Foreign Account Tax Compliance Act

Foreign Account Tax Compliance Act

Acronyms (colloquial)	FATCA
Enacted by	the 111th United States Congress
Effective	March 18, 2010 (26 USC § 6038D); December 31, 2012 (26 USC §§ 1471-1474)
Citations
Public Law	111-147
Statutes at Large	124 Stat. 97-117
Codification
Titles amended	26
U.S.C. sections created	26 U.S.C. §§ 1471–1474, § 6038D
U.S.C. sections amended	26 U.S.C. § 163, § 643, § 679, § 871, § 1291, § 1298, § 4701, § 6011, § 6501, § 6662, § 6677
Legislative history
Introduced in the House and Senate as Foreign Account Tax Compliance Act of 2009 (S. 1934, H.R. 3933) by Max Baucus (D–Montana); Charles Rangel (D–NY-13) on October 27, 2009 Committee consideration by Senate Finance, House Ways and Means Passed the Senate on February 24, 2010 (70-28) Passed the House as the Hiring Incentives to Restore Employment Act, Title V, Subtitle A on March 4, 2010 (217-201) with amendment Senate agreed to House amendment on March 17, 2010 (68-29) Signed into law by President Barack Obama on March 18, 2010

The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that requires United States persons, including individuals who live outside the United States, to have reported their financial accounts held outside of the United States, and requires all global non-US (Foreign) Financial Institutions (FFI's) to search their records for suspected US persons for reporting their assets and identities to the US Treasury. Congress enacted FATCA to make it more difficult for (resident and non-resident) U.S. persons to have financial assets which are not located in the United States, by adding further asset-reporting law with consequences, and thus to enable further federal tax revenues and penalties from a wider global population of newly-discovered US persons and their partners, at the expense of non-US banks.^[1] The FATCA is a portion of the 2010 Hiring Incentives to Restore Employment (HIRE) Act.^[2][3]

Background

FATCA was stated to be enacted with the intent to detect the non-US financial accounts of U.S. domestic taxpayers rather than to identify non-resident U.S. citizens and enforce collections. There might be thousands of resident U.S. citizens with non-U.S. assets, such as astute investors, dual citizens, or legal immigrants. FATCA is intended to have non-US financial institutions identify approximately 7.6-7.8 million U.S. citizens believed to reside outside of the United States and those persons believed to be U.S. persons for tax purposes.^[4] FATCA will also be used to help identify non-U.S. person family members and business partners who share accounts with U.S. persons. Another benefit of FATCA is that U.S.-person signatories of accounts will be identified. This allows reporting of the assets of non-U.S. corporations, volunteer organizations, and any other non-US entity where a U.S.-person can be identified.

FATCA requires non-U.S. (Foreign) Financial Institutions (FFI's) to report asset and identify information related to suspected U.S. persons using their financial institutions.^[5]

Under U.S. tax law, U.S. persons (regardless of country of residence) are generally required to report and pay U.S. federal income tax on income from all sources.^[6] Taxpayer identification numbers and source withholding are also now used to enforce asset reporting requirements upon non-resident U.S. citizens. For example, mandatory withholding can be required via FATCA when a U.S. payor cannot confirm the non-U.S. status of a foreign payee.^[7] The United States levies income taxes on its citizens, regardless of residency, and therefore requires U.S. citizens living abroad to pay addtional U.S. taxes on foreign income if the foreign tax should be less than US tax ("taxing up"), independently within each category of earned income and passive income.^[8][9][10] For this reason, the increased reporting requirements of FATCA have had extensive implications for U.S. citizens living abroad.

The IRS previously instituted a Qualified Intermediary (QI) program under Internal Revenue Code § 1441,^[11] which required participating foreign financial institutions to maintain records of the U.S. or foreign status of their account holders and to report income and withhold taxes.^[12] One report found that participation in the QI program was too low to have a substantive impact as an enforcement measure and was prone to abuse.^[13] An illustration of the weakness in the QI program was that UBS, a Swiss bank, had registered as a QI with the IRS in 2001 and was later forced to settle with the U.S. Government for $780 million in 2009 over claims that it fraudulently concealed information on its U.S. account holders.^[13] Non-resident US citizens' required self-reporting of their local assets was also found to be relatively ineffective.^[14]

