The USA is putting into place the Foreign Account Tax Compliance Act. As they say of it:
The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.
Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.
In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
Let's put it another way: the US wants to know which foreign banks are hiding their taxpayer's funds by forcing those banks to tell the USA about such money. It's an entirely reasonable objective. Tax compliance rates are little more than 50% when people think they can get away with non-reporting as there is no automatic information exchange from the person paying them to their government. It goes up to over 90% when there is automatic information exchange.
Banks the world over are complying with FATCA, forced to do so by their governments, in turn forced to do so by the USA.
Guernsey, Jersey and the Isle of Man are all signing agreements with the USA on FATCA soon.
But rumour now reaches me that the UK is pretty fed up about this. How can, the Treasury asks, the US get information that the UK can't about it's taxpayers who are cheating in these places? Good point. Expect a lot more pressure on the Crown Dependencies for more disclosure to the UK soon.
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Even more so, why not Switzerland, Liechtenstein, Austria and Luxembourg as well. If they cow tie to USA, they can cow-tie to the EU.
Mark,
The EU has no taxation authority. Member states have retained full sovereignty over tax issues. Austria and Luxembourg are therefore free to use their constitutional right to veto any initiative in the area that they don’t like, and they are not shy about using it.
As a result, the EU does not have a tax policy towards non-EU states. Switzerland does not even have to negotiate with the EU, because the EU is unable to decide what it is it wants to negotiate about. The same applies to Liechtenstein,
No tax authority?
That’s why VAT is EU wide on consistent rules
As is the ESTD?
And the Code of Conduct
You live in a world of fantasy Darren
The Code of Conduct is non-binding.
The ESTD amendments are being vetoed by countries repredenting just over 1% of the EU’s population.
The FTT and the CCCTB are blocked at the level of the Council.
Says it all.
It only says it all to someone who has no interest in democracy, and a lot in assisting tax cheating
You are shooting the messenger. I was only pointing out to Mark the reason why the EU is incapable of applying a consistent tax policy towards its own member states, let alone third-parties.
And we don;t believe you – because the political reality is not what you say it is
And the obvious response if the Channel Islands were to show any resistance to providing such information to the UK Tax Authorities would be to make it clear that bank branches in the Channel Islands would not be allowed to be part of the UK Clearing System.
If the UK wants such information, why don’t they introduce legislation, just like the US has?
The US economy is about 10 or 15 times bigger than the UK. They can exercise leverage in a way that no other nation can. If the UK tried to imitate the US, it would look like the mouse that roars.
Which is why we need to and will act with other nations to do this
Richard, what nations do you have in mind? With the EU totally incapacitated, I am struggling to see who would be able and willing to create the necessary pressure.
Incapacitated?
Far from it!
The EU has been trying to sort itself out for 5 years, and no progress whatsoever has been made. The latest news is here http://bit.ly/Qo7oRX.
I quote “Luxembourg and Austria “have not budged one iota” on the savings taxation issue, on which they continue to block progress, commented different diplomats after a high-level meeting of the Council’s working group on taxation, on 11 September.” and “in this context, Luxembourg and Austria seek an amendment of Article 10 of the Savings Taxation Directive related to the transitional period that enables them to apply withholding at the source rather than the automatic exchange of information implemented by the other 25 EU member states.”
That is the definition of incapacitation, don’t you think?
No
I think it’s a sign of a negotiating position
This has been Austria’s and Luxembourg’s exact same position for almost 5 years. If there has been any negotiation, it has not gone very fast or very far. It makes one think that this position is rather non-negotiable.
The time limit for transition has not been reached yet….so of course they have not moved
Richard,
Now you are making things up. There is no time limit for Austria and Luxembourg to move to automatic exchange of information. It was supposed to happen when Switzerland agrees to apply the OECD standard of information on request, which by the way happened in 2009. Austria and Luxembourg are nonetheless refusing to move to automatic exchange and are using a technicality to block progress. Morris explains this very well on his site.
Oh just go and read the original agreements will you?
Richard,
Look at Article 10, paragraph 2 of the directive. It is all here http://tinyurl.com/5ag7aw. There is no time limit. I am amazed you don’t know this….
And I am amazed you have no idea that the withholding arrangement was always transitional
Even the “mouse” that roars can and do scare the elephant atimes Whatever is good for the continent that is the united states of america Britain as a country deserves even better-God bless great britain
Re your little spat with the ASI camp followers – it is worth noting that the Adam Smith Institute had all the tax benefits of being a charity for 10 years between 1981 and 1991 until it was removed from the Charity Commission Register. A hangover from those days is that it still claims to be non partisan despite being one of the most partisan organisations around within any normal meaning of that word. There is still a registered charity for the Adam Smith Research Trust.
http://www.charity-commission.gov.uk/Showcharity/RegisterOfCharities/RemovedCharityMain.aspx?RegisteredCharityNumber=282164&SubsidiaryNumber=0
Presumably the US can get these countries to provide information is by wielding a bigger stick (30% withholding tax on a lot of US source income) than the UK. Also, it applies to financial institutions on a global basis so, if you are a UK headquartered financial institution, you need all your subs to provide data to the US, not just picking certain countries. Those companies will need their tax haven subs to provide the data as well. If the UK wants the data, find a bigger stick (and I am sure there are plenty to chose from).
