Following in the grand media tradition of running biased reports about old news in an attempt to generate a feeling of consensus and progress about the issues of the day, Hong Kong’s Headline News — one of the half-dozen Metro clones you can grab for free to read on the train to work — printed a FATCA article this morning, apparently apropos of nothing. There’s no new developments to report, so they just repeat the same old half-truths in an increasingly skewed manner.
The article features interviews with diverse sectors of society such as banks and tax consultancy firms. Only a few unimportant voices are missing, such as the government bureau which is allegedly supposed to be formulating the policy response to FATCA, or accountholders who might be affected. Unfortunately it’s the first news we’ve seen here in months, so I’ll translate it anyway as part of the ongoing project of Kremlinology in trying to figure out what exactly my adopted hometown’s response to FATCA is going to be.
|美新法防逃稅 業界憂成本增||New U.S. law prevents tax evasion; industry worries about increased costs|
|2012年09月03日 08:40||3 September 2012, 8:40 AM|
|為防止納稅人利用海外帳戶逃稅，美國將實行海外帳戶納稅法(FATCA)，「搵錢之法」無孔不入，業界人士表示最遲今年6月底香港銀行就要開始對客戶進行大起底，令銀行營運成本大增，有銀行可能要聘請顧問協助，甚至有個別客戶放棄美國綠卡。||In order to prevent taxpayers from using offshore accounts to evade tax, the United States government will implement the Foreign Account Tax Compliance Act (FATCA), and in their search for cash they’ll look in every nook and cranny. Industry sources stated that by June at the latest, Hong Kong banks must start a giant dig through their customers, causing a large increase in banks’ operating costs, and even some cases of individual customers giving up their green cards.|
Oh no! Banks face increased costs? We must do whatever it takes to save them! We can’t do something so inhumane and cruel as making them write letters to all their customers asking them for permission to send their data to a foreign country! The fact that this recycled, no-news article is headlined with this crucial piece of information about banks’ costs hints at the real reason this story is probably being written: to establish a fake consensus for ripping down our privacy laws to prevent banks’ costs from rising. I guess we can’t expect much honesty or editorial independence from free newspapers, who are under heavy pressure to please their only paying customers — the advertisers.
Right now, pretty much no one in Hong Kong is paying attention to obscure privacy law issues like this, due to the legislative elections coming up next Sunday — which are dominated by local problems like school curricula and rising housing costs. The banks’ game plan seems to be to build up a facade of public consultation about FATCA, and then ram the relevant privacy law amendments through the legislature as quickly as possible in October while the new delegates are still trying to find their desks and preserve their political ammunition for matters of larger importance.
|銀行界人士表示，配合FATCA法案，銀行必須將舊有客戶資料重新檢閱，識別會否有客戶隱瞞美國納稅人的身分。新客戶開戶時，銀行要取得客戶同意在有需要之時，將會把客戶資料提交美國。此舉不但令銀行的相關系統等要作出調整，部分銀行更打算聘請顧問教路，必將令行政營運費用大增，影響甚大，尤其波及大行及環球銀行。||Banking industry sources stated, in coordination with FATCA, banks must undertake a new inspection of their old customer data, to distinguish whether or not those customers are concealing United States taxpayer status. When opening new accounts, banks must obtain consent from customers to transmit their account data to the United States when necessary. This step not only makes it necessary for many banks to adjust their systems, but also has caused some banks to make plans to hire consultants to offer guidance. It will cause a big increase in administrative and operating expenses, especially for large banks and global banks.|
The ridiculously biased language in this section should tell you whose water this newspaper is carrying if you hadn’t already figured it out already. “Concealing” (隱瞞) U.S. taxpayer status? What a load of rubbish. Under the existing “Qualified Intermediary” standards, banks do not have to waste time demanding nationality documentation from people who have the right of abode in Hong Kong and show their Hong Kong Permanent Identity Card at account opening. Before 2000 they did not even require right of abode; any German, Pakistani, or Mauritian living in Hong Kong under a student, dependent, or employment visa could open a bank account without having to provide their passport to fulfill Washington’s demands. The horrors!
