The controversial US Foreign Account Tax Compliance Act (FATCA) law is set to start from July 1, 2014, so with less than 21 days to go, here’s a look at which countries are in and who is outside of the tax network.
The latest figures from the US Treasury suggest 72 countries are at various stages of FATCA compliance.
Signed and sealed
The Treasury has announced completed FATCA agreements to automatically swap tax data with 30 countries:
- Cayman Islands
- Costa Rica
- Isle of Man
- South Africa
- United Kingdom
Agreed in principle
Another 25 countries have agreed FATCA treaties with the US in principle and are considered FATCA compliant even though the agreements are awaiting final signature:
- British Virgin Islands
- Czech Republic
- Hong Kong
- New Zealand
- Slovak Republic
- South Korea
Negotiations to put a FATCAQ treaty in place are under way with a further 17 countries:
- St Maarten
- Trinidad and Tobago
- United Arab Emirates
Russia is the odd man out. Because of the violence and political crisis in The Ukraine, the US Treasury has refused to negotiate a FATCA treaty with Russia. Instead, Russian banks must comply by signing up individually on the FATCA portal.
FATCA FFI list
The first list of FATCA compliant foreign financial institutions (FFI) reporting outside international government agreements had more than 77,000 banks and other foreign financial institutions detailed. The next list is due on July 1, 2014.
What is FATCA?
FATCA is a law aimed at identifying US taxpayers controlling bank accounts and investments overseas who are not declaring any taxable income or chargeable gains.
The US Internal Revenue Service (IRS) intends to cross-reference financial reports from foreign tax authorities and banks against US tax returns to make sure any US taxpayer with overseas assets is paying the correct amount of tax.
In return, under many of the inter government agreements; the IRS will give reciprocal financial information about the financial affairs of foreign nationals with bank accounts and investments in the USA.
Banks failing to comply with FATCA face heavy fines and other sanctions that could stop them trading.