Hong Kong-based financial news group Finet reports on remarks by Liu Xiangmin of the People’s Bank of China on FATCA; I’ve translated their article below. Risk.net and Reuters have similar reports in English: “US should show more respect over Fatca” and “China central bank official slams U.S. tax dodging law”.
|人行：美國FATCA法案違反中國法律，並增不必要開支||People’s Bank: U.S. FATCA legislation violates Chinese law, unnecessarily increases expenses|
|人行條法司副司長劉向民表示，美國即將實施的「海外帳戶稅收遵循法案」(FATCA)法案對於中國的銀行會產生不必要的開支，亦令相關銀行因為向美國政府泄露客戶資料，而違反中國法律，他指出，兩國法律之間的相抵觸並非新事物，但因中國的公司近年才於海外設立辦事處或分行，有關的問題才浮現。||People’s Bank of China Department of Treaty and Law Deputy Director-General Liu Xiangmin stated, the United States’ soon-to-be-implemented Foreign Account Tax Compliance Act (FATCA) will result in unnecessary expenditures for China’s banks, and those banks which disclose customer data to the United States government will be in violation of Chinese law. He pointed out, conflict between the two countries’ laws is not a new phenomenon, but as Chinese companies have only recently begun to establish overseas representative offices and branches, the problem did not manifest itself until now.|
Up until now, the Chinese government has been keeping its cards very close to its proverbial chest on FATCA, only making vague statements about “promoting financial market stability” and “looking for cooperative solutions”. The most recent significant movement was a seminar on the topic held in September by the China Banking Association, the Hong Kong Institute of Bankers, and the Xiamen Association of Banks. The only media report I could find at all on that was this photo-heavy, information-light one (in Chinese), in which the reporter declined to tell us about about the concrete contents of anyone’s remarks.
The seminar was held in the southeastern city of Xiamen — kind of a strange destination for a banking conference whose participants came mostly from Beijing, Shanghai, and Hong Kong. That in itself may be significant, though I can’t quite figure out how. Perhaps making all participants travel rather than telling the Hong Kong bankers to make the pilgrimage up to the capital may be a nod that Hong Kong’s concerns are being taken seriously in what is no doubt going to be a coordinated national-level policy-making decision? And of course, Xiamen being the mainland city with the closest links to Taiwan, this may also have been a subtle invitation to Taiwan, which itself seems to be looking for help in resisting FATCA but so far has not approached Beijing on any response.
Or maybe everyone just wanted to get out of the smog and take a nice scenic vacation on the coast. It’s hard to tell, so we’re reduced to amateur Kremlinology in trying to guess what happens next …
|他表示，美國作為世界第一的金融市場，其他國家只能嘗試與其交涉，他希望美國制定相關法律時，可以考慮其他國家的意見。而中國當局現時須要優先處理，是要評估中國的銀行在有關法律所受的影響，中國需要以更全球性的方式來處理有關問題，他有指，FATCA 法案對美國本土經濟亦無大幫助，在實施法例後十年才能收取約8億美元的稅項。||He stated that the United States is the world’s primary financial market, and other countries have no choice but to negotiate with it. He hopes that as the U.S. formulates its regulations, it will consider the views of other countries. Furthermore, Chinese authorities must now give priority to assessing the impact of the relevant laws on Chinese banks, and China needs to take a more globalised approach to dealing with the problem. He also pointed out, FATCA will not be of much aid to the U.S. economy, and will take ten years from its implementation to bring in roughly US$800 million of revenues.|
Note what Liu did not state in his remarks: that other countries have “no choice but to comply”, nor that Chinese authorities should start jumping up and down and getting an inter-governmental agreement wrapped up. This is a far cry from remarks by people like Jamaican prime minister Portia Simpson Miller siding with the United States against her own country on FATCA. Indeed, Liu seems to be calling for the same thing that Taiwan’s ABAC representative sought a few months ago: a multilateral coalition to pressure the U.S. into scaling back FATCA’s most intrusive violations of other countries’ sovereignty.
|FATCA法案要求外國金融機構必須與美國稅務局簽定外國金融機構協定(FFIA)，自2013年起每年向稅局申報美國公民透過該機構帳戶所獲得的利益、資金流動等情形。FATCA跳過各國政府，直接透過與外國金融機構簽署協定，要求外國金融機構配合提供資料以減少公民避稅問題。||FATCA demands that foreign financial institutions enter into Foreign Financial Institution Agreements (FFIAs) with the United States’ Internal Revenue Service, and from 2013 begin reporting on U.S. citizens’ profits and capital movements in accounts in those financial institutions. FATCA bypasses national governments and through direct agreements with foreign financial institutions mandates that those foreign financial institutions provide matching information in order to reduce the problem of tax evasion by citizens.|
Reuters was careful to emphasise Liu’s statement that his remarks expressed his own views and not the official position of the Chinese government. This hardly means that Liu has gone rogue. At minimum he no doubt discussed the theme of his planned remarks with his bosses before making them; more likely, he was delivering a trial balloon, and not a particularly subtle one at that — this is far from some unattributed “official remarks” which got leaked in regional newspapers, or an unsigned editorial.
Liu Xiangmin, deputy director general of legal affairs at People’s Bank of China, said the U.S. should find a better way to tackle tax evasion than the Foreign Account Tax Compliance Act (FATCA) … “China’s banking and tax laws and regulations do not allow Chinese financial institutions to comply with FATCA directly.” Liu said. He emphasised those were his views and not necessarily the opinions of the central bank or the Chinese government … Liu was giving a speech on the foreign impact of financial regulation. He also noted the challenges posed to foreign banks by some of the regulation contained in the U.S. Dodd-Frank Act, such as the Volcker Rule. The rule bans banks from engaging in proprietary trading and will apply to many foreign banks if they have a branch in the U.S.