Senator Levin has stated that the U.S. Treasury loses as much as 100 billion USD annually to "offshore tax non-compliance" without stating the source of the data.^[3][15] (Another source stated 40-70 billion USD without citing the source) Supplementing the reporting regimes already in place was stated by Senator Max Baucus to be a means of acquiring more financial data and raising government revenue.^[16] After committee deliberation, Sen. Max Baucus and Rep. Charles Rangel introduced the Foreign Account Tax Compliance Act of 2009 to Congress on October 27, 2009. It was later added to an appropriations bill as an amendment, sponsored by Sen. Harry Reid, which also renamed the bill the HIRE Act.^[17] The bill was signed into law on March 18, 2010.

Provisions

FATCA has these main provisions:

• It requires non-US (foreign) financial institutions, such as banks, to enter into an agreement with the IRS to search through their customer databases to identify those customers suspected of being U.S. persons and to disclose the account holders' names, TINs, addresses, and the transactions of most types of accounts.^[18] Some types of accounts, notably retirement savings and other tax-favored products, may be excluded from reporting on a country by country basis. U.S. payors making payments to non-compliant foreign financial institutions are required to withhold 30% of the gross payments.^[19][20] Foreign financial institutions which are themselves the beneficial owners of such payments are not permitted a credit or refund on withheld taxes absent a treaty override.^[21] Identification is done by detecting "FATCA indicia" or if a bank employee has knowledge that a customer is a suspected US person. After identification, the FFI has the responsibility to further question the individual before allowing the individual to have the identification of suspicion removed.
• U.S. persons owning or having signatory authority of these foreign accounts or other specified financial assets must report them on a new IRS Form 8938, Statement of Specified Foreign Financial Assets, which is filed with the person's U.S. tax returns if the accounts are generally worth more than US$50,000;^[22] a higher reporting threshold applies to US persons who are overseas residents and joint filers.^[23][24][25] Account holders would be subject to a 40% penalty on understatements of income in an undisclosed foreign financial asset.^[20][26] Understatements of greater than 25% of gross income are subject to an extended statute of limitations period of 6 years.^[27] It also requires taxpayers to report financial assets that are not held in a custodial account, i.e. physical stock or bond certificates.

• It changed a method where foreign investors had not been due U.S. dividends by converting them into "dividend equivalents" through the use of swap contracts.^[28][29]

• It shifted the burden of proof from FINCEN and the IRS to individuals. It increased penalties and imposed negative presumptions on individuals (US persons) who fail to have reported non-US financial accounts (on the existing FINCEN form 114 and new IRS form 8938) ^[30]

These reporting requirements are in addition to the requirement for all US persons for reporting of non-US financial accounts to the U.S. Financial Crimes Enforcement Network;^[31] this most notably includes Form 114, "Report of Foreign Bank and Financial Accounts" (FBAR) for foreign financial accounts exceeding US$10,000 required under Bank Secrecy Act regulations issued by the Financial Crimes Enforcement Network (FinCEN).^[32]

Controversy

Certain aspects of FATCA have been a source of controversy in the financial and general press.^[33] The controversy primarily relates to several central issues:

• Cost. Although numbers are still somewhat speculative, estimates of the additional revenue raised seem to be heavily outweighed by the cost of implementing the legislation. The Association of Certified Financial Crime Specialists (ACFCS) claims FATCA is expected to raise revenues of approximately US$800 million per year for the U.S. Treasury; however, the costs of implementation are more difficult to estimate. ACFCS also claims it is extremely likely that the cost of implementing FATCA (which will be borne by the foreign financial institutions) will far outweigh the revenues raised by the U.S. Treasury, even excluding the additional costs to the U.S. Internal Revenue Service for the staffing and resources needed to process the data produced.^[34] Unusually, FATCA was not subject to a cost/benefit analysis by the Committee on Ways and Means. Perhaps not considered by Congress, the cost to the global financial institutions to implement FATCA could be $200 plus billion dollars, based on per capita costs for Australia and the UK.^[35]
• Benefits versus cost. The intention of locating US persons and their non-US financial accounts would be to increase tax revenues from the interest, dividends, and gains of those assets. The majority of assets located will be (the international equivalent of) standard checking and savings accounts, where the applicable interest is less than 0.5% (during 2015). The majority of that income is already (by tax treaty) attributable to the country where it resides. (IRS form 1116 is normally used to credit foreign taxes upon passive income). Another source of revenue where FATCA intends to raise revenue is in the identification of a wider population of US persons. However, the majority (82%) of US persons filing owe no tax to US (due to tax treaties).^[36]
• Capital flight. The primary mechanism for enforcing the compliance of foreign financial institutions is a punitive withholding levy on U.S. assets. This may create a strong incentive for foreign financial institutions to divest (or not invest) in U.S. assets, resulting in capital flight.^[37] When implementing FATCA, Congress did not publish the source of the revenue data, neither had it performed a cost/benefit analysis.

