FOREIGN ACCOUNT TAX COMPLIANCE ACT UPDATE - Income Tax Press Release
On 26 July the United States Treasury Department published a model intergovernmental agreement (IGA) designed to improve tax compliance and implement the Foreign Account Tax Compliance Act (FATCA). FATCA was enacted by the United States in 2010 and aims to strengthen efforts to combat non-compliance by U.S. persons using foreign accounts.
Earlier this year, on 8 February, France, Germany, Italy, Spain and the United Kingdom announced that they had agreed with the U.S. to explore an intergovernmental approach to FATCA implementation that would address legal impediments to compliance, simplify practical implementation, and reduce costs. The model IGA published by the U.S. two weeks ago is the latest step towards this.
Japan and Switzerland recently announced that they too intend to pursue an intergovernmental approach with the U.S. to facilitate the implementation of FATCA. The model envisaged in relation to both Japan and Switzerland is different from the model envisaged by the five European countries mentioned above and has not yet been published.
As stated in its news release dated 24 February 2012, the Isle of Man Government recognises that businesses in the local financial services sector will be affected by FATCA and wishes to assist those businesses both to comply with FATCA and to reduce compliance costs in the Isle of Man wherever possible. The intergovernmental approach initially announced by France, Germany, Italy, Spain and the UK and now also being pursued by Japan and Switzerland continues to be explored by the Isle of Man Government.
The high-level FATCA working party comprising officers from the Chief Secretary’s Office, Department of Economic Development, the Financial Supervision Commission, the Insurance and Pensions Authority, the Office of the Data Protection Supervisor and The Treasury is considering the best approach for the Isle of Man. An Industry Liaison group has been established to which representatives of potentially affected business sectors have been invited. The Isle of Man Government is also in contact with the US Treasury Department, HM Treasury in the UK as well as both Jersey and Guernsey Governments.
Treasury Minister Eddie Teare, MHK, said, “FATCA represents a step change in global tax co-operation. It is vital that a robust and efficient framework is in place that will allow Isle of Man businesses to comply with FATCA. The model IGA published two weeks ago and the alternatives are being studied closely and the views of the local businesses potentially affected are being sought. I remain committed to ensuring that the Isle of Man is well placed to meet the challenges posed by FATCA and to ensuring that we provide the best possible environment for business in the Isle of Man.”
9th August 2012
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Isle of Man
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