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Foreign Account Compliance Tax Act

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Foreign Account Compliance Tax Act

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What Is FATCA FATCA is a law aimed at identifying US taxpayers controlling bank accounts and investments overseas who are not declaring any taxable income or chargeable gains.

The US Internal Revenue Service (IRS) intends to cross-reference financial reports from foreign tax authorities and banks against US tax returns to make sure any US taxpayer with overseas assets is paying the correct amount of tax.

In return, under many of the inter government agreements; the IRS will give reciprocal financial information about the financial affairs of foreign nationals with bank accounts and investments in the USA.

Banks failing to comply with FATCA face heavy fines and other sanctions that could stop them trading.

Which Countries Are In And Out

The controversial US Foreign Account Tax Compliance Act (FATCA) law is set to start from July 1, 2014, so with less than 21 days to go, here’s a look at which countries are in and who is outside of the tax network.

The latest figures from the US Treasury suggest 72 countries are at various stages of FATCA compliance.

Signed And Sealed

The Treasury has announced completed FATCA agreements to automatically swap tax data with 30 countries:

Australia

Belgium

Bermuda

Canada

Cayman Islands

Chile

Costa Rica

Denmark

Finland

France

 

Germany

Gibraltar

Guernsey

Hungary

Ireland

Isle of Man

Italy

Jamaica

Japan

Jersey

 

Malta

Mauritius

Mexico

Netherlands

Norway

Slovenia

South Africa

Spain

Switzerland

United Kingdom

Agreed In Principle

Another 25 countries have agreed FATCA treaties with the US in principle and are considered FATCA compliant even though the agreements are awaiting final signature:

 

Austria

Azerbaijan

Bahamas

Brazil

British Virgin Islands

Bulgaria

Croatia

Cyprus


Czech Republic

Estonia

Hong Kong

India

Israel

Kosovo

Latvia

Liechtenstein

 

Lithuania

New Zealand

Poland

Portugal

Qatar

Romania

Singapore

Slovak Republic

South Korea

 

Under Negotiation

Negotiations to put a FATCAQ treaty in place are under way with a further 17 countries:

Argentina

Bahrain

Barbados

Curacao

Ghana

Gibraltar

 

Honduras

Lebanon

Luxembourg

Malaysia

Russia

Seychelles

 

St Maarten

Taiwan

Thailand

Trinidad and Tobago

United Arab Emirates

 

Russia is the odd man out. Because of the violence and political crisis in The Ukraine, the US Treasury has refused to negotiate a FATCA treaty with Russia. Instead, Russian banks must comply by signing up individually on the FATCA portal.

FATCA FFI List

Foreign Financial Institutions

The first list of FATCA compliant foreign financial institutions (FFI) reporting outside international government agreements had more than 77,000 banks and other foreign financial institutions detailed. The next list is due on July 1, 2014.

Article supplied by TBA & Associates

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