• Foreign relations. Forcing foreign financial institutions and foreign governments to collect data on U.S. citizens at their own expense and transmit it to the IRS has been called divisive. Canada's former Finance Minister Jim Flaherty raised an issue with this "far reaching and extraterritorial implications" which would require Canadian banks to become extensions of the IRS and would jeopardize Canadians' privacy rights.^[38] There are also reports of many foreign banks refusing to open accounts for Americans, making it harder for Americans to live and work abroad.^[39]

• Extraterritoriality. The legislation enables U.S. authorities to impose regulatory costs, and potentially penalties, on foreign financial institutions who otherwise have few if any dealings with the United States.^[40] The U.S. has sought to ameliorate that criticism by offering reciprocity to potential countries who sign intergovernmental agreements, but the idea of the U.S. Government providing information on its citizens to foreign governments has also proved controversial.^[41] The law's interference in the relationship between individual Americans or dual nationals and non-American banks led Georges Ugeux to term it "bullying and selfish."^[42] The Economist has called FATCA's "extraterritoriality stunning even by Washington's standards."

• Differentiation by National Origin and Discrimination In each country of the world, those residents which are suspected to be US Citizens are separated out at their financial institutions for deferential treatment, based upon their place of birth and nationality. Those suspected to be of US nationality are treated differently than any of the other residents.

• Citizenship renunciations. Time magazine reported a sevenfold increase in Americans renouncing U.S. citizenship between 2008 and 2011, attributing this at least in part to FATCA.^[43] According to BBC Magazine, the act is one of the reasons for a surge of Americans renouncing their citizenship—a rise from 189 people in Q2/2012 to 1,131 in Q2/2013.^[44] Another surge in renunciations in 2013 to record levels was reported in the news media, with FATCA cited as a factor in the decision of many of the renunciants.^[45][46] According to the legal website International Tax Blog, the number of Americans giving up U.S. citizenship started to increase dramatically in 2010 and rose to 2,999 in 2013, almost 6-fold the average level of the previous decade.^[47] The trend has continued in 2014 with over 2,300 people giving up citizenship in the first three quarters. The numbers of those renouncing their citizenship are understated, some say considerably.^[48][49] According to a survey reported by Forbes, “5.5 million Americans eye giving up U.S. citizenship”.^[50]

• American citizens living abroad. According to CBC.ca, many Americans living abroad may face large fines as a result of this legislation.^[51] According to Time magazine, American citizens living abroad are unable to open foreign bank accounts.^[52] The Wall Street Journal reports that "FATCA worsens the already profoundly unjust the tax treatment of millions of middle-class Americans living abroad." "FATCA rules were intended to correct a tax loophole. Applied to Americans living abroad, they are absurd." ^[53][54] The Guardian reports that Americans living abroad feel financially terrorized by FATCA requirements.^[55] According to research by Democrats Abroad: "These survey results show the intense impact FATCA is having on overseas Americans. Their financial accounts are being closed, their relationships with their non-American spouses are under strain, some Americans are being denied promotion or partnership in business because of FATCA reporting requirements and some are planning or contemplating renouncing their US citizenship." ^[56]

