From Just Me:
I have emailed the reporters at the Weekly Standard (using their internal email box) thanking them for this article, and have tweeted this..and sent to a couple reporters this morning, but out of time. Have to run to town.
Obama Burdens the Banks and you did not know! @weeklystandardbit.ly/ztzA5p MUST READ about #DATCA the domestic version of #FATCA
Obama Burdens the Banks
The costliest regulation you’ve never heard of..
JAN 23, 2012, VOL. 17, NO. 18 • BY IKE BRANNON AND SAM BATKINS
That is a very good article and confirms what I suspected – sweeten the deal for other countries and maybe they will go along with FATCA. At least that is my take on it. Oh, those folks are diabolically clever….
As a previously article pointed there is a lack of equality between what the U.S. is proposing to do and what they are demanding of others. In the situation with DATCA it is the IRS that will report financial information to foreign governments. But in the case of FATCA the U.S. is demanding that the foreign banks report directly to the IRS and not through their national taxing agencies.
The difference between the two reporting systems is that the IRS will get have access to the information prior to that of the foreign taxing regime. This would give the U.S. government unfair access and ability to alter the information that is being sent.
But the bizarre thing is that “reporting of interest paid to non-US depositors” is NOT a sweetener for the very countries the IRS claims to be targeting with FATCA: “tax havens”. Every single tax haven country in the world (and plenty of non-tax havens) has a territorial tax system. They do not care one whit if their residents or companies are earning bank interest in the US or capital gains in Antarctica or whatever.
If the IRS are trying to fight tax haven abuses, they’re doing it wrong. But if they’re just trying to invade the privacy of every American and Western European, they’re doing a stand-up job. If you have a tinfoil hat, you might even conclude that was their real goal in the first place …
Incidentally, not a single Hong Kong bank has even mentioned the word “FATCA” yet on their websites. I talked to the manager at my local branch last week; she’d barely heard of FATCA and had no idea if her bosses were making plans to deal with it yet.
Very good point there, Eric. If a country doesn’t have citizen based taxation then the IRS offer is meaningless.
From the article: “The Treasury estimates that the costs to comply with the regulation would be minimal, with banks needing no more than 15 minutes to comply, summing to a grand total (when multiplied by the roughly 8,000 banks and other depository institutions affected) of 2,000 hours of employee time, or somewhere just south of $100,000 per annum. ”
So, basically their thinking is that “we’ll offer the Europeans something that we can whip together in 15 minutes” which costs hardly anything for a large bank to implement, whilst at the same time requiring all foreign banks to implement legislation that will cost 1.000 times more for the foreign banks to implement. Sure, seems like a fair deal to me…
The US seems determined to make sure that nobody will want to invest there, especially those from “unstable” countries. If you were from a country with an untrustworthy or corrupt government would you invest your money in the US, knowing that it would then be reported back to them? This needs to die just as quick a death as FATCA.
Earlier comment at functionally defunct Expat Tax Forum rumored a two-year wait list for renunciations in Hong Kong.
Thanks, I’ve heard that too. Officially when you call the consulate and ask for the appointment, they say they can give you one in a few months. But they demand that you have proof of your other citizenship in hand. And they enforce the BS “period of reflection” before the second appointment. On the phone they wouldn’t tell me how long the delay for that was. People also say that the HK government got an unexpectedly high volume of naturalisation applications this year and so there’s delays from that side as well. So I wouldn’t be surprised if the total length of the process indeed added up to two years.
Anyway, two interesting things will happen later this month which should shed some light on all the rumours: the HK government will release the FY2012 budget (including target processing times for naturalisation applications, and whether the Immigration Department met that target – in the past it’s been 80% of applications finalised within 3 months). And of course, the Q4 2011 renunciation list will get published in the Federal Register, so we can see if there’s been an unexpected surge in numbers.