THE UK has become the first jurisdiction to sign a bilateral
agreement with the US to implement the legislation to comply with Foreign
Account Tax Compliance Act(FATCA) by reporting information to HM Revenue and
Customs (HMRC) who will send details on to the Internal Revenue service. This
move marked a remarkable step towards commitment for working internationally to
combat offshore tax evasion in collaboration.
FATCA will potentially open
the financial affairs of an untold number of consumers and investors to the US
fiscal authorities.
Moreover, since the stated policy objective of FATCA
is to improve transparency and reporting and not to collect withholding tax, the
US government distinguishes that FATCA partner countries have the right to
reciprocal action. So the US is open to take on an intergovernmental approach to
improve international tax compliance.
Initially, the US and its five
European partners will be involved in collecting and exchanging on automatic
basis information on accounts held by residents of the six countries.
The
US also aims to work with other FATCA partners, the OECD, and where appropriate
the EU, on adapting FATCA in the medium term to a common model for automatic
exchange of information, including the development of reporting and due
diligence standards.
Financial services providers, their customers and
investors equally are going to get used to a very different globe of
international tax data transparency fostering towards global automatic exchange
of information.
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