• IRS not ready. According to The New York Times, it is unclear whether the IRS is ready to handle millions of new complicated filings per year.^[31] On May 2, 2014, the IRS issued Notice 2014-33 providing that 2014 and 2015 will be regarded as a transition period for purposes of enforcement and administration relating to entity but not individual investors.^[57]
• Effect on "accidental Americans". The reporting requirements, including penalties, apply to all U.S. citizens, including those who are unaware that they have U.S. citizenship. Since the U.S. considers all persons born in the U.S., and most foreign-born persons with American parents, to be citizens, FATCA affects a large number of foreign residents, who are unaware that the U.S. considers them citizens.
• Complexity. Doubts have been expressed as to workability of FATCA due to its complexity,^[58] and the legislative timetable for implementation has already been pushed back twice.^[59] According to US National Tax Advocate Nina Olsen in regards to FATCA:"This is a piece of legislation that is so big and so far-reaching, and [has] so many different moving pieces, and is rolling out in an incremental fashion . . . that you really won’t be able to know what its consequences are, intended or otherwise,’ Olson said. “I don’t think we’ll know that for years. And by that point we’ll actually be a little too late to go, “Oops, my bad, we shouldn’t have done this,’ and then try to unwind it.”^[60]
• Duplicate Legal Jurisdiction FATCA and FBAR and CBT impose the legal and taxation systems of two countries upon the affected individuals and institutions. Whereas a normal situation would be that conduct in one country is the full responsibility of the government of that country, these systems allow 2 governing authorities over the same activity occurring in one country.
• Identity theft. The IRS reports that identity thieves are using fraudulent compliance requests as a "phishing" ruse to obtain sensitive account-holder information.^[61] As of April, 2015, more than 150,000 financial institutions throughout the world are storing social security numbers and asset values of US citizens.^[62]
• Security. As piracy, kidnapping, and global terrorism dominate the political and media climate, some thinkers have questioned the entire FATCA mentality, where non-US banks and non-US governments are entrusted with the private data of US citizens. The following countries have been entrusted with FATCA's private data of US persons: Brazil, Croatia, Israel, Kosovo, Mexico, Qatar, Uzbekistan, Algeria, Azerbaijan, Bahrain, China, Columbia, Georgia, Serbia, Thailand, Turkey, Ukraine, UAE, Angola, Cambodia, Kazakhstan, Tunisia.^[63] FFI's are required via FATCA to identify US persons and store their asset values and US Social Security numbers. There are many countries which have been, could be, or are at war or cold war, where FFI's have implemented FATCA. There is no control over which government or which individuals at these locations have control of the identity of US persons. Here are some examples of the quantity of FFI's registered in troubled areas: Afghanistan: 15, Chad: 5. China: 1021. North Korea:1, Nigeria: 92. Iraq: 16. Russia: 1117. Ukraine: 217. Venezuela; 179. Yemen: 13

Many countries have US sanctions upon the country and the country's leaders and their assets. Many of those countries have FATCA programs in their banks, where US person customers are being identified, such as these countries and the quantity of FFI's: Cote d'Ivoire (35) Zimbabwe (12) ^[64]

• Minimum requirements without limits on the upper end. FATCA has minimum standards in its methodology of finding US persons. For example, the accounts with minimum end balance of 50,000 USD must be investigated with at least the US indicia criteria specified. The FATCA rules do not require any FFI to not investigate or report or FATCA-process accounts as low as zero. The FFI's are not prohibited from using any indicia to identi^[65] fy US persons. There are no restrictions in FATCA regulations as to what is not allowed to be used against US persons.
• Marketability of American Financial Products. European Parliament’s Economic and Monetary Affairs Committee public hearing on FATCA May 29, 2-13, Robert Stack stated ", I believe the, the members here present today and the participants understand that the United States, ah, put its markets at risk in doing FATCA" ^[65][66]

Opposition

Republican National Committee

On January 24, 2014, the Republican National Committee passed a resolution calling for the repeal of FATCA.^[67]

American expatriates

American Citizens Abroad, Inc., (ACA) a not-for-profit organization claiming to represent the interests of six million Americans residing outside the United States, asserts that one of FATCA's problems is citizenship-based taxation (CBT). ACA calls for the U.S. to institute residence-based taxation (RBT) to bring the US in line with all other OECD countries.^[68][69]

As reported in the Washington Times,^[70] a legal challenge has been launched by James Bopp attorney, and backed by the Republican Party, that FATCA violates the Senate's sole possession of foreign treaty power, an 8th Amendment Excessive Fines Claim, and a 4th Amendment Search and Seizure Claim.^[71][72]

Canadians, particularly those considered to be American persons for taxation purposes

