The United States Treasury Department is now actively working with more than 50 nations to share Americans’ personal financial data that will reveal who is tax compliant, including American expats living overseas. The effort is in support of new FATCA (Foreign Account Tax Compliance Act) laws that require foreign financial entities to report Americans’ account information to US authorities and to undertake mandatory withholding from them to assure compliance with American income tax laws.
The inception of, roll out and implementation of FATCA has been clever, if not masterful on the part of the US Treasury. The United States enacted FATCA and began by leaning, mostly, on foreign financial entities and mandating that they comply with certain new rules, including reporting of data on American clients and withholding of monies, to ensure Americans were compliant with US tax laws. Foreign financial interests, in turn, desperately sought relief from their own governments. The US mandates were burdensome and cost prohibitive for them to implement. The solution for financiers was for their own governments, many of whom already have the data the US wants to take on the sharing requirement that the US, using its global financial clout, is forcing on everyone.
50+ countries in all are clamoring to get on board. In part because of the controversial nature of FATCA itself and the fact its implementation is so prohibitively expensive, foreign financial entities are pleading with their own governments to facilitate the newly required reporting that the US laws mandate. For many, it is impossible to continue doing business with American clients and are closing their accounts. Additionally, foreign banks and investment houses who do not comply face a 30% withholding on their own transactions that occur within the US, so there’s no way to opt-out.
The US Treasury expects to finalize signed data sharing agreements by the end of the year with countries that include Norway, the Netherlands, Mexico, Jersey, Ireland, Isle of Man, Guernsey, Finland, Denmark, Canada, Switzerland, Japan, Spain, Germany, Italy and France.
Treasury is actively negotiating with the following countries to finalize and enact data sharing agreements – Sweden, Singapore, Slovak Republic, New Zealand, Malta, Malaysia, Liechtenstein, Korea, Israel, Hungary, Estonia, Cyprus, Cayman Islands, Belgium, Australia and Argentina. Their goal is to conclude agreements with as many as possible by year’s end.
The list goes on – The US Treasury is reaching out to and actively attempting to engage the following countries to agree to data sharing as well – South Africa, Slovenia, Sint Maarten, Seychelles, Russia, Romania, Luxembourg, Lebanon, India, Gibraltar, Czech Republic, Chile, British Virgin islands, Brazil and Bermuda.
Assistant Secretary of the US Treasury, Mark Mazur, in a public statement said, “Global cooperation is critical to implementing FATCA in a way that is targeted and efficient. By working cooperatively with foreign governments and financial institutions, we are intensifying our ability to combat tax evasion while minimizing burdens on financial institutions.”