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I found an interesting article on FATCA at Financial News this morning that for an “industry” publication is the first I get some sense that they are getting it. A couple of interesting quotes:

“Once countries have got the structure in place to comply with US Fatca, their governments won’t just say, ‘we’ll bear the costs of helping the US gather its tax and leave it at that’. Something will happen.”
That “something” will not be a repeal of US Fatca, Fleming said. The realistic options, he said, are either that every country develops its own version of Fatca, or that a “global Fatca” is developed, where every country has to disclose the assets of every other countries’ citizens under a common framework. He said: “There will have to be a ‘global Fatca framework’ – the alternative is even worse. We couldn’t operate on the basis of 27 Fatcas in the Europe Union, say.”
The significance is enormous, he said: “It will be a global tax system. It is impossible to comprehend how you maintain national tax integrity under such a system; how you get to a global Fatca is an immense challenge.”

A few points they seem to be making:

Many in the financial industry are increasingly taking the view that FATCA and any copy cat legislation is going to be an overriding issue for the rest of the decade.

In closing the authors state that they in fact think the US is playing a “long game” of trying to determine the world’s taxation model.

Unfortunately this article now seems to be pay-walled, but you can sign up for a free four week trial.

http://www.efinancialnews.com/story/2012-03-27/fund-managers-predict-global-fatca

140 thoughts on “A Global #FATCA( or is #GATCA) in the future”

  1. Posted at Jack Townsends blog…New Article on the Emerging Consensus for Taxing Offshore Accounts 
    Itai Grinberg, The Battle Over Taxing Offshore Accounts,  60 UCLA L. Rev. 304 (2012), here.
    I have posted the following comment, still in moderation, last I looked…
    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
    Yup, a global GATCA is the new ‘Gotcha’ of FATCA Compliance Complex who stand to make lots of money in consulting fees. I am beginning to look at the BIG 4 Accounting firms as the “War Profiteers” of the War on Offshore Tax Evasion (WOOTE)

    Itai Grinberg is obviously one of the leading shills for the proposition that automatic exchanges without regard to the ‘rights’ of individuals to be free of unnecessary coercion by BIG GOVERNMENT revenue requirements. For their world view, surrender of those pesky individual rights of privacy are necessary for the good of Liberal democracy. Give me a break, please from their “good intentions” .

    FATCA has been high jacked by the “New World Order” crowd, or maybe it was part of the plan to start with. Automatic exchanges are not the holy grail of compliance. Good ole DOJ investigations and bilateral Tax Treaties are! Automatic exchanges are the dastardly instruments of “control” by the FATCAnitics and the Gatchwellians. It is not a pretty world they envision, with all their lofty sentiments and intentions not withstanding. The US unilateral approach, with Tax Treaty overrides, PFFI treaty right surrender, individual rights surrender, and FATCA IGA cram downs are not what the liberal democratic process is supposed to be about. 

    The systemic Risks this all presents to the shaky financial world is not even mentioned by this professor. But why would he? What does he know of those impacts? Heaven save us from these so called experts whose only experience is inside the sheltered life of academia, or within Treasury corridors, and not out in the real rough and tumble economic world you and I live in.

    The compliance burden on Financial institutions, unsympathetic as I am generally, is exponentially multiplying with only the BIGGEST able to afford the armies of consultants, software programmers and CPAs/attorneys to stay up with it. IE, Frank Dodd, Volcker Rule, Basil III, DOJ Bank Secrecy law implementation changes (http://n.pr/132STqZ) , etc, etc. This has the effect of killing off the small to midsize institution competition who can not afford to play this expensive compliance game. It increases the power of the’Too Big to Fail’ UBS types that even the SEC is afraid to penalize too harshly for failures of compliance. And who pays for that? Yes, the tax payer, or in the US case, their children, as we just borrow the money!. 

    FATCA needs to be repealed, Full stop. The offshore tax collection enforcement effort needs to be started over with more simple solutions instead of these grand designs. Where is the rising voice of contrarian views in our ‘asleep on the job’ media? That voice, feeble as it is, doesn’t get all that much the attention like these articles do, or the constant marketing messages by the BIG 4, co-enablers with Treasury and their “must comply” FATCA messages. 

