US says 77,000 banks, firms sign up to fight tax evasion

Wednesday, 2 July 2014 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: About 77,000 foreign and US banks and financial institutions, including some in Russia, have registered with the United States to comply with a new law meant to fight tax dodging by Americans, the US Treasury Department said. Deputy Assistant Secretary for International Tax Affairs Robert Stack said in a statement that the high level of registrations so far showed “strong international support” for the law, set to take effect on 1 July. The Foreign Account Tax Compliance Act (FATCA) will require foreign banks, investment funds and other institutions to tell the US Government about Americans’ accounts that are worth more than $ 50,000. Hundreds of institutions in Russia signed up to comply with FATCA despite frosty relations between Washington and Moscow. The law was written after a scandal involving Americans dodging US taxes through secret bank accounts in Switzerland. In addition to sign-ups by individual banks, nearly 70 countries have negotiated FATCA pacts with Treasury that allow their firms to comply with FATCA and home-country privacy laws. Treasury officials broke off FATCA pact negotiations with Russia earlier this year as the crisis in Ukraine heated up. Hundreds of firms in countries that have such FATCA pacts registered individually anyway, out of an abundance of caution, a Treasury spokeswoman said. Foreign firms that do not comply with FATCA face a 30% withholding tax on their US investment income and could effectively be frozen out of US capital markets. More than 500 US businesses also registered, including Citibank NA, JPMorgan Chase & Co, various hedge funds and exchange company CME Group Inc. Publication of the registration list was a key step in the long process of implementing FATCA because it lets firms see who is and is not signed up. The list will be updated monthly as more firms register, said the US Internal Revenue Service.

US Treasury says reaches foreign tax law pact with China

REUTERS: The United States has reached an agreement with China on implementing and enforcing a new US law meant to combat overseas tax avoidance by Americans, a US Treasury Department official said. Long seen as a crucial step for the rollout of 2010’s Foreign Account Tax Compliance Act, or FATCA, the agreement in substance with China was concluded just days before the law is set to take effect on 1 July. The United States now has FATCA agreements being treated as in effect with more than 80 jurisdictions, the official said. FATCA will require foreign banks, investment funds and other institutions to tell the US Government about Americans’ accounts that are worth more than $ 50,000. Foreign firms that do not comply face a 30% withholding tax on their US investment income and could effectively be frozen out of US capital markets. The law was written after a scandal involving Americans dodging US taxes through secret bank accounts in Switzerland.