The tax-industrial complex continues its efforts to promote lifetime employment and ever-rising salaries for tax consultants. Today they’ve turned their efforts towards Taiwan, whose governing officials have recently shown an alarming outbreak of insufficient zeal for kowtowing to Washington’s divide-and-conquer FATCA strategy. Two Deloitte accountants take time out of their busy schedules of helping large companies “optimise” their tax burdens in order to encourage these wayward souls back on to the straight and narrow.
|FATCA negotiations progress: our country losing to Japan, Singapore, South Korea|
|29 November 2012, 01:21
Commercial Times reporter Chang Kuo-jen
|美國總統歐巴馬連任成功，美國打擊美國人海外逃稅動作加快，預計今年底前將與約50個國家完成簽訂政府間協定或協商，遵守外國帳戶稅收遵從法（FATCA） 規定，而我國應對性不足，迄無任何具體行動，金融業界擔心受罰憂心忡忡。||With U.S. president Obama’s re-election, the U.S.’ attack on overseas tax evasion by Americans is picking up speed, and it is forecast that by the end of the year it will conclude the signing of intergovernmental agreements or negotiations with more than fifty countries regarding compliance with Foreign Account Tax Compliance Act regulations. However, our country is not being responsive enough, and up to now has not taken any concrete action, leaving the finance industry worried that it will be penalised.|
Before I get started with the rest of the article, a minor linguistic diversion. In the past, I’ve mentioned that Taiwan’s phonetic nickname for FATCA, Féikā (肥咖), can be translated literally as “fat coffee”. But I realised lately there’s a much better translation. That “肥” is the first character in the Chinese word féiliào (肥料), which means “fertiliser”. Indeed, in Japanese, the character “肥” standing alone lost its original Chinese-based meaning of “fat” or “fertile” and now solely means “fertiliser”, “manure”, or “dung”. Hence, we have a nice new Chinese aphorism to go along with “crisis = danger opportunity”: “FATCA = s**t coffee”, a nice big steaming mug of it which the U.S. Treasury wants you to drink.
Anyway, the article continues, without actually quoting any representatives of the local finance industry:
|德勤新加坡所會計師金卡文（Jim Calvin）指出，美國財政部在11月8日宣布，美國財政部正在積極與50多個國家和地區，為簽署FATCA（俗稱肥咖條款）進行政府間協定或協商程序。||Deloitte Singapore accountant Jim Calvin pointed out, the United States Treasury Department announced on 8 November that the United States Treasury is now proactively carrying out intergovernmental agreements or negotiations with 50 countries and territories on FATCA.|
|卡文說，所謂政府間協定，是指美國與其他國家跨國性共同來推動合作打擊海外逃稅和改善全球稅收合理徵納的互惠模式；這種跨國政府間的合作協定，2012年9月，由英國首先簽署。||Calvin said, “intergovernmental agreement” refers to international cooperation between the United States and other governments to promote cooperation in combatting overseas tax evasion and improve the rationality of global tax collection in a reciprocal manner; the first such intergovernmental agreement was signed in September 2012 by the United Kingdom.|
Some of you may recognise Jim Calvin’s name; since earlier this year he has been running the FSI Tax Posts blog, where Just Me and Tim are frequent commenters.