    I agree with James Jatras, that FATCA is the ‘Worst law that most Americans have never heard about’. In search of ONE good intention, that this Treasury shill promotes, we are putting together an incredible complex world of BIG DATA exchanges with all kinds of serious systemic risk to the global financial world. 

    Sadly, it is starting this effort by putting a target on the backs of all Americans (US Persons) residing around the globe, and the FATAL Flaw in all this, is security, identity theft, and fraud with a myriad of other ways this can all go wrong. H ere is one of the most prescient articles on the security aspects of FATCA not considered by our bureaucratic Masters of the Universe: http://bit.ly/X1J8ES

    So, to interject another voice in these arguments, here is the most recent interview with James Jataras on why FATCA must be repealed:   http://bit.ly/X1J8ES

    Here is a video of his presentation at the Canadian FACT finding forum with text: http://bit.ly/RoNGqU

    and for Jack, this is a presentation by Allison Christians, a Canadian International Tax attorney might interest. http://bit.ly/WhOdIg She has had her personal epiphanies on the road to FATCAmascus. 

    Finally, I would say, that my opposition to FATCA is because, IMHO, it is the wrong solution to a BIGGER problem, which is actually a complex and capricious tax code that creates all kinds of unwanted economic activity. Offshore evasion is but one, and frankly if you read the TIGTA reports, it is one of the more minor ones compared with Identity theft which is a much bigger problem on the homeland shore. But never mind. But instead of fixing that, we layer on new FATCA complexity in chase of the wrong problem. Our Pollies never let a simple solution get in the way of a complex and expensive program if they can create one. Even if it costs more than the meager revenue it supposedly creates. It is what bureaucrats do.

    They have never learned to ‘Sweat the small stuff’ instead of the grand designs. http://bit.ly/UKQTlj

    FATCA ala GATCA is one of those grand moments they live for!

    And finally, for all my complaints, I am somewhat of a fatalist and realist. This move to a GATCA auto exchange future, maybe a force of nature, like a tidal movement, and pretty hard to build seawalls against.

    I wished I was wrong. 

    I can guarantee this, it will create all kinds of creative human actions to subvert the intention and avoid the tide. Like the WOD (War on Drugs) this WOOTE (War on offshore tax evasion) will not be won in this arena of global exchanges. 50 years from now, they will still be fighting it with some new fangled global repression. The authors of these grand schemes are deluded. But, it matters not what I think, as their actions are part of human nature too. So it goes.

  4. New Market Study Published: FATCA: Global Wealth Manager Responses
    This press release is marketing a product, and yet it does represent some of the thinking that is going on out there in response to FATCA.  None of us can say for certainity, what the final outcome will be, and exactly how the market will react to a global GATCA, but I do try to stay open to views that might be different than mine.  So, I am posting this one for your review…

    Boston, MA — (SBWIRE) — 01/26/2013 — Wealth managers are under fire as US high net worth individuals are the key target of FATCA. As it has developed on its path toward global tax collection efficiency, attitudes have changed as the resolve of the US to implement the act has become abundantly clear, and intergovernmental agreements have added new thought processes to meeting compliance.

    Scope

    – Analyse the current situation regarding FATCA compliance and the role of wealth management in the changing tax environment.

    – Interpret FATCA trends within the wealth management industry using Datamonitor’s Global Wealth Manager Survey 2012.

    – Understand the challenges facing wealth managers and how to react.

    – Assess responses to FATCA from your industry peers using company specific case-studies.

    View Full Report Details and Table of Contents  (NOT CHEAP!)

    Report Highlights

    On a global scale, wealth managers are sitting on the fence when asked whether disassociating US clients is too drastic a measure. On a country scale attitudes toward US clients are very different, and some firms are seeing a niche market developing whereby US-friendly firms welcome with “open arms” those individuals rejected from US-averse firms.

    FATCA may have been postponed to 2014 but the challenges remain the same. A FATCA strategy must embrace flexibility. It must react to the growing intergovernmental agreement environment. Enhanced due diligence will become a fact of life and causing minimal strain on the client relationship is paramount.

