the fateful F-Day is now here and FATCA is in force.
FATCA has brought about a fundamental change in the way governments treat tax. The old notion of secretive tax havens has been swept away. The veiled curtain has been pulled back on bankers and tax advisers helping wealthy clients escape paying the tax they should.
Tax bastions like Switzerland, Luxembourg and Liechtenstein have all fallen before FATCA.
Secret tax havens open doors
Sunshine islands like the Caymans, British Virgin Islands and Bermuda are no longer actively courting the wealthy.
The old way of salting away cash offshore and playing off tax jurisdictions against each other has gone forever.
Now, most of the countries that matter have jumped on the FATCA bandwagon and introduced transparent and open tax regimes.
Tax cheats have few places, if any, left to hide.
Only Russia and China remain as the main economic powers outside FATCA. China has hinted at joining but still has to jump, while Russia has begged to join but has been blackballed out of the club due to the recent incursion into the Ukraine.
This is the most idiotic article about FATCA I have ever read. Does the author honestly think for one minute that FATCA is going to suddenly eliminate tax havens and tax evasion? It WILL destroy both America’s diaspora and, eventually, the US economy, but it will certainly not impede the flow of illicit funds around the world except, ironically, into the greatest tax haven of them all – the United States of America.
By the way, there are few things more embarrassing than being an air-head cheerleader for FATCA – I suggest you take-up a different hobby.
Get up to speed…. Congress has NOT voted on allowing reciprocity from the US banking system. It is a false promise. And do you really think the FAT CAT tax evaders are sitting around waiting to be FATCA’ed? Their money sitting in crappy return bank accounts? They didn’t get rich for being stupid. This law is going to do nothing about curbing tax evasion, it is only going to destroy the little guys….AGAIN. Just all those folks who are subject to life control and restrictions based on place of birth
On another point….FATCA is illegal. The Treasury’s mandate does NOT include signing treaties with other nations. Calling them agreements is simply a ruse. This disaster will destroy any possible good will that might remain in the world towards the US. Do you really think all of these other nations appreciate being bullied and handing over a great deal of their nations assets to the US? I think NOT, and I’m certain they are looking for ways to subvert the US. This is very short sighted, aside from being amoral.
Not a panacea but a boondoggle. Get real.
I don’t know whether to laugh hysterically at this inept article or not. There is NO reciprocity. Most countries even if there were do NOT tax people where they do not live so they are not interested in banking information on their residents or citizens unless that person has an account where they do not live. No one is going to citizenship based taxation either. The U.S. and Eritrea still stand alone in that.
Canada did not “jump on the FATCA bandwagon.” The government here from every party fought it vigorously. The U.S. threatened this friendly nation which is not a tax haven with economic sanctions. Certainly you do read some news from outside the U.S.? Since FATCA violates the laws of Canada there is a law suit coming over it. Indeed FATCA will not go after one percenter tax evaders much but, will violate the rights of low and middle income expats and immigrants. Way to go U.S.A. you already were viewed as rather bullying before but, FATCA has made you unpopular in a way that wasn’t evident before. The U.S. needs to go to RBT like every other modern nation or FATCA is nothing but, a big pile on the middle class abroad. It’s certainly no champion to get tax evaders. Two years of studying this issue and still articles like this one appear. Very lazy writing.