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Offshore tax havens Jersey, Guernsey and Isle of Man sign up for FATCA
| Published: | 10 Jan at 6 PM |
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The halcyon days of the UK’s three offshore islands as tax havens finally came to an end recently as all three simultaneously signed up for FATCA.
As a result, all three will now be passing the financial details of all transactions, investment and bank accounts owned by US citizens to the American Internal Revenue Service (IRS). The UK signed up earlier in 2013, and has been pushing its overseas territories and crown dependencies to enter into a similar deal with the UK tax authority.
Financial companies on the islands have had no choice but to join, although all have strongly criticised FATCA for its effect on red tape and the costs involved. Most also believe the extra paperwork is unnecessary and represents an unwelcome burden for those doing business internationally.
The alternative of remaining outside the system would have severely restricted trade with US financial institutions and banks, as they are required to deduct 30 per cent tax on all transactions with non-FATCA compliant financial companies. The three offshore islands are now part of a network including over 50 of the world’s financial jurisdictions.
Russia, Singapore and Hong Kong have all indicated their wish to sign up, and FATCA will be formally introduced in July 2014. Its stated intent was to introduce transparency into offshore financial centres acting as tax havens, but many investors and service providers suspect ulterior motives by the American government, and expat US citizens are concerned about the loss of privacy.
As a result, all three will now be passing the financial details of all transactions, investment and bank accounts owned by US citizens to the American Internal Revenue Service (IRS). The UK signed up earlier in 2013, and has been pushing its overseas territories and crown dependencies to enter into a similar deal with the UK tax authority.
Financial companies on the islands have had no choice but to join, although all have strongly criticised FATCA for its effect on red tape and the costs involved. Most also believe the extra paperwork is unnecessary and represents an unwelcome burden for those doing business internationally.
The alternative of remaining outside the system would have severely restricted trade with US financial institutions and banks, as they are required to deduct 30 per cent tax on all transactions with non-FATCA compliant financial companies. The three offshore islands are now part of a network including over 50 of the world’s financial jurisdictions.
Russia, Singapore and Hong Kong have all indicated their wish to sign up, and FATCA will be formally introduced in July 2014. Its stated intent was to introduce transparency into offshore financial centres acting as tax havens, but many investors and service providers suspect ulterior motives by the American government, and expat US citizens are concerned about the loss of privacy.
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