Interesting article about FATCA and Lebanon linked to below. Same old story. FATCA compliance incompatible with Lebanese privacy law. Some discussion of changing Lebanese law but Lebanon MP’s yet to be informed of this. Some discussion of Lebanon trying to join a block of other countries unhappy with FATCA. Perhaps Flaherty needs to ring lead. Interesting quote:
For this reason the Lebanese central bank initially sought to preserve banking secrecy by urging banks to just pay the fees on their clients accounts to the IRS.
“Our recommendation to the banks is going to be to go for the 30 percent option because the other option is legally difficult,” he said. “It would involve the IRS auditing their banks, which is not in line with Lebanese laws and would also create much litigation, which, reputation wise, is not recommendable.”
However it appears attitudes have softened in the past year, with banks coming to the conclusion that they can no longer fight the tide of pressure from the US Treasury. Asked if his bank would abide by the FATCA law, the compliance officer said: “We are forced to. We live in a world where the US is the dominant force and the dollar is the global currency, we can’t just ignore that.”
He admitted that this could mean an end to banking secrecy, for Americans at least.
http://www.executive-magazine.com/getarticle.php?article=15231
If Lebanon were to pay fees to the IRS on behalf of their accounts held by US citizens this would constitute taxable income to the US citizen. I suspect the Lebanese banks don’t realize it. So for it to be tax free to the account holder they would some how have to gross up the payment to include the tax on the reimbursement itself. this would be a never-ending process with the amount paid to the IRS going up each year like a wet snowball rolling down a mountain side.
I sincerely hope that Lebanon will indeed lead and persuade other countries, including Canada, to stand firm in opposing this imperialistic extraterritorial thrust of the US Congress and the US Administration to impose and collect taxes within the sovereign borders of other nations. This is a an invasion no nation should tolerate.
It seems that Brazil has not cater to FATCA so far as I know. I am hoping that it will be the case. Not that this will affect me because I am complying with the IRS (with great difficulties) as I have stated. But because I consider this an invasion of one country by another. I can´t imagine every country doing this to each other. Can you?
Mark, most of the countries are giving into this FATCA: Canada, Switzerland, Canada – my prediction is that most countries willl give in the US. If not, they will appear to give safe harbour to tax evaders.
Brazil.. I’m still not sure. But US citizenship isn’t worth it, even in Brazil. It makes much more sense economically to say “To hell with US citizenship” and get a US tourist visa to visit relatives.
Plus, with all of the “reciprocity” fees nowadays, I think that a Brazilian passport is worth more $$$ than a US passport. If you show a US passport to get into other South American countries, they will charge you are $150 USD in each country. I just wish the Polícia Federal issued passports for 10 years instead of the 5 years like they do.
The US gov could offer me a job that pays $2 million a year in exchange for going back there. I wouldn’t take it, even though I only make a small fraction of this. “The Land of the Free, Home of the Brave.” Maybe the last part is true, but definitely not the first part.
I loved this quote from the story…
“If you reveal your secrets to the wind you should not blame the wind for revealing them to the trees.”
@Roger – I think you’ve missed the point about a bank staying out of FATCA. If a Lebanese bank stayed out of FATCA, they wouldn’t even bother to try to identify any US clients, they would just suffer the 30% withholding on US sourced income and then later 30% penalty on sale of US assets flowing in to the bank regardless of beneficial payee. This would not be identifiable as a payment to any US person, as the whole bank has been colectively penalised because they have declined to identify US persons in their clientbase. They could eliminate the risk of this by exiting US investments in time.
Then if/when the IRS figures out how to calculate and apply the foreign passthru payment penalty (based on the impossible passthru payement percentage, which is deferred until 2017) they will suffer a 30% withholding on a percentage of all payments received from partly-US banks.