WASHINGTON Nov 8 In a step toward reining in
offshore tax evasion, the U.S. Treasury Department on Thursday
said it was close to finalizing tax information-sharing pacts
with countries ranging from Canada to islands such as Guernsey
and the Isle of Man.
Treasury listed 47 jurisdictions, from India to Sint
Maarten, that are in various negotiation stages on formal
agreements governing how their local financial businesses can
comply with the U.S. Foreign Account Tax Compliance Act (FATCA).
The department's statement said the Cayman Islands,
Gibraltar and Liechtenstein are talking with Treasury about
FATCA compliance. These nations are widely viewed as tax havens.
Enacted in 2010, FATCA requires financial institutions that
have accounts held by Americans valued at more than $50,000 to
report some client information to the Internal Revenue Service.
Beginning in 2014, institutions that fail to comply could
effectively be locked out of the U.S. financial marketplace.
When it was enacted, FATCA caused an uproar among foreign
financial institutions about compliance costs and the law's
potential for infringing national financial secrecy laws.
Rather than imposing a one-size-fits-all approach, Treasury
has pursued a process of government-to-government agreements
that, in some cases, let banks report information to their home
tax agencies, which will pass along the information to the IRS.
Proposed FATCA rules expected to spell out more details for
financial institutions were announced in February but have not
been finalized. Businesses are worried they will not have time
to prepare for the law's start date, tax experts have said.
Treasury's goal is to have the FATCA rules published before
the end of the year, a senior Treasury official reiterated.
Notably absent from Treasury's list was China. Without
cooperation from the world's second-largest economy, FATCA's
effectiveness may be diluted, some tax experts have said.
The Treasury said talks were ongoing with 50 jurisdictions,
but it only listed 47 of them, plus the United Kingdom, the only
nation to ink a final FATCA deal.
Thursday's announcement did not include negotiations with
countries wishing to be anonymous for now, the official said.
Guernsey, the Isle of Man and Jersey are UK "Crown
Dependency" jurisdictions, but their financial sectors are not
regulated by the UK, allowing them to become bastions of
financial secrecy. The United States has tax information
processes in place with these islands that precede FATCA.
A U.S. congressional panel estimated in 2010 that FATCA
would raise $8.7 billion in new tax revenues over 10 years.