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Taiwan Lags Inking FATCA Agreement with U.S.

2012/12/03 | By Judy Li

Taipei, Dec. 3, 2012 (CENS)--U.S. President Barack Obama has instructed his administration to quickly ink tax agreement based on the U.S. Foreign Account Tax Compliance Act (FATCA) with foreign countries, with about 50 countries are expected to sign such agreement or to conclude negotiations on such issue with the U.S. by the end of this year.

Financial institutions in Taiwan worry that Taiwan may lag negotiating with the U.S. on such issue as the two sides haven't signed any tax agreement, and Taiwan may need more time to sign with the U.S. the FATCA agreement.

Insiders say that FATCA provisions, enacted by the U.S. Congress in 2010, target noncompliance by U.S. taxpayers using foreign accounts and require foreign financial institutions (FFIs) report American accountholders' assets above a certain threshold to the U.S. Internal Revenue Service. FFIs include investment advisers, hedge funds, private equity funds, banks and other types of financial institutions.

As part of the effort to enforce FATCA, the U.S. has been signing information-sharing agreements with other countries allowing U.S. financial institutions to share account information with other countries on their own citizens.

This summer, the U.S. Treasury Department published a model intergovernmental agreement for implementing FATCA and announced the development of a second model agreement. These models serve as the basis for concluding bilateral agreements with interested jurisdictions.

The U.S. has already concluded a bilateral agreement with the U.K. and is in the process of finalizing an intergovernmental agreement with France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Ireland, Netherlands, Norway, etc., hoping to conclude negotiations with them by the end of this year.