|美國財政部宣告，包括法國、芬蘭、德國、根西島、義大利、愛爾蘭、西班牙、曼城島、日本、澤西島、瑞士、墨西哥、加拿大、荷蘭、丹麥、及挪威等16個國家或地區，將在今年12月31日前，針對肥咖條款完成政府間協定的簽訂。||The United States Treasury Department proclaimed that 16 countries and territories, including France, Finland, Germany, Guernsey, Italy, Ireland, Spain, the Isle of Man, Japan, Jersey, Switzerland, Mexico, Canada, the Netherlands, Denmark, and Norway would conclude the signing of intergovernmental agreements on FATCA before 31 December.|
|至於阿根廷、南韓、澳大利亞、列支敦斯登、比利時、馬來西亞、開曼群島、馬爾他、賽普勒斯、紐西蘭、愛沙尼亞、斯洛伐克共和國、匈牙利、新加坡、以色列、瑞典等16個國家或地區，則將在12月31日前完成肥咖條款的協商工作。||As for Argentina, South Korea, Australia, Liechtenstein, Belgium, Malaysia, the Cayman Islands, Malta, Cyprus, New Zealand, Estonia, Slovakia, Hungary, Singapore, Israel and Sweden, they will complete negotiations on FATCA agreements before 31 December.|
|此外，美國政府也將與百慕達、盧森堡、巴西、羅馬尼亞、英屬維爾京群島、俄羅斯、智利、塞席爾、捷克共和國、聖馬丁、直布羅陀、斯洛維尼亞、印度、南非、黎巴嫩等15個國家或地區研究有無機會洽商簽訂政府間協定的可能。||Aside from this, the United States government will also investigate the possibility of whether or not there is an opportunity to negotiate intergovernment agreements with an additional 15 countries and territories, namely Bermuda, Luxembourg, Brazil, Romania, the British Virgin Islands, Russia, Chile, the Czech Republic, Sint Maarten, Gibraltar, Slovenia, India, South Africa, and Lebanon.|
Nice way to waste column-inches and promote a sense of inevitability: quote the Treasury Department talking about what other countries “will” do before the end of the year, especially their hilariously vague list of countries which are investigating the possibility of the opportunity of the chance of the glimmer of a hope of considering entering into discussions about whether or not to conduct negotiations. The same phenomenon can be seen in Russia, where journalists keep running articles claiming that Russia and US to share information on bank accounts, when in reality all that is happening is negotiations, in the face of opposition from the Ministry of Finance which has understood and clearly stated that FATCA is a violation of the principle of sovereign equality of states.
|勤業眾信會計師陳光宇表示，由於中國與美國間已有租稅協定的簽署，中國與香港雖沒有在美國財政部宣布的三種模式名單之列，但一般相信中美間循租稅協定方式進行肥咖條款的互惠執行，可能性很大。||Deloitte Taiwan accountant Chen Kwang-yu stated, because China and the United States have already signed a tax treaty, even though China and Hong Kong are not listed among the three models announced by United States Treasury Department, still it is commonly believed there is a large possibility that China and the United States will follow the tax treaty model to carry out reciprocal enforcement of FATCA [i.e. Model 1].|
|比較之下，台灣在亞洲四小龍中針對肥咖條款一事，應對的積極性明顯不足，主管機關雖有工作小組成立，但因台灣與美國並無租稅協定，即使要運用政府間協定的模式談判，也須配合修改相關法規與協商等程序複雜，國內金融業界為此憂心不己。||In comparison, Taiwan among Asia’s “four little dragons” is quite clearly not being proactive enough in dealing with the matter of FATCA. Even though regulators have set up a working group, because Taiwan and the United States do not have a tax treaty, even if negotiations are conducted on the employment of the intergovernmental agreement model, this must be done in concert with the complex procedure of amending the relevant laws and regulations, and so the domestic finance industry is quite concerned.|
Chen’s attempt to portray China as raring-at-the-bit to get in on FATCA is laughable, yet the Commercial Times swallows it whole without any fact-checking. I can understand if a Lebanese Arabic-speaking journalist has no clue what, say, South Korea or Russia are doing about FATCA, but here we’re treated to the spectacle of a Chinese-speaking journalist who is entirely ignorant about the FATCA news coming out of China — such as the criticisms levied against it by central bank officials.
More problematically, Chen Kwang-yu makes an obvious factual error: Hong Kong (and for that matter, Macau) is not included in the China–US tax treaty, and as a result the IRS treats the mainland and Hong Kong as separate countries for tax purposes. There would be legal and practical difficulties if Beijing tried to sign a FATCA agreement behalf of Hong Kong, rather than our government coming to its own theoretically independent agreement. On the constitutional side, there’s at least three relevant provisions in the Basic Law which have conflicting things to say about such a situation:
- Article 13, according to which Beijing is solely responsible for Hong Kong’s foreign relations, except as provided by the Basic Law;
- Article 151, which authorises Hong Kong to conclude its own financial agreements with foreign countries
- Article 153, which requires Beijing to “seek the views” of Hong Kong’s government if it wants an international agreement signed by China to be applicable in Hong Kong
And on the purely political side, the Hong Kong public is unlikely to accept any agreement imposed on us by Beijing, and especially not one which might involve bank data being passed to Beijing. In fact, the mere suggestion of such a thing seems like a great way to turn FATCA from an obscure concern of a few tens of thousands of expats into a city-wide issue sparking opposition on the scale of the national education or Article 23 protests.