Although not technically a direct opposition to FATCA—as the United States Congress has no legislative authority over Canada—but instead in opposition to a parallel Canadian federal legislation, Alliance for The Defense of Canadian Sovereignty (ADCS) is pursuing legal challenge of Canadian law that supports FATCA and implements it between the United States and Canada,^[73] on grounds that such law violates the Canadian Charter of Rights & Freedoms; particularly, in regards to anti-discrimination provisions against discrimination on the basis of citizenship and/or national origin.^[74] On August 11, 2014, in an action supported by the Alliance for the Defense of Canadian Sovereignty, two Canadian citizens filed suit in the Federal Court of Canada challenging the constitutionality of the Canadian law that implements FATCA in Canada. Both of the citizens were born in the U.S., with at least one Canadian parent, but returned to Canada in childhood and have had no residential ties to the U.S. since. They state that this would result in them having U.S. indicia and therefore being discriminated against by Canadian banks.^[75][76] On August 12, Canadian government spokesman Jack Aubry defended the constitutionality of the legislation, but otherwise declined to comment on the pending litigation.^[77]

In any event, a Canadian Federal Court ruling would not constitute jurisdiction over the privity of their relationship as United States citizens with the United States Government, but only over their rights as Canadians, and therefore a finding of unconstitutionality as a matter of Canadian Constitutional law, as to the two litigants, while allowing a remedy under Canadian law, would not relieve them of their responsibilities to the United States under FATCA, as United States citizens, thus not removing the effectuation of the provisions of FATCA on U.S. citizen-taxpayers, no matter where, outside the United States, their bona fide tax home is located. However, a Human Rights Complaint submitted to the United Nations, by members of The Isaac Brock Society and Maple Sandbox, that the U.S. system of taxation, and requirements, compliance reporting, and excessive penalties therewith, of its citizens tax resident in other countries including taxation of their income and assets in those countries, represents violation of their Human Rights. This complaint is suggestive that such taxation violates the IRS Taxpayer Bill of Rights provision #10 "The Right to a Fair and Just Tax System."^[78][79]

On October 7, 2014, the legal claim by the Alliance for the Defence of Canadian Sovereignty was amended to include the allegation that the FATCA IGA and enabling legislation are in violation of both the Income Tax Act of Canada and the Canada U.S. Tax Treaty.^[80]

Costs

There are wildly varying estimates of the likely cost of implementing the legislation. FATCA is expected to produce approximately $8.7 billion in additional tax revenue over 10 years, which is small relative to the estimated $40 billion per year cost of international tax evasion.^[81]:36 The United States Congress Joint Committee on Taxation estimated that the FATCA bill would raise $792 million of additional taxes a year in the next ten years.^[82]

Estimate of the costs to the private sector, the IRS and foreign revenue authorities are less precise. Compliance cost to financial institutions alone has been roughly estimated at US$8 billion a year,^[83] approximately ten times the amount of estimated revenue raised. The United Kingdom government has estimated that the cost to British businesses alone will be £1.1 billion to £2 billion for the first five years (approximately two thirds of the estimate total additional global tax revenue expected).^[84] According to the Financial Post, the Scotia Bank in Canada has already spent almost $100 million.^[85][86] There are few reliable estimates for the additional cost burden to the IRS, although it seems certain that the majority of the cost seems likely to fall on the relevant financial institutions and (to a lesser degree) foreign tax authorities who have signed intergovernmental agreements. Based on implementation costs known in a few countries projected costs exceed $200 billion for all the financial institutions of the world to implement FATCA and this projection excludes annual administration costs.^[35]

Implementation

Domestic

FATCA added 26 U.S.C. § 6038D (section 6038D of the Internal Revenue Code) which requires the reporting of any interest in foreign financial assets over $50,000 after March 18, 2010. FATCA also added 26 U.S.C. §§ 1471–1474 requiring U.S. payors to withhold taxes on payments to foreign financial institutions (FFI) and nonfinancial foreign entities (NFFE) that have not agreed to provide the IRS with information on U.S. accounts. FATCA also added 26 U.S.C. § 1298(f) requiring shareholders of a passive foreign investment company (PFIC) to report certain information.

