Channel Islands Confirm UK 'FATCA' Talks

By Editorial 04 December, 2012

The Chief Ministers of Jersey and Guernsey have confirmed that negotiations are to proceed between the Crown Dependencies and the United Kingdom towards the negotiation of inter-governmental agreements to facilitate a new era of automatic information exchange between the islands and the United Kingdom, to achieve a similar framework as that envisaged by the United States Foreign Account Tax Compliance Act (FATCA).

Guernsey Chief Minister, Peter Harwood, and his Jersey counterpart, Ian Gorst, jointly confirmed that: "Reflecting the interest being shown by the Organization for Economic Cooperation and Development and the EU in the wider application of the principles behind the US FATCA arrangements, the UK has approached the Crown Dependencies and the Overseas Territories with a view to [these] principles being applied with the UK."

"Crown Dependencies officials held an exploratory meeting with HM Treasury officials this week to understand better the UK proposals. Further discussions are expected," they disclosed.

FATCA was enacted by Congress in March 2010 and is intended to ensure that the US tax authorities obtain information on financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest, with foreign financial institutions (FFIs). Failure by an FFI to disclose information would result in a requirement to withhold 30% tax on US-source income.

To simplify the administration of the new system, nations have been invited to enter into inter-governmental agreements with the United States on a bilateral basis, to ease the compliance burden on local financial institutions by allowing them to report data directly to the tax authority in the country in which they are based, rather than to the US Internal Revenue Service.

Negotiations between the United States and the Crown Dependencies towards bilateral intergovernmental agreements "are well advanced," according to the chief ministers, and the islands "are awaiting the publication of the final US Regulations promised before the end of the year."

Indicating that they would accept a UK FATCA-style agreement, Harwood and Gorst underscored that: “The UK and the Crown Dependencies share a common commitment to combat tax evasion and to participate generally in international efforts to combat financial and other crime including fiscal crime.”

Tags: Expatriates | Isle Of Man | Compliance | Tax | Investment | Offshore Confidentiality | Tax Avoidance | Interest | Law | Banking | Financial Services | Guernsey | Jersey | United Kingdom | Offshore | Agreements | Withholding Tax | Services |


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