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(CNS Business): The US Department of the Treasury has signed a bilateral agreement with the United Kingdom to implement government-to-government information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA). The Cayman Islands Government announced in July that it had established a task force to evaluate the suitability of similar reporting for the implementation of FATCA in Cayman. Enacted by Congress in 2010, the FATCA provisions target non-compliance by US taxpayers using foreign accounts. The US-UK agreement signed this week is based on the model published in July of this year and developed in consultation with France, Germany, Italy, Spain, and the UK.
“Today’s announcement marks a significant step forward in our efforts to work collaboratively to combat offshore tax evasion,” said Treasury Assistant Secretary for Tax Policy Mark Mazur. “We are pleased that the United Kingdom, one of our closest allies, is the first jurisdiction to sign a bilateral agreement with us and we look forward to quickly concluding agreements based on this model with other jurisdictions.”
The new rules for international tax reporting requirements, developed by the US Treasury Department in conjunction with the OEDC and published last July, offers countries two options for their domestic banks to comply with its new rules about reporting to the Internal Revenue Service (IRS) all information on assets held abroad US clients. Failure to do so will result in a 30% withholding tax beginning in 2014.
The OECD plan allows for the automatic, reciprocal exchange of information among governments. It includes the development of reporting and due diligence standards for financial institutions.
A statement from the Cayman Islands Ministry of Finance in July said that government remained committed to maintaining a high level of engagement and dialogue with US officials on FATCA matters, and would continue to ensure that US citizens and green-card holders living in the Cayman Islands were aware of their obligations to comply with US tax directives.
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