All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

US opens FATCA implementation to the world

fotoflexer-photofatca.jpg

The US Department of the Treasury has confirmed that it is discussing how to implement the Foreign Account Tax Compliance Act (FATCA) with more than 50 jurisdictions around the world.

The legislation requires foreign financial institutions (FFIs) to enter into an agreement with the US to provide certain information about its US accountholders or pay a 30% withholding tax.

“Treasury’s engagement with this broad coalition of foreign governments to efficiently and effectively implement FATCA marks an important milestone in establishing a common intergovernmental approach to combating tax evasion,” the department said in a statement yesterday.

“Global cooperation is critical to implementing FATCA in a way that is targeted and efficient,” Mark Mazur, Treasury Assistant Secretary for Tax Policy, said. “By working cooperatively with foreign governments and financial institutions, we are intensifying our ability to combat tax evasion while minimising burdens on financial institutions.”

Some jurisdictions protested when the law was passed in 2010 that apart from the compliance burden FATCA imposed, local data privacy laws would not allow their financial institutions to report directly to the US authorities.

When Treasury and the Internal Revenue Service (IRS) published proposed final regulations last February, they and five other jurisdictions released a joint statement saying they were working on ways to implement FATCA locally.

And in July, Treasury published a model intergovernmental agreement for implementing FATCA and announced the development of a second model agreement. These will be the models for concluding bilateral agreements with interested jurisdictions.

Yesterday’s Treasury statement said the US is working with three different groups of countries on FATCA implementation:

· Those with whom it hopes to finalise intergovernmental agreements before the end of the year: France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands, and Norway.

· Those with whom it is actively engaged in a dialogue towards concluding an intergovernmental agreement: Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden. Treasury expects to be able to conclude negotiations with several of these jurisdictions by year end; and

· Those jurisdictions with which Treasury is working to explore options for intergovernmental engagement: Bermuda, Brazil, the British Virgin Islands, Chile, the Czech Republic, Gibraltar, India, Lebanon, Luxembourg, Romania, Russia, Seychelles, Sint Maarten, Slovenia, and South Africa.

The UK became the first jurisdiction to sign a bilateral agreement with the US in September.

The Treasury Department said it will continue to try to work with interested jurisdictions that wish to consider an intergovernmental approach to implementing FATCA. US officials are participating in a meeting in Qatar in early December, which will be attended by senior government officials and financial institutions in the Gulf Cooperation Council, to provide information about FATCA and the intergovernmental agreements.


“Certainly, our end goal is a convention providing for the multilateral exchange of tax information globally, and the OECD and G20 are making important strides in that direction,” said Heather Lowe, legal counsel and director of government affairs at Global Financial Integrity, a US group that campaigns for measures to stop the cross-border flow of illegal money. “Still, Treasury’s work with regard to FATCA is a major milestone, and we are very pleased with the direction they’ve taken.”

More from across our site

This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree