HONG KONG Nov 28 A new U.S. anti-tax-evasion
measure imposes unfair costs on foreign banks and clashes with
Chinese law, a senior official at China's central bank said.
Liu Xiangmin, deputy director general of legal affairs at
People's Bank of China, said the U.S. should find a better way
to tackle tax evasion than the Foreign Account Tax Compliance
"It creates unreasonable costs for foreign financial
institutions and directly contravenes many countries' privacy
and data protection laws," he said during the Thomson Reuters
Pan-Asia Regulatory Summit.
FATCA requires non-U.S. financial institutions to report
client information to U.S. tax authorities if they have American
customers whose accounts are valued at more than $50,000.
Starting in 2014, institutions that fail to comply could
effectively be locked out of the U.S. financial marketplace.
"China's banking and tax laws and regulations do not allow
Chinese financial institutions to comply with FATCA directly."
Liu said. He emphasised those were his views and not necessarily
the opinions of the central bank or the Chinese government.
The law will only slightly increase U.S. tax revenues, Liu
said. "One estimate says FATCA covers less than 2 percent of U.S
tax payers and would bring extra revenue of only $8bln over 10
years, he said."
Liu was giving a speech on the foreign impact of financial
regulation. He also noted the challenges posed to foreign banks
by some of the regulation contained in the U.S. Dodd-Frank Act,
such as the Volcker Rule. The rule bans banks from engaging in
proprietary trading and will apply to many foreign banks if they
have a branch in the U.S.
"The Volcker Rule seems to be intentionally designed to
apply to a broad range of foreign institutions in order to level
the playing field for U.S. entities subject to the rule."
Liu said governments should find a more effective way to
regulate international finance.
"While it is understandable to address the cross-border
externalities or spill-over effects with national legislation, a
more effective and acceptable regime would call for better
co-ordination between home and host-country regulators," he
"An extra-territorial effect should be carefully evaluated
and limited, so as to minimise the undue burden on foreign