FATCA does not work and its time more regulators and officials followed the lead of an Israeli judge who has ordered that work drafting data for the US Internal Revenue Service should halt.
Judge Hanan Meltzer has stopped the Israeli tax authority and financial institutions from handing information about the finances of around 300,000 US taxpayers living in the country to the IRS in direct contravention of FATCA.
The law instructs foreign tax authorities and financial firms to file annual returns detailing the balances of accounts worth more than $50,000 for US resident taxpayers. They also have to give reports on expats with accounts of more than $200,000.
Meltzer ruled FATCA was unfair to US taxpayers and ordered a full hearing before September 15 of a suit brought by the pressure group Republicans Overseas Israel demanding that the law is overturned.
“Justice Meltzer’s action should be championed,” said Green. “His wise caution should serve as a wake-up call for other countries to rethink enforcing this toxic, flawed, damaging legislation that is being imposed on sovereign states around the world by the US”
He also fired a warning to other financial centres that are adopting FATCA without considering the unintended consequences of the law.
“Countries and foreign financial institutions have been coerced into complying with FATCA’s sovereignty-violating, expensive, burdensome and privacy-infringing regulations by the US or threatened with heavy penalties. In effect, these countries and financial institutions are now working as de facto agents of America’s tax authority,” said Green.
FATCA: Could Israeli Injunction On US Sovereignty 'Violating' Tax Law Prompt Rethink? https://t.co/3Er406QFtw
— Nigel Green (@nigeljgreen) September 4, 2016
“It is claimed by its proponents that this law is designed to catch tax evaders who illegally shelter money offshore, but FATCA cannot possibly tackle this extremely important global issue effectively due to its dragnet, untargeted approach.”
Green also argues that the high cost of compliance with FATCA is making Americans and US businesses not worth working with.
“American businesses working in international markets are now often branded with a leprosy-like status. Clearly, this can only be detrimental to their global competitiveness and could, in turn, hit American jobs and the long-term growth of the US economy,” he said.
View the Youtube video below of Nigel Green explaining his thoughts on the controversial FATCA