That the USA is to host the Foreign Account Tax Compliance Act (FATCA) and that the tax havens of Guernsey, Jersey and the Isle of Man will be unwillingly forced by to comply with the regulations is excellent news. Although as Richard infers no comparable legislation is forthcoming from the City of London controlled parliament in Westminster to force these squalid islands to tip up information about cheating UK tax payers to the UK Treasury.
The PSG is acquainted with the so-called “governments” of these fascistic islands and remains sceptical about their resolve to comply with any information exchange initiatives. Jersey with its slick yacht club image concealing nauseating activities, the Isle of Man with its custard pie, backwoods image hiding financial shenanigans on a breath taking scale. And Guernsey probably camouflaging more than the other two put together by pretending to be plain stupid.
But even if the USA initiative is enforceable the islands will unfortunately still wobble along with “business” endowed by the City of London
Pass the sick bucket Alice.
The. USA applies FACTA worldwide. It is indiscriminate. If the UK was to demand this from all countries, then all would have to sign up. To merely demand that Crown Dependencies do so would be discriminatory and, more importantly, totally ineffective because offshore business would all migrate elsewhere. That migration option does not exist under FACTA, which is why it works.
Guernsey and the Isle of Man already have automatic exchange of information under the EUSD, which of course includes the UK. Jersey should be the target of your question.
Your comments aren’t entirely accurate – isle of man banks report automatically under the EU savings directive, and insurance companies have been operating automatic exchange of information in relation to UK resident policyholders since 1998. What’s the problem?
The reality is as the EU itself notes, such exchanges are almost meaningless as they are so easily avoided
Why don’t you accept this reality and stop hiding behind a pretence?
Richard
They are only “so easily avoided” because the EU hasn’t yet introduced the extensions to the EUSD. Why has it not done so? The tools are already there. Two of the three Crown Dependencies have done exactly what has been asked of them by the EU.
As you well know it is taking steps on this issue – blocked by the supporters of tax crime in Luxembourg and Austria
Austria and Luxembourg are not blocking the extensions. They object to start engaging in automatic information, but that is only incidental to the extensions themselves. If the Commission dropped the demand for automatic information, the extensions would become effective almost immediately.
Oh dear: another lie
automatic information exchange and the European Union Savings Tax Directive are synonymous
It is not a lie at all. There were very clear exceptions to automatic information for Luxembourg, Austria and Belgium (the latter having since moved to automatic information).
Withholding was also the regime adopted by all non-EU jurisdictions that agreed to enter agreements similar to the Directive.
And they were time limited
As you should well know
Again, utter misrepresentation by you
Strictly legally speaking, there was an automatic trigger for Austria and Luxembourg to move to automatic information, but politically it was never going to happen.
There was no such trigger however for the non-EU jurisdictions. In their case, the withholding regime was always meant to be permanent.
Well now you’re getting a little nearer the truth
Freeborn Man
Under the present agreement: – Before the Isle of Man will “exchange information” with another tax jurisdiction the so-called “government” demands to see sufficient evidence to justify this disclosure.
If the jurisdiction asking the questios were already in possession of this evidence they would not need any assistance from the Isle of Man.
It is a Catch 22 absurdity which has been explained (far better than the PSG) by Mr. Murphy on numerous occasions. The result is the Isle of Man (and the rest of them) doesn’t share information.
This is why the Crown Dependencies remain tax dodging, secrecy obsessed hubs of deceit engaged in robbing impoverished countries of essential revenue.
PSG – you are talking about something totally different. All banks and insurance companies on IOM have to report all interest earned my EU tax payers to the IOM treasury, who sends it on to the relevant state.
If you google FISC153, all the information is available on tinterweb.
But as we all know such measures can be easily avoided
David Quayle
Having had some experience of the “reporting procedures” ostensibly required by the Isle of Man from island based banks and insurance companies the PSG can assure you that anything published by the island’s so-called “government” Financial Supervision Commission and Office of Fair Trading and is done solely for the benefit of the financial services industry and is open to broadest possible interpretation – an interpretation that always safeguards the island’s ability to remain secretive and impenetrable.
PSG – FISC153 is nothing to do with the the IOM’s government. It is an EU directive that the IOM and Guernsey have agreed to comply with. I have an awful lot of experience with these “reporting procedures” and can confirm that compliance is not optional in either jurisdiction.
Richard – apparently, more rigorous company and trust reporting is to follow soon.
Oh indeed it is – but that just proves the EU has muscle
Simon is right – 2 of 3 comply. There is no issue. EUSD is not avoidable in respect of interest payments. An neither are the obligations for insurance companies.
Respectfully that is a completely ludicrous comment befitting its source in the Isle of Man
Move interest into a trust or company the the EU directive is avoided
Get real
And why not try telling the truth instead of a tiny part of it?
The answer is for the EU to sort out its own members to extend the Directive so that such structures are covered. It is inappropriate to expect non-members to have to do something which the EU’s own members refuse to do. It is perfectly reasonable to demand a level plsying field, otherwise Crown Dependency busines would simoly migrate elsewhere, including to Luxembourg and Austria!
The level playing field argument is disingenuous
It’s like a burglar saying if some people leave their houses unlocked all must do so to provide a level playing field for burglars
Stop promoting facilities for crime!