WASHINGTON In a step toward reining in offshore tax evasion, the U.S. Treasury Department on Thursday said it was close to finalizing tax information-sharing pacts with countries ranging from Canada to islands such as Guernsey and the Isle of Man.
Treasury listed 47 jurisdictions, from India to Sint Maarten, that are in various negotiation stages on formal agreements governing how their local financial businesses can comply with the U.S. Foreign Account Tax Compliance Act (FATCA).
The department's statement said the Cayman Islands, Gibraltar and Liechtenstein are talking with Treasury about FATCA compliance. These nations are widely viewed as tax havens.
Enacted in 2010, FATCA requires financial institutions that have accounts held by Americans valued at more than $50,000 to report some client information to the Internal Revenue Service.
Beginning in 2014, institutions that fail to comply could effectively be locked out of the U.S. financial marketplace.
When it was enacted, FATCA caused an uproar among foreign financial institutions about compliance costs and the law's potential for infringing national financial secrecy laws.
Rather than imposing a one-size-fits-all approach, Treasury has pursued a process of government-to-government agreements that, in some cases, let banks report information to their home tax agencies, which will pass along the information to the IRS.
Proposed FATCA rules expected to spell out more details for financial institutions were announced in February but have not been finalized. Businesses are worried they will not have time to prepare for the law's start date, tax experts have said.
Treasury's goal is to have the FATCA rules published before the end of the year, a senior Treasury official reiterated.
Notably absent from Treasury's list was China. Without cooperation from the world's second-largest economy, FATCA's effectiveness may be diluted, some tax experts have said.
The Treasury said talks were ongoing with 50 jurisdictions, but it only listed 47 of them, plus the United Kingdom, the only nation to ink a final FATCA deal.
Thursday's announcement did not include negotiations with countries wishing to be anonymous for now, the official said.
Guernsey, the Isle of Man and Jersey are UK "Crown Dependency" jurisdictions, but their financial sectors are not regulated by the UK, allowing them to become bastions of financial secrecy. The United States has tax information processes in place with these islands that precede FATCA.
A U.S. congressional panel estimated in 2010 that FATCA would raise $8.7 billion in new tax revenues over 10 years. (Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and David Gregorio)
Trending On Reuters
Prime Minister Narendra Modi will let anÂ executive order making it easier for businesses to buy land lapse on Monday after failing to win support from opposition parties in a major blow to his economic reform agenda. Full Article