    FATCA is the beginning of a wider and more transparent global tax environment that all firms must take anticipatory measures for now.  (Gotcha GATCA)

    Reasons to Get this Report  (The Sales effort)

    – What path is FATCA taking and where will the global tax environment be in five years’ time?

    – How is the competition reacting to FATCA?

    – How will FATCA affect the client relationship and how should wealth managers react?

    – Who is still accepting US clients and who isn’t?

    – What should a FATCA IT solution incorporate to reach maximum efficiency?

    SBWire (http://s.tt/1yYRj)

  5. Good historical overview by The Economist of the evolution since 2009 towards a Global Automatic Tax Data exchange, or GATCA! or maybe I should say GATDEX

    Hat tip to Badger from Ask your FATCA question thread.

    Tax transparency – Automatic response

    NOT ONE TO mince words, Daniel Mitchell of the right-wing Cato Institute denounces the OECD’s push to co-ordinate global tax enforcement as “the devil’s spawn” and possibly even a step towards the fiscal equivalent of—shudder!—the World Trade Organisation. Tax havens “should not have to enforce the burdensome tax laws of other countries”, he thunders. “Having grown rich with the tax policies of their choosing, the OECD countries are pulling up the ladder and saying, ‘you can’t do the same to attract investment’. It’s fiscal imperialism.”

    To tax-freedom advocates like Mr Mitchell, one of the most infuriating aspects of this perceived imperialism is the complete overhaul of cross-border information exchange. It is technical stuff, but the changes are extremely important. They promise to shine a light on some of the darkest corners of banking and investing, not only making tax evasion much harder but also casting a net over a host of other financial sins—and, along the way, testing financial firms’ compliance departments to the limit.

    The new era began in 2009 with something of a false start……

    read more online

  6. Chris posted this comment on the FATCA thread but wanted it to appear here.

    This belongs to the GACTA thread, but I can’t find it…
    A very interesting article:
    http://www.investmenteurope.net/investment-europe/feature/2249483/us-fatca-is-just-the-start-warns-csc
    Quotes from the article that I think are of interest:

    “The financial industry is so focused on US Fatca that it is ignoring the risk of other governments implementing their own Fatca”
    “The nightmare vision Ferrara has is of a ‘UK Fatca’, ‘Germany Fatca’, ‘France Fatca’ and so on, as each government looking to improve tax revenues realises they can go after their own citizens in the same way the US has.”
    “There is even a template for similar developments, when the OECD spent two decades developing common standards of anti-money laundering, Ferrara says.”
    “Another concern Ferrara points to is statements from US Treasury officials suggesting they will be monitoring implementation of the legislation to see how well it is working and then move to “tweak” the regime.”
    “Other governments would apply their own Fatcas to their own expats, with their own treasuries perceiving the revenue gains as “free money”.

    Here the author misses the point that other countries expats are not subject to taxation in their country of origin. I think FATCA would not get as much pushback if it was only targeting Foreign accounts used by one country’s residents.

    “Global trend to Fatca-type regulation will supersede specific data protection statutes”

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  8. Taxing the Wealthy Is Not So Easy

    In case you doubted…..See, I told you so… GATCA is coming…

    “We see the world moving to more automatic exchange of information, and we’re happy to embrace it.”

    Mr. Shane has observed the same development, and he envisions other countries’ joining the United States and Britain in seeking and offering personal financial data.

    “In the last few months many countries have started to say they’re interested,” he said. “This is the first step in a global tax database. For now they’re just handing information over, but it’s only a matter of time before there’s a database started in the U.S. and used by other countries.”

  9. Just continuing to update this trend…..Here is the reality, I fear…

    Bankers are seeing FATCA or more specifically GATCA as a global trend… and FATCA, as I have often said, is just the “Tip of the Spear” in this global war on offshore Tax evasion. (WOOTE) Bankers are capitulating around the world.

    “We want to strengthen cooperation with foreign tax authorities,” said the Finance Minister Luc Frieden, Sunday in the “Frankfurter Allgemeine Sunday newspaper.” “The international trend is towards an automatic exchange of bank information. We are not strictly opposed, ““said Frieden. Luxembourg, one of the six founding members of the European Union is increasingly in the spotlight, especially targeted for its culture of banking secrecy.

