FATCA and the Drive to Tax Transparency
Every day I see people coming down on FATCA. I take the view that it helps to view FATCA as part of a larger movement. It’s so much more than just the USA – even if the USA is playing a leadership role.
Consider this. BEPS (Base Erosion and Profit Shifting) now has more political-will, driving it than ever before. There are also TIEAs (Tax Information Exchange Agreements) being signed every week. The UK was the first to sign FATCA and appropriately, there is now “UK FATCA” – which sees financial institutions in Jersey, Guernsey and the Isle of Man (the Crown Dependencies) and the Overseas Territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos Islands (the Overseas Territories) automatically providing information relating to the financial affairs of UK resident clients in respect of 2014 onwards. There is even a rumor that China is working on its own FATCA.
There is also the drive for a publicly accessible register of companies’ beneficial (i.e. real as opposed to proxy) owners. Beyond that there is also a push for open registers for trusts, foundations and practically any other corporate vehicle or legal arrangement that is deemed to be open to abuse. There is an article in March 12th’s Economist about how much of a sea change this would be for Trusts in particular –
Clearly this is more than, as some campaigners say, the U.S. bullying other countries and foreign banks. There is a momentum that now appears unstoppable towards complete tax transparency. Admittedly it is a huge administrative burden but once the various institutional/governmental infrastructures are in place…
For individuals, consider yourself served. It’s time to get your tax affairs in order as the number of places that one can hide is shrinking fast. And even if you manage to keep some financial assets hidden, consider the Estate Tax / Inheritance Tax issues your beneficiaries would face in transferring undeclared financial assets into their names.
To Know More About FATCA –