WASHINGTON Nov 29 The United States has signed
agreements with the Cayman Islands and Costa Rica to help those
countries' banks comply with an anti-tax evasion law starting
next year, the Treasury Department said on Friday.
The deals are part of the U.S. effort to enforce the Foreign
Account Tax Compliance Act (FATCA), enacted in 2010 and set to
take effect in July 2014.
FATCA requires foreign financial institutions to tell the
U.S. Internal Revenue Service about Americans' offshore accounts
worth more than $50,000. It was enacted after a Swiss banking
scandal showed U.S. taxpayers hid substantial fortunes overseas.
With these two deals, both signed this week, the Treasury
has now finished 12 FATCA "intergovernmental agreements" (IGAs),
which help countries' financial institutions comply with the
The FATCA agreement with the Cayman Islands was initially
agreed to in August.
The island nation of 53,000 people has no income tax and is
frequently labeled as a tax haven by critics. It is one of the
world's most popular destinations for investment funds to
organize for tax purposes.
Costa Rica was one of three Central America countries the
Organization for Economic Development and Co-operation (OECD)
has tagged as a tax haven. Panama and Belize were the other two.
Significantly, the Costa Rica deal is reciprocal, meaning
the Costa Rican government can get tax information about its
citizens with assets in the United States.
The trading financial information, though not part of the
Cayman Islands deal but included in many of the other 11 FATCA
agreements, has rankled U.S. banks.
In April, the Texas Bankers Association and the Florida
Bankers Association, both industry groups, filed a lawsuit
attempting to block a Treasury Department rule that would allow
the IRS to send certain bank account information to foreign
The case, filed in the U.S. District Court for the District
of Columbia, is awaiting a judge's ruling on whether the
bankers' associations have standing.
(Reporting by Patrick Temple-West; editing by Gunna Dickson)