  12. Another GATCA story… Did Congress really know this was what they were creating when they started this?

    World powers urge ‘automatic’ swap of bank data as FATCA’s roots and bankers’ plight grow

    The Group of 20 nations, which represent the world’s major powers, took a major step last Friday toward making a global standard of the handful of recent bilateral bank information exchange agreements spawned by the US Foreign Accounts Tax Compliance Act of 2010.

    In a communiqué released April 19, the G20 urged global adoption of a “standard” that would create a system for the “automatic exchange of information” on the bank accounts of persons that may be evading taxes that they owe in their home or tax domiciles.

    The G20 announcement in Washington, issued at the end of their semiannual meeting, is more than mere words because it is meant for public consumption but is directed at the Organization for Economic Cooperation and Development (OECD), which they control.

    FATCA template has struck a global chord

    The communiqué is further proof that the principles and goals of FATCA — to uncover the hidden, foreign bank and other financial accounts of US persons in order to identify tax evaders and collect evaded taxes — have struck a chord with nations around the world, particularly the powerful ones.

  13. Just Me,

    If GATCA is the end goal, which it looks like it is from the G20, why even go through with FATCA and DATCA and all those costs? Go straight to GATCA and, perhaps?, treat every country fairly. Saying that, I can’t even imagine the bureaucracy and costs to all for GATCA.

  14. @Just Me, will we see the rest of the US banks join Florida and Texas bankers in a lawsuit against the federal government re DATCA in order to prevent GATCA?

    And we’ve got US-based Wells Fargo expanding in Canada. Will they oppose DATCA in the US, but join the CBA here in urging Canada’s federal government to sign on to a burdensome FATCA IGA http://www.thebottomlinenews.ca/index.php?section=article&articleid=584 ? And Canadian-based banks like TD, who expand or do substantial business in the US (or have more US branches than Canadian ones); will they advocate for a Canada-US FATCA IGA here at home – while joining US bank association lawsuits against the US domestic version of FATCA and oppose the US federal government in the US http://www.bizjournals.com/houston/morning_call/2013/04/texas-florida-bankers-sue-irs-over.html ?

  15. Let’s hope it Drains out of Florida faster. Let Rubio and Bill Nelson figure out where all the Money Went. Same for Ted Cruz.

  16. Well Calgary, they needed a whip, and FATCA was it. For GATCA to become a reality, the USFIs have to be forced into compliance via the FATCA IGA reciprocity, and that is harder to do than forcing the scared little FFIs to comply.

  17. Former German finance minister and chancellor candidate Peer Steinbrück was quoted today as saying he supports having another go at an IGA with Switzerland for automatic exchange of bank data. (The last attempt at an IGA was rejected by his party, the SPD, for being too weak.) This time he is demanding the same kind of information the Swiss are providing to the USA.

  18. It seems, that every story I see these days, points back to FATCA as the impetus for the new efforts to crack down on evasion and/ or avoidance or ‘avoidsion’ as the words get co-mingled in the readers mind…

    This from the Financial Times…
    .http://www.ft.com/cms/s/0/c0a8b634-b571-11e2-a51b-00144feabdc0.html#ixzz2STlaxVJg

    Brussels steps up efforts over tax avoidance
    By James Fontanella-Khan and Alex Barker in Brussels

    Brussels is increasing efforts to clamp down on tax avoidance by wealthy investors, including private equity partners and hedge funds, by forcing all 27 EU members to share confidential information on individuals’ investment income and capital gains for the first time.

    Europe’s five largest economies – the UK, France, Germany, Italy and Spain – recently agreed to start sharing this information but extending the rules to the rest of the bloc would encompass countries such as Luxembourg and Ireland, where many of the continent’s biggest investment funds are domiciled. The move comes amid a renewed international push to tackle tax evasion and avoidance.

    If that link is pay walled, then just search for the title under google news and it will come up for you.

