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Dreaded US FATCA now involves at least 50 nations
| Published: | 25 Dec at 6 PM |
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The US Treasury Department is now working with over 50 countries across the world as regards sharing US expats’ personal financial details to establish tax compliance.
The Foreign Account Tax Compliance Act (FATCA) is expected to affect all American expats living in the selected countries, as it requires foreign banks and investment firms to pass on private details of expat incomes to the US regulatory body. Failure to do so will result in penalties likely to damage foreign banks, and the trade-off is the reciprocal reportage of partner countries’ nationals holding US bank accounts.
Since 2010, American authorities have been pressuring foreign financial organisations into conforming with US tax avoidance laws, with the requirements seen as expensive and burdensome. World governments have been forced to cover the costs by taking on the paperwork themselves, encouraged by the US government’s financial clout.
Many overseas financial institutions are now closing the accounts of their US expat clients as a result of there being no opt-out clause, with non-compliant financial entities expected to be hit by a 30 per cent withholding charge on their US transactions. As many as 32 countries, including the Caymans, Singapore, Bermuda, Switzerland, the Isle of Man and an expanding number of other offshore tax havens are expected to sign up by the beginning of 2013.
The fight to include a further swathe of countries popular with US expats, investors and entrepreneurs will continue into 2013, with little chance of relief for investors hoping to more their portfolios to secure locations elsewhere. As yet, Asian countries are not appearing on the list, with the exception of Korea and Japan, and it remains to be seen how FATCA will affect expats in China, the developing countries of Southeast Asia and South America’s expanding economies.
The Foreign Account Tax Compliance Act (FATCA) is expected to affect all American expats living in the selected countries, as it requires foreign banks and investment firms to pass on private details of expat incomes to the US regulatory body. Failure to do so will result in penalties likely to damage foreign banks, and the trade-off is the reciprocal reportage of partner countries’ nationals holding US bank accounts.
Since 2010, American authorities have been pressuring foreign financial organisations into conforming with US tax avoidance laws, with the requirements seen as expensive and burdensome. World governments have been forced to cover the costs by taking on the paperwork themselves, encouraged by the US government’s financial clout.
Many overseas financial institutions are now closing the accounts of their US expat clients as a result of there being no opt-out clause, with non-compliant financial entities expected to be hit by a 30 per cent withholding charge on their US transactions. As many as 32 countries, including the Caymans, Singapore, Bermuda, Switzerland, the Isle of Man and an expanding number of other offshore tax havens are expected to sign up by the beginning of 2013.
The fight to include a further swathe of countries popular with US expats, investors and entrepreneurs will continue into 2013, with little chance of relief for investors hoping to more their portfolios to secure locations elsewhere. As yet, Asian countries are not appearing on the list, with the exception of Korea and Japan, and it remains to be seen how FATCA will affect expats in China, the developing countries of Southeast Asia and South America’s expanding economies.
Comments » There are 3 comments
Marvin Van Horn wrote 11
years ago:
A couple comments... The "50 countries" announcement by the IRS listed 16 countries besides UK with which they planned to have "finalized" IGAs expected by the end of year. They put this monkey on their own back. How many do they have? 4 That is FOUR!! That is all!! As we all know, NO ONE in Europe will be working between the holidays at all! So wouldn't be expecting the 50, anytime soon! I know Treasury is trying to create the impression that they have momentum, and the FATCA Compliance Complex is trying to tell you that everyone must Comply. There is money to be made in their consulting fees. They are an extremely effective Marketing co-enablers for the IRS. "It is inevitable. Resistance is futile. Start preparing now. Hurry up, get ready, so you can comply when rules are finalized." However, Fatca is not inevitable, but it is hard convincing others to stop acting as if it were -- that's what's making it viable. So STOP IT. Just say NO! The Facts are that the original FATCA as passed by Congress is unworkable. The FATCA IGA thing that the FATCANATICS at Treasury thought up, as an alternative way to cram this down other countries throats, is moving much slower than they would like. Reuters now reports that the final regulations are delayed. We need to have more opposition and push back by countries and do everything possible to slow it up. If we can, it might die a natural death. They've postponed every year since 2010. I assume they'll simply announce another postponement later - particularly since the IRS will be leaderless, as will Treasury in the New Year. Why would anyone outside of the USA rush to complete something that a new Commissioner or Secretary of Treasury might then change? To take a page from the British, we should encourage all other governments to delay signing anything using the new incoming Commissioner as the excuse. No one knows who it is, do we? And we know that this fish definitely has stunk from the top since it was passed. It is one good intention gone terribly awry! It's cost is out of proportion to the revenue it creates, and the identity theft and fraud in the homeland is 5 times the loss that this effort is supposed to generate over 10 years. We should encourage Delay as a strategy. The British reference is a quote that I found to be quite apt: "The British have made a profession out of the word 'delay'". So, here is a link to a recent FATCA Finding Forum that occurred in Canada. Push back dear comrades! LOL http://bit.ly/WEuNzs and here is 11 Reasons why FATCA needs to be Repealed, that you can spread around. http://bit.ly/RBcJZl
John Brown wrote 11
years ago:
FATCA is aimed at squeezing money out of US EXPATS - full stop. The only real way to stop it from potentially affecting oneself is to get another passport and renounce US citizenship, which many expats are now doing. Americans living/working abroad receive no services whatsoever from the Homeland government. They don't use US roads, bridges, highways, schools, hospitals, police, fire, ambulances, courts, power grid, airspace etc. They don't take jobs away from other Americans; don't collect unemployment, and can't receive Medicare. "Citizenship-based taxation" is unique to the US. No other country has it except Eritrea, which was recently condemned by the UN for its own version of citizenship-based taxation called the "Diaspora Tax," which is actually far lighter (only 2 or 3%) than what the US levies. So if you want to be free from this FATCA mess and free once and for all from citizenship-based taxation see renunciationguide.com and isaacbrocksociety.ca. Renounce and be free!
1389AD wrote 11
years ago:
James Jatras explains why FATCA will be a disaster for all concerned: http://1389blog.com/2013/02/04/fatca-why-foreign-banks-wont-take-americans/
