The United States Treasury Department has announced that Deputy Assistant Secretary for International Tax Affairs, Manal Corwin, is travelling to Europe and Asia from September 17-28 to discuss the implementation of the Foreign Account Tax Compliance Act (FATCA) and global efforts to combat offshore tax evasion.
Enacted by Congress in March 2010, FATCA’s provisions are intended to ensure that the US tax authorities obtain information on financial accounts held by US taxpayers with foreign financial institutions (FFIs). Failure by an FFI to disclose information would result in a requirement to withhold 30% tax on US-source income.
FFIs with US clients will be required to report basic account details for 2013 and 2014 by January 1, 2015, but it is currently envisaged that the income of those clients will not need to be reported until January 1, 2016, with respect to calendar year 2015.
To assist compliance by FFI’s, the governments of France, Germany, Italy, Spain and the UK took part in joint discussions with the US government to explore a practical way forward, and, in July this year, the governments published a model intergovernmental agreement to implement FATCA, the first example of which was signed between the US and the UK on September 16.
The model for the automatic exchange of tax information is based on existing bilateral tax treaties, thereby allowing FFIs to report the necessary information to their respective governments rather than to the IRS.
In response to interest expressed by numerous European Union (EU) member countries to conclude FATCA intergovernmental agreements, Corwin has attended a meeting in Brussels hosted by the European Commission, and including government officials from all EU member states.
Corwin has also led a briefing session on FATCA and the model agreement for financial industry stakeholders, hosted by the Organization for Economic Co-operation and Development, and attended a meeting of the Steering Group of the Global Forum on Tax and Transparency.
Throughout his first week away, Corwin has participated in bilateral meetings with government officials from various European and non-European jurisdictions who have expressed interest in further progress toward concluding FATCA agreements.
For the following week, Corwin has arranged meetings in Singapore with government officials and business leaders across Asia to discuss FATCA implementation, and to engage with interested jurisdictions regarding the possibility of concluding intergovernmental agreements..
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