The IRS issued temporary and proposed regulations on December 14, 2011 (26 C.F.R. 1.6038D-0T et seq.) for reporting foreign financial assets, requiring the filing of Form 8938 with income tax returns.^[87][88] The U.S. Department of the Treasury issued final regulations and guidance on reporting interest paid to nonresident aliens on April 16, 2012 (26 C.F.R. 1.6049-4 et seq., 26 C.F.R. 31.3406(g)-1).^[89] Treasury and the IRS issued proposed regulations regarding information reporting by, and withholding of payments to, foreign financial institutions on February 8, 2012,^[90][91][92] and final regulations on January 17, 2013 (26 C.F.R. 1.1471-0 et seq.).^[93][94] On December 31, 2013 the IRS published temporary and proposed regulations (26 C.F.R. 1.1291-0T et seq.) on annual filing requirements for shareholders of PFICs.^[95] On February 20, 2014, the IRS issued temporary and proposed regulations making additions and clarifications to previously issued regulations and providing guidance to coordinate FATCA rules with preexisting requirements.^[96][97]

On April 2, 2014, the U.S. Treasury and the IRS extended from April 25, 2014 to May 5, 2014 the deadline by which an FFI must register with the IRS in order to appear on the initial public list of "Global Intermediary Identification Numbers" (GIINs) maintained by the IRS, also known as the "FFI List."^[98][99] In June 2014, the IRS began publishing a monthly online list of registered FFIs, intended to allow withholding agents to verify the GIINs of their payees in order to establish that withholding is not required on payments to those payees.^[100]

International implementation

Implementation of FATCA may involve legal hurdles; it may be illegal in foreign jurisdictions for financial institutions to disclose the required account information.^[101] There is a controversy about the appropriateness of intergovernmental agreements (IGAs) to solve any of these problems.^[102][103]

France, Germany, Italy, Spain, and the United Kingdom announced in 2012 they consented to cooperate with the U.S. on FATCA implementation,^[104][105] as did Switzerland, Japan ^[106] and South Africa.

The deputy director general of legal affairs of the People's Bank of China, the central bank of the People's Republic of China, Liu Xiangmin said "China's banking and tax laws and regulations do not allow Chinese financial institutions to comply with FATCA directly."^[107] The U.S. Department of the Treasury suspended negotiations with Russia in March 2014.^[108] Russia, while not ruling out an agreement, requires full reciprocity and abandonment of US extraterritoriality before signing an IGA.^[109][110]

A 2014 Swiss referendum against the act did not come to fruition.^[111]

Intergovernmental agreements

As passed by Congress, FATCA was meant to be a relationship between the US Treasury and individual FFI's. However, the entire industry responded that it was not possible to follow their own countries laws (privacy, confidentiality,discrimination, etc) and to comply with FATCA as is. Therefore, discussions created Intergovernmental Agreements (IGA's) between the Executive Branch of the US with foreign governments. This allowed the foreign governments to implement the US FATCA law into their own legal systems, which allowed those governments to change their own domestic privacy and discrimination laws to allow the identification and reporting of US persons via foreign governments. In an IGA, a government agrees that all of its financial institutions shall comply to FATCA (whereas without the IGA each FFI would have been able to decide if it were to comply with FATCA or not). WIth the IGA's, the private data of suspected US persons would be collected and handled by the FFI's, whereas the many governments would then collect and store that data for further transmittal. The IGA added the applicable government to the list of handlers of the data.

The United States Department of the Treasury has published model IGAs which follow two approaches. Under Model 1, financial institutions in the partner country report information about U.S. accounts to the tax authority of the partner country. That tax authority then provides the information to the United States. Model 1 comes in a reciprocal version (Model 1A), under which the United States will also share information about the partner country's taxpayers with the partner country, and a nonreciprocal version (Model 1B). Under Model 2, partner country financial institutions report directly to the U.S. Internal Revenue Service, and the partner country agrees to lower any legal barriers to that reporting.^[112] Model 2 is available in two versions: 2A with no Tax Information Exchange Agreement (TIEA) or Double Tax Convention (DTC) required, and 2B for countries with a pre-existing TIEA or DTC. The agreements generally require parliamentary approval in the countries they are concluded with, but the United States is not pursuing ratification of this as a treaty.

