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A Global #FATCA( or is #GATCA) in the future

Posted on by Posted in Issues regarding US persons abroad 140 Comments

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”

  2. Another author coming to the conclusion that a global GATCA is in the works,

    WHO’S ON THE HOOK FOR FATCA?

    What was originally a U.S. initiative is morphing into a global regime that will likely see the Canadian government forge information-sharing agreements with multiple jurisdictions. Nicolson points to a recent OECD policy paper as a step toward such a regime.

  3. OECD plans a tax information superhighway = GATCA

    As financial institutions work toward the implementation of the Foreign Account Tax Compliance Act (FATCA), they will be aware that automatic information exchange is not going to be a US-only phenomenon. In April 2013, the G5 (France, Germany, Italy, Spain and the UK) agreed to develop and pilot a multilateral automatic tax information exchange.1 In their announcement they called on other EU Member States to join the pilot; since April 2013 over 30 countries are known to have endorsed this plan.

  4. OECD seeks inspiration from FATCA model

    In case there was any doubt that GATCA is the ultimate outcome from FATCA

    The automatic exchange of tax information, a global standard pushed by the Organisation for Economic Co-operation and Development (OECD), will be based on the US anti-tax evasion legislation known as FATCA – the Foreign Account Tax Compliance Act.

    This is according to Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, who spoke to swissinfo.ch about the plans to introduce automatic exchange of tax information which the OECD intends to present for scrutiny next February.

    This future international standard is considered to be much more exacting than the current model and incompatible with the present system in Switzerland. The OECD aims to get the new standard adopted in September 2014.

  6. FATCA fallout in the copy cat realm continues to spread.. OECD now has 30 countries working on their GATCA spurred on by FATCA. Of course, they will make an exception for U.S. Citizenship taxation to try to have the U.S. join their model. Wonder what conflicts will occur?

    More than 30 Countries Working on the OECD’s Common Reporting Standard
    http://www.fsitaxposts.com/2013/12/13/30-countries-working-oecds-common-reporting-standard/

    On November 28, 2013, more than 30 countries released a joint statement announcing their commitment to early adoption of the Common Reporting Standard (CRS) that is being developed by the Organisation for Economic Co-operation and Development (OECD).

    The CRS draws on the U.S. FATCA regime and contains the reporting and due diligence standard that supports the automatic exchange of financial account information within the countries joining this initiative.

    The countries announcing their support to the single global standard of automatic exchange of information are:

    See the list… http://www.fsitaxposts.com/2013/12/13/30-countries-working-oecds-common-reporting-standard/

    BTW, South Africa is involved with the experimental application of this, and a Linkedin Comment to me described progress this way…

    In South Africa there are a number of products which are targeted at lower income individuals which would not be included in FATCA and therefore would not need system/process/on-boarding changes within the FATCA framework – these will now have to be included because without the de minimis they fall into the AEOI basket.
    From an IT development perspective it is easier to not have to filter data, however the volumes of data to handle for all nationalities raises its own challenges.

    In terms of approach – both citizenship and residency are factors for AEOI and customers will be required to provide both. This is the same requirement for FATCA and the AEOI.

    With regards to how many people are aware of this, it is the responsibility of financial institutions to communicate with their customers and advise them of this change. They may not like it, and they may even want to move their accounts, but they will have difficulty finding a reputable institution that is not implementing these changes. It is just not in the interests of Financial Institutions to fight this thanks to the 30% withholding on the FATCA side, and in terms of the OECD AEOI, it will be legislated by our government as they stand to benefit from the additional revenue that this will bring in to them.

    The USA shot themselves in the foot with this legislation – it will cost them a lot to administer for small reward, but for countries like South Africa where people have been squirreling money off-shore since apartheid times waiting for the country to fall apart, it is a gift from heaven and there is no way the South African tax authorities are going to miss this opportunity.

  8. Like someone mentioned, it looks like other countries are embracing citizenship based taxation, rather than the US getting rid of it. That’s scary. Totally orthogonal to what is required for a country to thrive in a globalized world. The only migrants left will be expats sent on a temporary basis by big multinationals who can afford the increase in benefits necesssary for sending someone abroad. People who settle abroad will be forced to dump their original citizenship in order not to be double taxed for no services. What a sad state of affairs…

  9. Note this headline of Deloitte’s Jim Calvin blog…

    DBrief Webcast: GATCA – Globalization of FATCA and Multilateral Exchange of Tax Information

    The OECD is developing a framework for multilateral automatic exchange of tax information based on the Model 1 Intergovernmental Agreements (IGAs) for the U.S. Foreign Account Tax Compliance Act. This global Automatic Exchange of Information (AEoI) is sometimes referred to as global FATCA or “GATCA”. Delivery of this framework is on an ambitious timetable, with the requirements to be finalized in early 2014 and exchange of information scheduled to commence by the end of 2015 among G20 members. We’ll discuss:

    What are the main requirements of GATCA?
    What are the significant differences between FATCA and GATCA, particularly for exemptions and concessions?
    What are the key issues and concerns raised by financial institutions and advisers to date?
    What might financial institutions in Asia Pacific consider doing now to prepare for GATCA?
    Understand how your financial institution will be affected by GATCA and consider the impact of GATCA on current FATCA implementation programs.

  10. I am beginning to think I have had the ordering of the evolution of FATCA wrong…

    I started early on saying FATCA begets DATCA begets GATCA…

    but watching these developments, I am beginning to think it goes like this..

    FATCA begets GATCA and forces DATCA onto U.S. shores.

    The international convention creates pressure to force onto America that which it would not accept otherwise. Then again, we could just thumb our noses at the world like we did with Kyoto Protocol

  13. From FATCA to GATCA: the move towards global tax information exchange

    http://www.mallesons.com/publications/marketAlerts/2013/Pages/From-FATCA-to-GATCA-the-move-towards-global-tax-information-exchange.aspx

    I see some others are picking up my theme…

    I started out a couple years ago saying… FATCA begets DATCA begets GATCA,

    I figured a domestic DATCA was essential for a global GATCA to work, and this would be the progression, but as I have said previously… I am beginning to think I got the order wrong..

    FATCA begets GATCA and then forces a DATCA onto the USFIs. Was this what Congress intended? I think not. But, the FATCAnatics in Treasury may have had this as a strategy. Create an International movement that becomes so large, Congress is forced into imposing FATCA like provisions (DATCA) on the USFI. Whether or not they thought that far, I do not know, but that is certainly what is happening.

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