FACTA—Ireland and Caymens on board to TAX THE RICH —no more offshore bank accounts?
As I read through the following articles, somehow, a began to see much of the recent rhetoric as well as GOP Campaign rhetoric in a new light.
Do you, as well, have any new insights?
Long-Awaited Final Rules on Foreign Account Tax Compliance Act Issued
Friday, January 18, 2013
The Treasury Department and IRS issue long-awaited final rules on the Foreign Account Tax Compliance Act, with changes intended to harmonize the rules with agreements negotiated with other countries. Treasury says the rules are intended to finalize a step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions, other foreign entities, and U.S. withholding agents. The rules also are intended to build on intergovernmental information sharing agreements that allow financial institutions to report information on U.S.-owned accounts directly to their own governments, which then would share the data with the United States. The final rules phase in the timelines for due diligence, reporting, and withholding in order to give financial institutions time to build systems to comply.
More: Cayman Islands to Disclose Hidden Companies and Directors - I Acknowledge Class Warfare Exists 19 Jan 2013 (this article has tons of source links)
Since President Obama was sworn into office - the American government has actively pursued breaking tax havens. Many banks in Switzerland won’t take American clients because of the pressure being exerted on the Switzerland government and the mini banking cartel that exists in Zurich (source). For the first time in modern history - Switzerland is actively disclosing personal banking information to the American authorities (source). This can only be the result of leverage which the Obama administration is exerting to its fullest.
The Obama administration entered into a treaty with Ireland - another tax haven - to share financial information in December of 2012 (source); it’s notable that this happened after Obama won re-election. The Obama administration has negotiated treaties with Hungary, Switzerland and Luxembourg for open and transparent disclosure between governments to catch tax cheats - all three of these countries are used as tax havens. Currently - these treaties are being held up by Rand Paul in the Senate (source). In short - the Obama administration has been on a worldwide mission to destroy tax shelters that the wealthy use to avoid paying their taxes.
The decision to make the Caymans more transparent is either the result of the LIBOR scandal or the American government requesting changes from the Brits. The British is one of America’s closest allies and I suspect they would be willing to entertain concerns shared by the Obama administration. We really don’t know why the British pushed this through.
Cayman Islands to Open Up to Scrutiny -CNBC 18 Jan 2013
The British overseas territory, which wants to shed its reputation for clandestine financial activity, is introducing sweeping reforms that will make public the names of thousands of previously hidden companies and their directors.
In proposals sent to Cayman-based hedge fund businesses and seen by the Financial Times, the islands’ powerful monetary authority, CIMA, has outlined plans to create a public database of funds domiciled on the island for the first time. The database will also list funds’ directors, pending an ongoing consultation process due to close in mid-March.
CIMA, which did not respond to a request for comment, also plans to require directors to undergo a vetting process to ensure they are qualified to act as fiduciaries for investors.
“In the 24 months subsequent to the onset of the financial crisis, the BVI Financial Services Commission, the Central Bank of Ireland, the Jersey Financial Services Commission, the Bahamas Financial Services Board and the Isle of Man Supervision Commission all updated their corporate governance codes, laws and/or regulations,” CIMA said in one document.
U.S. Treasury finalizes anti-tax evasion pact with Ireland
The deals are part of the implementation of the U.S. Foreign Account Tax Compliance Act, or FATCA, which takes effect in 2014.
An agreement with Switzerland has been “initialed,” with final terms expected in coming days, Treasury said on Tuesday.
The United States has completed FATCA deals with the UK, Denmark and Mexico. Spain has also “initialed” with Treasury, the department said on Thursday.
Enacted in 2010, FATCA requires foreign financial institutions to tell the U.S. Internal Revenue Service about Americans’ offshore accounts worth more than $50,000.
Banks, funds and other institutions failing to comply could effectively be forced out of U.S. financial markets.
Separately on Thursday, IRS Acting Commissioner Steven Miller highlighted FATCA as a “tool” that has compelled delinquent taxpayers with hidden assets abroad to enter a voluntary disclosure program at IRS.
FATCA has come under fire from Americans with foreign financial accounts because they are accustomed to secrecy. Foreign financial institutions have complained, too, about compliance costs and the law’s intrusion, especially in countries where banking secrecy has been a part of the financial tradition.
US TREASURY Press Release on FACTA 1/17/2013
US TREASURY FACTA Resource Center
Joint Statements and Signed Bilateral Agreements
Bilateral Agreement between the US and Mexico to Implement FATCA
(11-19-2012)
Bilateral Agreement between the US and Denmark to Implement FATCA
(11-19-2012)
Bilateral Agreement between the US and the UK to Implement FATCA
(9-12-2012)
Joint Communiqué on the Occasion of the Publication of the Model Agreement
(7-25-2012)
Joint Statement from the US and Japan (6-21-2012)
Joint Statement from the US and Switzerland (6-21-2012)
Joint Statement from the US, France, Germany, Italy, Spain and the UK
(2-7-2012)
Foreign Account Tax Compliance Act threatens investment in the U.S.
Guest Contributor JANUARY 26, 2012
Designed to staunch the bleeding of capital from the U.S. to secret bank accounts, FATCA is clamping down on overseas earnings but its unintended consequences are threatening to undermine investment in the U.S.
Buried within the $17.5 billion Hiring Incentives to Restore Employment (HIRE) Act, the Foreign Account Tax Compliance Act of 2009 (FATCA) was signed into law on 18 March 2010- a prosaically named act with potentially calamitous consequences.
With substantial extraterritorial effect it will make financial institutions the world over U.S. Treasury watchdogs – tracking and recording the flow of U.S. source income irrespective of location. It also has the potential to impinge upon a wide range of transactions (e.g. derivatives) which have no ostensible connection to the U.S. at all.
