The FT reports:
The US Treasury is close to issuing rules to force banks worldwide to hand over up to 5m Americans’ account de tails in an assault on tax evasion that financial institutions say is unworkable.
Tens of thousands of banks, fund managers, insurers and hedge funds face having to give the names of US clients with at least $50,000 of assets to the Internal Revenue Service under the Foreign Account Tax Compliance Act, passed in March.
Institutions are stepping up lobbying ahead of guidance from the US Treasury on implementation of the law. They argue that the legislation will cost them billions of dollars in compliance costs and expose them to the risk of flouting domestic laws on data protection. Many countries do not allow bank details to be given to a foreign state.
An official said the department was in the “final stages” of preparing guidance. “Addressing offshore tax evasion helps level the playing field and create a fairer system for all taxpayers,” the official said.
Quite so.
But that’s not what mates to offshore banks it seems. Making sure that their customers are tax compliant — that is they pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes - is clearly not a priority for banks. For banks the upholding of banking secrecy laws that they helped promote which have the sole aim of assisting tax evasion would appear to be the highest priority.
Time for a rude awakening for the banks then. I have no doubt the US will enforce their demands, and once they have EU states will follow suit because by then all the required mechanisms to allow automatic information exchange will exist. This is the future, and it’s getting remarkably close. It’s something I and many others have campaigned for — and I’m delighted it’s happening.
Those in secrecy jurisdictions should start smelling the coffee. The game is up.
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“and once they have EU states will follow suit because by then all the required mechanisms to allow automatic information exchange will exist”
How is the EU deal with objections of Luxembourg and Austria on this matter? Unless they are brought onboard (which Luxembourg has stated is not even open to negotiation), the entire automatic exchange cannot work.
They said that before the ESTD happened
But they agreed
And they no doubt will again
Did they not agree to the ESTD after obtaining various opt-outs, including the withholding regime? It was my impression that in the current round of negotiation regarding automatic exchange Luxembourg has said “non”, and that the matter requires unanimity.
While this is probably a positive step in the fight against tax evasion, it is by no means the end of the road. The actions of the US government against banks will only be effective with those institutions that have substantial US banking operations. However, banks and wealth managers with no onshore US interests will be far less affected.
Following the UBS debacle, it is likely that most of the global banks’ wealth management operations will have reviewed their books of business to weed out any potentially high risk customers. In fact, there has already been some evidence (in Switzerland and elsewhere) of depositors shifting assets (voluntarily or not) from the global banks’ wealth management units in jurisdictions with banking secrecy, to local banks with no or very limited operations in the United States.
Jason, Luxembourg negotiated the withholding tax option, which we in Guernsey also adopted.
However it looks like we are going to ditch that option in 2011 (when the tax rate increases) as it’s pretty irrelevant for us.
@Greg
Never Greg
Not once
Silly me
Same as he’s never mentioned the need for cuts in case of a debt default either
Not once
But if you search this site you’ll find ample references otherwise
????
@Greg
Irony obviously passes you by
The whole of the Tory economic policy is based on the idea we’ll default if we do not cut
And you have not noticed?
Have you not noticed you’re posting in the wrong thread? 🙂
I’m happy to respond here, but maybe it would make more sense in the other thread?