  20. More to help explain the merging of tax terms, evasion and avoidance into, apparently a term in real use, tax avoision.
    http://opinion.financialpost.com/2013/05/13/tax-avoision/

    The potential impact of Ottawa’s war on illegal tax evasion and its expanding definition of avoidance — sometimes known in the tax business as tax avoision— on the dignity of the law, and the Westminster-style parliamentary process that is intended to protect it, is worrisome, and none of us are the richer for it.

  21. Everyone is coming to the conclusion we came too long ago…

    GATCA is coming…


    FATCA part of trend toward global information sharing

    The role of information sharing is only becoming more important in today’s financial markets, according to an article published by business law site Lexology. While this may seem self-evident in today’s digital age, the implementation of initiatives like the Foreign Account Tax Compliance Act (FATCA) fully illustrate how financial information and the sharing thereof has become a global enterprise that is erasing boundaries when it comes to issues such as taxation.

    “Over the course of a decade, what began as a gentle discursive foray into transparency and voluntary information exchange has steadily spiraled into an onslaught of automatic information exchange agreements between various taxation authorities,” the article stated. “Across Europe, the United States and an increasing number of developing countries, governments are putting in place new initiatives to try to combat non-compliance with tax laws and the non-disclosure of assets by their citizens.”

  24. There are tons of articles around about the newest OECD proposals on GATCA as presented to the Moscow G20 meeting. Thought I would just post just one…

    The OECD presented to G20 finance ministers plans for a two-pronged attack on tax avoidance and evasion from both companies and individuals.

    Complementing its Action Plan on Base Erosion and Profit Shifting by companies, the OECD provided ministers with a proposal to increase international tax cooperation and transparency through the promotion of automatic exchange of information between jurisdictions.

    The new single global standard is expected to be endorsed by the G20 which will call on all jurisdictions to commit to its implementation. The new standard, based on a three-tier proposal by the OECD should be operational in 2014.

    The proposal provides:

    A definition of the financial information to be exchanged automatically: interest, dividends, account balance and income from certain insurance products. It also includes sales proceeds from financial assets and other income generated by assets or from payments made with respect to the account.

    The development of an operational platform. The OECD points out that for automatic exchange of information to function effectively, the right legal and administrative framework needs to be in place to ensure confidentiality and to avoid misuse of the data transmitted. Common reporting and due diligence rules, supported by compatible technology and software, will be developed in the coming months.

    The establishment of a multilateral, legal platform. The Multilateral Convention on Mutual Administrative Assistance in Tax Matters contains strict rules on confidentiality and proper use of information. More than 70 jurisdictions, including all G20 countries, have so far signed the Convention. Building on this, the report calls on the G20 to support the development of a standardised agreement to allow signatories of the Multinational Convention to opt into automatic exchange of information. Developing such a model agreement could be completed by the end of 2013 with detailed guidance available in the first half of 2014, according to the report.

    Work is already underway to ensure that all countries benefit from a more transparent tax environment. This includes, for instance, helping developing countries identify needs for technical assistance and capacity building.

    The OECD’s update on progress toward automatic exchange of information and its Action Plan on Base Erosion and Profit Shifting (BEPS) were presented to G20 finance ministers meeting in Moscow on July 19-20, 2013.

    – See more at: http://www.myiris.com/newsCentre/storyShow.php?fileR=20130722084150199&dir=2013/07/22#sthash.May7exeV.73CqdTV3.dpuf

  25. Global Tax Evasion: Is FATCA Just the Beginning?

    While new compliance burdens imposed by the Foreign Account Tax Compliance Act (FATCA) are
    causing indigestion at credit unions and other financial institutions, they may only be the starting point for
    something much bigger. Global financial account information reporting requirements appear to be on the
    horizon. GATCA!

    [………]

    Credit unions, understandably concerned by onerous and constantly evolving FATCA requirements that
    begin as early as June 30, 2014, may wonder where all of this is heading. The good news is it might
    eventually lead to a single reporting regime, not different rules for each country. The better news is it
    might result in a watered down version of FATCA, what one wag has referred to as “Slim FATCA”.

    […..]

    Leveraging this existing data makes much more sense than collecting new and complex information to satisfy one country.

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