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US Talking To More Than 50 Countries On FATCA

by Mike Godfrey,, Washington

13 November 2012

The United States Department of the Treasury has disclosed that it is engaged with more than 50 countries and jurisdictions around the world to implement the information reporting and withholding tax provisions arising out of the Foreign Account Tax Compliance Act (FATCA).

FATCA was enacted by Congress in March 2010 and is intended to ensure that the US tax authorities obtain information on financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest, at FFIs (including banks, investment funds and insurance companies), foreign trusts and foreign corporations. Failure by an FFI to disclose information would result in a requirement to withhold 30% tax on US-source income.

To assist compliance by FFIs, the Treasury has published a model inter-governmental agreement for implementing FATCA and announced the development of a second model agreement. It is intended that these models should serve as the basis for concluding bilateral agreements with interested jurisdictions.

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

The Treasury has already concluded a bilateral agreement with the United Kingdom. Additional jurisdictions with which the Treasury is in the process of finalizing an intergovernmental agreement, and with which it hopes to conclude negotiations by year-end, include: France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands and Norway.

Jurisdictions with which the Treasury is actively engaged in a dialogue towards concluding an inter-governmental agreement include: Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, South Korea, Liechtenstein, Malaysia, Malta, New Zealand, Slovakia, Singapore and Sweden. The Treasury also expects to be able to conclude negotiations with several of these jurisdictions by year-end.

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

The Treasury has confirmed that it will continue its outreach to interested jurisdictions that wish to consider an inter-governmental approach to implementing FATCA. For example, a meeting hosted by the Qatar Central Bank in early December will provide information about FATCA and the inter-governmental agreements to invited senior government officials and financial institutions in the Gulf Cooperation Council.

TAGS: individuals | compliance | tax | investment | tax information exchange agreement (TIEA) | tax compliance | Denmark | Ireland | Malta | law | banking | insurance | investment funds | Israel | Liechtenstein | Singapore | Slovakia | United Kingdom | ministry of finance | agreements | withholding tax | Canada | Finland | France | Germany | Italy | New Zealand | Sweden | Switzerland | United States | Gulf Cooperation Council | Japan

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