fiogf49gjkf0d
A U.S. law meant to snuff out billions of dollars in offshore tax evasion has drawn the criticism of the world’s banks and business people, who dismiss it as imperialist and “the neutron bomb of the global financial system”.
The unusually broad regulation, known as FATCA, or the Foreign Account Tax Compliance Act, makes the world’s financial institutions something of an extension of the tax-collecting Internal Revenue Service — something no other country does for its tax regime.
Conceived as a way to enlist the world in a crackdown on wealthy Americans evading tax, it gives global financial institutions and investment entities a choice: either collect and turn over data on U.S. clients with accounts of at least $ 50,000, or withhold 30% of the interest, dividend and investment payments due those clients and send the money to the IRS.
Foreign institutions and entities that refuse, or fail, to do so face bills for the taxes due, a draconian penalty of 40% of the amount in question and heightened scrutiny by the IRS.
The legislation that created FATCA was introduced in 2009 by four congressmen during a crackdown on: UBS, the Swiss bank giant that sold tax evasion services. Signed into law by U.S. President Barack Obama in March 2010, FATCA goes into effect on January 1, 2014, for most types of transactions and a year later for other payments.
(Source: www.cnbc.com 19-8-2011)
