Fund managers are queuing to endorse Britain’s move to set up a bilateral FATCA agreement with the US and are calling for all European governments to sign up for the pact.
The Foreign Account Tax Compliance Act (FATCA) is set to trigger on January 1, 2013, and imposes strict reporting rules on financial institutions outside the USA who have American clients.
Britain is the first nation to sign up with FATCA with a special deal that reduces the red tape for banks, building societies, insurance firms and investment funds and gives HM Revenue & Customs a two-way flow of tax information on British taxpayers with investments in the US.
HMRC has published draft legislation for consultation that will go forward to become part of the Finance Act 2013.
Meanwhile, The European Fund and Asset Management Association has sent an open letter to “all interested governments and parties” urging them to become FATCA partners.
More governments urged to act
The trade body, which represents fund managers across Europe, wants more governments to set up agreements with the US government to help firms to comply with FATCA without jeopardising compliance with European Union consumer and data protection laws.
“No further time now exists for the industry to become compliant without clarity of approach on this core point, and thus we urge all European governments to progress negotiations as soon as practicable,” urges the letter.
Meanwhile, the Investment Management Association (IMA) in the UK has welcomed the US/UK FATCA agreement but has concerns over crossborder tax laws.
Julie Patterson, IMA director of authorised funds and tax said: “The consultation demonstrates the UK government’s continued commitment to ensuring the US FATCA requirements are translated into practical rules for UK firms and fund investors.
Protectionist laws hinder global trade
“IMA research illustrates the grave concern that uncoordinated, extra-territorial regulations such as FATCA are causing. Senior industry figures interviewed for the survey said that such protectionist regulations risked hindering global markets and limiting investors’ choice and returns.
“IMA has lobbied for final amendments to the US requirements, in addition to undertaking considerable work with the UK government towards limiting the impact of FATCA implementation in the UK. We will continue to remain fully engaged in the interests of all investors in UK funds.”
IMA is the trade body for the UK’s £4.2 trillion asset management industry.