When I first came to Hong Kong I opened up a bank account this way. It was at a simple local bank which didn’t offer any U.S. brokerage services or whatnot, so they were shockingly bound only by local law, not by U.S. QI standards. I picked them because they had an ATM near my apartment. I did not “conceal” my U.S. Person status (unless you count the fact that I was wearing pants, which covered up my “property of U.S. government” tattoo); I gave the bank all the documentation they wanted and answered every question they asked of me, and they gave me a checkbook and an ATM card. Back in those innocent days neither of us imagined that a government on the other side of the planet had anything to do with the transaction.
|明年1月實施||To be implemented next January|
|有客戶或擔心此法案實行後帶來的不便，而全家放棄美國綠卡的身分，亦有客戶立即向銀行表明自己的美國公民身分，以免因瞞報而被罰。FATCA法案將於明年1月實施，6月底前各地金融機構要與美國當局協定合規代理協議||Some customers may be worried that the implementation of this law will bring inconvenience for them, and some whole households are giving up their status as U.S. green-card holders, while others are immediately informing banks of their status as U.S. citizens in order to avoid being fined for concealing it. FATCA will be implemented from January next year, and before June financial institutions in every territory will need to sign cooperation agreements with the U.S. authorities.|
Really? Who are these “others” who are taking such a weird step like painting a target on their backs and announcing themselves to their banks, and what fines are they worried about? Why didn’t Headline News interview some of them? In reality, the U.S. has no laws for fining you if you don’t tell your bank about your citizenship, or for that matter if you decide to move your account to a non-FATCA-compliant institution (Carl Levin’s best efforts notwithstanding). The only fines the U.S. can impose are for not filling out Form 8938 or one of their other dozens of stupid forms, which is a matter between you and the IRS and has nothing to do with telling your bank about anything.
And nor can the U.S. collect any fines in Hong Kong: there is no tax treaty, and anyway none of Hong Kong’s existing treaties call for mutual assistance in collection, least of all against residents of Hong Kong in relation to their Hong Kong-source income. We firmly observe the common law “revenue rule”, and thanks to Basic Law Articles 106 and 108 that situation is not likely to change any time soon. And of course Hong Kong itself does not have any of its own fines for people who do not comply with FATCA, any more than we fine people who travel to Abkhazia in violation of Georgia’s travel ban or who spread religion in violation of North Korean law.
More likely the “fines” are part of the banks’ own contingency plans if they’re faced with the unthinkable situation that the legislature will not tear up our Personal Data (Privacy) Ordinance and allow them to send information about Hong Kong people’s finances out to whatever random foreigners ask for it. If that happens, they’ll have a giant “recalcitrant account holder” problem. Presumably their “solution” is to impose random service charges on uncooperative customers who ignore or refuse to respond to letters and phone calls demanding they fill out Form W-8 or W-9, until those customers get sick of the harassment and close their accounts “voluntarily”.
|銀行公會主席馮婉眉表示，正就FATCA法案與財經事務及庫務局研究及溝通，並將向美國當局提交意見。畢馬威中國合夥人王尹巧儀表示，美國為全球最大經濟體，很多金融機構都要在美國經營或設有戶口等，必需要遵守此法案，否則或因違規為受罰。即使沒有在美國經營的機構，由於涉及範圍廣，不參加此協議的銀行或會被杯葛，以後做生意多掣肘，故此香港的金融機構都必須做好準備。||Hong Kong Association of Banks chairwoman [Anita] Fung Yuen-mei stated, they are presently engaged in research and discussion on FATCA with the Financial Services and Treasury Bureau, and will submit their opinions to the U.S. authorities. KPMG China partner [Jennifer] Wong Wan How-yee stated, the U.S. is the world’s largest economy; many financial institutions have operations or accounts there, and so must comply with the law, or otherwise face fines for violating it. Due to the broad scope, even institutions which do not have U.S. operations may face boycotts if they do not participate in agreements and could face constraints on their business in the future. Due to this, Hong Kong financial institutions need to make preparations.|
|馮婉眉表示，正就FATCA法案與財經事務及庫務局研究及溝通。||Fung stated, they are presently engaged in research and discussion on FATCA with the Financial Services and Treasury Bureau.|
As noted previously, Secretary for Financial Services and the Treasury K. C. Chan lived in the U.S. for a long time and may be a former U.S. Person. Let’s hope he’ll at least stop to think of his former fellow U.S. passport and green card holders before he jumps at whatever plan the banks here come up with to dump all the costs and harms of FATCA compliance onto local Hong Kong taxpayers and bank customers. The Hong Kong Association of Banks is a statutory corporation, meaning it’s theoretically set up to serve the interests of society at large, rather than society being set up to serve its interest …
Of course, while financial institutions in Hong Kong have significant influence in the government just like in most developed countries, here there’s another force for them to contend with: Beijing, whose opinions our local government officials will at minimum solicit and study when it comes to matters affecting foreign relations. Mainland China has been notoriously tight-lipped about exactly what it will do in response to FATCA, making only vague noises about “promoting financial market stability” and finding “an opportunity to discuss China’s concerns”. Like others have said here, the U.S. will lose a lot of credibility and momentum on FATCA if it doesn’t get the “BRICs” on board, so likely not just Hong Kong but many foreign governments are waiting for Beijing to tip their hand before publicly committing to their own response.