Global Financial Integrity today applauded the U.S. Department of the Treasury for working with over fifty jurisdictions to establish agreements enabling the bilateral automatic exchange of tax information as part of the implementation of the Foreign Account Tax Compliance Act (FATCA).
“Expanding FATCA implementation to provide for the automatic exchange of tax information between the U.S. and more than 50 nations is the ideal outcome of this legislation,” said Heather Lowe, legal counsel and director of government affairs at GFI. “The U.S. should not be a safe haven for the dirty money of foreign tax evaders, just as foreign financial institutions should not harbor the illicit assets of U.S. tax evaders.”
“The situation in Greece is a prime example of what can happen when tax evasion becomes rampant,” added Lowe. “The global economy cannot afford to let tax evasion run wild.”
“The actions taken by Treasury will ultimately mean more tax revenue for both the U.S. and other countries,” she continued.
FATCA—adopted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act—requires foreign financial institutions to report information on the accounts of U.S. customers to the Internal Revenue Service (IRS), or tax on all of the foreign bank’s U.S.-source income will automatically be withheld before being transferred to the bank.
In July 2012, the U.S. announced that it was working with five nations—France, Germany, Italy, Spain and the United Kingdom—to establish a system of automatic tax information exchange between jurisdictions as part of the implementation of FATCA. On Thursday, the Treasury Department announced that the discussions have expanded to more than 50 jurisdictions.
“Certainly, our end goal is a convention providing for the multilateral exchange of tax information globally, and the OECD and G20 are making important strides in that direction,” noted Lowe. “Still, Treasury’s work with regard to FATCA is a major milestone, and we are very pleased with the direction they’ve taken.”