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UK joins commitment to common approach to US regulations
The United States’ Treasury and Internal Revenue Service (IRS) have issued regulations relating to the Foreign Account Tax Compliant Act (FATCA), which aims to combat cross-border tax evasion.
And a joint statement has been released by the governments of the US, UK, France, Germany, Italy and Spain to commit to exploring a common approach to implement FATCA, focusing on the use of existing tax treaties for information exchange between authorities, rather than direct reporting by financial institutions to the IRS.
The measure is intended to alleviate some of the legal difficulties and compliance burdens that would otherwise arise for financial institutions affected by FATCA.
‘None of this changes the fact that seven million Americans living outside of the United States are still required to file a whole host of annual US tax returns,’ said David Treitel of US Tax and Financial Services Ltd
‘From this year, the reporting is more complex than ever for many, because a new personal FATCA form disclosing worldwide financial assets is now mandatory’.
Adrian Harkin, global FATCA leader at KPMG, offered a mixed reaction to the news. He praised the IRS for having done ‘a good job in listening to the financial services industry and [tightening] the scope of FATCA, making the proposals more proportionate. We estimate these measures could reduce the implementation cost of FATCA by more than $10 billion.’
But he warned that the Act ‘will still cost the industry much more than it is likely to raise for the IRS. Plus, the introduction of bilateral FATCA agreements between countries will add more complexity into the mix for the biggest global financial institutions.’
