FATCA – Countries In And Out Of The Tax Network

FATCA has the potential for being the biggest revolution seen in banking history as increasing numbers agree to give up details of account holders to US authorities.

The biggest scalp so far to sign is Switzerland, a renowned secretive tax haven, which will now handover information about American clients and their accounts.

The Foreign Account Tax Compliance Act (FATCA) is an American law aimed at and uncovering the assets being held abroad by US taxpayer citizens.

To do this, banks and foreign financial institutions must register with US tax authorities by January 2014 with data being submitted from next year.

FATCA is aimed at finding US citizens with assets worth more than £32,500 who may not be paying the correct amount of tax.  Those assets include cash, annuities and shares.

Who’s In FACTA?

Failure to comply will see the financial institution being hit with a 30% withholding charge on transactions between it and the US.

Among the first countries to sign up was the UK – which then introduced its own version of FATCA – and also Mexico, Ireland and Denmark.

Other countries close to signing include Italy, Spain, Norway and Germany, though the Germans are said to be delaying their signing until late in the year.

The British version of FATCA is aimed at financial centres based in Crown Dependencies and territories, including well-known tax havens such as Jersey and Guernsey.

Those two Channel Islands are now also close to signing the US FATCA law, as is the Isle of Man.

Other countries close to completing negotiations include Holland, Japan, the Cayman Islands, Australia, Brazil and the United Arab Emirates.

The US is now ramping up its efforts to get more countries to sign up which will, it says, ‘promote global tax transparency’.

China rumoured to join FATCA

In a bid to help countries agree to implement FATCA, the US has acknowledged that many have issues with their own domestic law such as privacy and data protection.

As such, there are now two versions of intergovernmental agreements (IGAs) available for signing which allow the signatory country to handover anonymous details at a national level.

However, even that concession is a step too far for many countries with critics saying the law is not in the national best interest.

That has been the view of the Chinese who have so far refused to sign though they may be in discussions, and this week the Philippines government came under attack by announcing it will begin negotiations.

One of the major issues to FATCA is that the law does not compel US based banks and financial institutions to handover details of its foreign clients to other tax authorities.

Stay Connected

Latest News

Economic Impact Payments for US Expats

The US government is paying millions of dollars into the bank accounts of American expats as coronavirus economic impact payments and this guide will...

HMRC Explained

HMRC is short for Her Majesty’s Revenue and Customs. The HMRC collects the taxes and customs duties that the British government spends...

Difference Between Residence and Domicile

For British expats, their residence and domicile determine how much tax they are likely to pay, both in the country where they...

QROPS, Qualifying Recognised Overseas Pension Scheme

QROPS is a type of pensions that were designed to cater for the needs of British pension holders that move out of...

Where Do British Expats Live?

More than 5.5 million people from Britain live overseas and leave the country at a rate of around 2,000 a week.

Living In The Philippines, A Guide for Expats

Brilliant weather, a low cost of living and friendly, English speaking people makes The Philippines a popular destination for British expats.

LEAVE A REPLY

Please enter your comment!
Please enter your name here