In April 2014, the U.S. Department of the Treasury and IRS announced that any jurisdictions that reach "agreements in substance" and consent to their compliance statuses being published by the July 1, 2014, deadline would be treated as having an IGA in effect through the end of 2014, ensuring no penalties would be incurred during that time while giving more jurisdictions an opportunity to finalize formal IGAs.^[98][112]

In India the Securities and Exchange Board of India (SEBI) said "FATCA in its current form lacks complete reciprocity from the US counterparts, and there is an asymmetry in due-diligence requirements." Furthermore "Sources close to the development say the signing has been delayed because of Indian financial institutions' unpreparedness."^[113]

With Canada's agreement in February 2014, all G7 countries have signed intergovernmental agreements. As of April 29, 2015, the following jurisdictions have concluded intergovernmental agreements with the United States regarding the implementation of FATCA, most of which have not entered into force.^[112]

Intergovernmental agreements

Jurisdiction	Type	Ratified via signature	Entry into force	Approval process partner state
Australia	1	02014-04-28-0000April 28, 2014	02014-06-30-0000June 30, 2014[114]
Austria	2	02014-04-29-0000April 29, 2014
Bahamas	1	02014-11-03-0000November 3, 2014
Barbados	1	02014-11-17-0000November 17, 2014
Belarus	1	02015-03-18-0000March 18, 2015
Belgium	1	02014-04-23-0000April 23, 2014
Bermuda	2	02013-12-19-0000December 19, 2013	02014-08-19-0000August 19, 2014[115]
Brazil	1	02014-09-23-0000September 23, 2014
British Virgin Islands	1	02014-06-30-0000June 30, 2014
Bulgaria	1	02014-12-05-0000December 5, 2014
Canada	1	02014-02-05-0000February 5, 2014	02014-06-27-0000June 27, 2014[116]	Implementation act published.[117]
Cayman Islands	1B[118]	02013-11-29-0000November 29, 2013	02014-07-01-0000July 1, 2014[115]
Chile	2	02014-03-05-0000March 5, 2014
Costa Rica	1A[118]	02013-11-26-0000November 26, 2013
Croatia	1	02015-03-20-0000March 20, 2015
Curaçao	1	02014-12-16-0000December 16, 2014
Cyprus	1	02014-12-02-0000December 2, 2014
Czech Republic	1	02014-08-04-0000August 4, 2014
Denmark	1	02012-11-19-0000November 19, 2012		Implementation law L67 passed December 20, 2013.[119] Draft implementation regulation published, hearing ends May 8, 2014.[120] Due diligence deadlines June 30, 2015, and June 30, 2016.[121]
Estonia	1	02014-04-11-0000April 11, 2014
Finland	1	02014-03-05-0000March 5, 2014
France	1	02013-11-14-0000November 14, 2013
Germany	1	02013-05-31-0000May 31, 2013	02013-12-11-0000December 11, 2013[122]
Gibraltar	1	02014-05-08-0000May 8, 2014
Guernsey	1	02013-12-13-0000December 13, 2013	02014-07-01-0000July 1, 2014[123]	Draft implementation regulation published.[124]
Honduras	1	02014-03-31-0000March 31, 2014
Hong Kong	2	02014-11-13-0000November 13, 2014
Hungary	1	02014-02-04-0000February 4, 2014	02014-07-16-0000July 16, 2014[115]
Ireland	1	02013-01-23-0000January 23, 2013	02014-07-01-0000July 1, 2014[125]
Isle of Man	1	02013-12-13-0000December 13, 2013	02014-07-01-0000July 1, 2014[126]	Draft implementation regulation published.[124]
Israel	1	02014-06-30-0000June 30, 2014
Italy	1	02014-01-10-0000January 10, 2014
Jamaica	1	02014-05-01-0000May 1, 2014
Japan	2	02013-06-11-0000June 11, 2013	02013-06-11-0000June 11, 2013[127]
Jersey	1	02013-12-13-0000December 13, 2013		Draft implementation regulation published.[124]
Kosovo	1	02015-02-26-0000February 26, 2015
Kuwait	1	02015-04-29-0000April 29, 2015
Latvia	1	02014-06-27-0000June 27, 2014
Liechtenstein	1	02014-05-19-0000May 19, 2014
Lithuania	1	02014-08-26-0000August 26, 2014
Luxembourg	1	02014-03-28-0000March 28, 2014
Malta	1A[128]	02013-12-16-0000December 16, 2013	02014-06-26-0000June 26, 2014[115]
Mauritius	1	02013-12-27-0000December 27, 2013	02014-08-29-0000August 29, 2014[115]
Mexico	1	02012-11-19-0000November 19, 2012	02013-01-01-0000January 1, 2013[129]	Replaced by revised treaty on April 9, 2014, with no break in enforcement.[130]
Moldova	2	02014-11-26-0000November 26, 2014
Netherlands	1A[131]	02013-12-18-0000December 18, 2013	02015-04-09-0000April 9, 2015[132]
New Zealand	1	02014-06-12-0000June 12, 2014	02014-07-03-0000July 3, 2014[133]
Norway	1	02013-04-15-0000April 15, 2013	02014-01-27-0000January 27, 2014[115]
Poland	1	02014-10-07-0000October 7, 2014
Qatar	1	02015-01-07-0000January 7, 2015
Singapore	1	02014-12-09-0000December 9, 2014
Slovenia	1	02014-06-02-0000June 2, 2014	02014-07-01-0000July 1, 2014[115]
South Africa	1	02014-06-09-0000June 9, 2014
Spain	1	02013-05-14-0000May 14, 2013	02013-12-09-0000December 9, 2013[134]
Sweden	1	02014-08-08-0000August 8, 2014
Switzerland	2	02013-02-14-0000February 14, 2013	02014-06-02-0000June 2, 2014[111]	Parliamentary approval obtained;[135] insufficient supporters for a referendum.[136]
Turks and Caicos Islands	1	02014-12-01-0000December 1, 2014
United Kingdom	1A	02012-09-12-0000September 12, 2012	02014-06-30-0000June 30, 2014[137]	Presented to parliament in September 2012.[138][lower-alpha 1]
Uzbekistan	1	02015-04-03-0000April 3, 2015

