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When FATCA Wasn’t Enough, Now There’s the OECD to Worry About

Article Summary:

Like dominoes, countries are falling in line with the Foreign Account Tax Compliance Act (FATCA) as Washington pressures foreign financial institutions to expose U.S. taxpayers’ assets in their vaults. Although FATCA is U.S. legislation, the inspiration is the tax treaty network secretly being put into place by the Organization of Economic Cooperation and Development (OECD), a reciprocal tax network that lets nations swap details on the financial affairs of non-residents with their home country.

Photo Credit: The Funneled Web

Original Article Text From iExpats:

FATCA – Digging Out Facts About The Global Tax Network

Global tax is undergoing a major upheaval that has largely passed without comment or notice.

One after another, countries are falling in to line with the controversial Foreign Account Compliance Tax Act (FATCA) as Washington pressures foreign financial institutions to spill the beans on US taxpayers secreting assets in their vaults.

Britain has already signed up to an intergovernmental agreement (IGA) with the US to supply FATCA information to the Internal Revenue Service (IRS) in return with similar details from US financial institutions tipping off HM Revenue & Customs (HMRC) about assets held for UK taxpayers.

Singapore is the latest nation to join the talks, which is a surprise to some as Singapore has often shown a laissez faire attitude to how residents treat overseas tax. Singapore is one of the only countries that didn’t sign up to the European Union Savings Tax Directive.

Other nations waiting to sign up to FATCA include Spain, Italy, Germany, Japan, Australia, Guernsey, Jersey, the Isle of Man and India.

Tax talking shop
But while FATCA takes all the headlines, a bigger shift is going on at a more seismic level.

Although FATCA is US legislation, the inspiration is the tax treaty network slowly but surely being put in to place by the Organisation of Economic Co-operation and Development (OECD).

The OECD represents a tax talking shop for most of the world’s leading economies.

Since a pact reached in Oslo, Norway, in 2010, the OECD has toiled to set up a reciprocal tax network that lets nations swap details on the financial affairs of non-residents with their home country.

FATCA is one manifestation. The Hacienda in Spain has collaborated with offshore financial centres to compile information about assets held Spanish taxpayers outside Spain.

Another financial information warehouse is the European Union Savings Tax Directive, which has similar provisions to FATCA for sharing details about the holdings of individuals in one country with a tax authority in another.

The prize is extra revenue
The landmark agreement between Britain and Switzerland – soon to be followed by similar deals with Austria, Germany and France – brings another errant nation with a veil of secrecy over financial information in to the fold.

Soon, tax treaty tentacles will reach out and link all the tax authorities of most major nations.

The objective is to banish the opportunities for cross-border tax management by companies and individuals.

The prize is extra revenues for governments.

FATCA proposes to raise £6.3 billion for the USA, Spain is looking at plugging a £6.6 billion tax shortfall, while the UK is looking at £9 billion.

At the heart of this network is the unsung OECD, which has created the international legal framework that culminates in an all-seeing and all-knowing global tax Big Brother.

Link to Original Article:

From iExpats

  • Robert in Canada

    Governments made huge promises to the masses, while knowing there was no way to pay for it all (this is how you buy votes from gullible people).

    Now we will pay double for all the “free” stuff we were promised but didn’t get.

    Yet people keep voting for whoever promises the most “free” stuff.

    It’s no wonder that former Canadian Prime Minister Trudeau called Canadian voters his “useful idiots”.

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