The following jurisdictions have also reached "agreements in substance":^[112]

Model 1  Algeria  Angola  Anguilla  Antigua and Barbuda  Azerbaijan  Bahrain  Cape Verde  Cambodia  China  Colombia  Dominica  Dominican Republic

Model 1  Georgia  Greece  Greenland  Grenada  Guyana  Haiti  Iceland  India  Indonesia  Kazakhstan  Malaysia  Montenegro

Model 1  Montserrat  Panama  Peru  Philippines  Portugal  Romania  Saint Kitts and Nevis  Saint Lucia  Saint Vincent and the Grenadines  Saudi Arabia  Serbia

Model 1  Seychelles  Slovakia  South Korea  Thailand  Trinidad and Tobago  Tunisia  Turkey  Turkmenistan  Ukraine  United Arab Emirates   Vatican City

Model 2  Armenia  Iraq  Macau  Nicaragua  Paraguay  San Marino  Taiwan

Related international regulations

In 2014, the OECD introduced its Common Reporting Standard (CRS) proposed for the automatic exchange of information (AEOI) through its Global Forum on Transparency and Exchange of Information for Tax Purposes. The G-20 gave a mandate for this standard, and its relation to FATCA is mentioned on page 5 of the OECD's report.^[139] Critics immediately dubbed it "GATCA" for Global FATCA.^[140]

The Common Reporting standard requires each signatory country to gather the full identifying information of each bank customer, including additional nationalities and place of birth. Prior to the implementation of CRS, there had been no other method of fully and globally identifying immigrants and emigrants and citizens by way of their identification numbers, birthplaces, and nationalities. Each participating government is tasked with collecting and storing the data of all its citizens and immigrants and of transferring the data automatically to participating countries. CRS is capable of transmitting person data according to the demands of either Residence Based Taxation or Citizenship Based Taxation (CBT) or Personhood-Based Taxation.

See also

• FATCA agreement between Canada and the United States
• Financial Secrecy Index
• Income tax in the United States
• Foreign earned income exclusion
• Tax haven
• European Union withholding tax
• Common Reporting Standard, dubbed the Global Account Tax Compliance Act (GATCA)
• Extraterritorial jurisdiction#United States
• International taxation#Citizenship

References

Notes

Further reading

External links

• FAQ from the US Internal Revenue Service
• FATCA Resource Center from the US Treasury Department