South Korean tax industry publication Josei Ilbo is reporting that Finance Minister Bahk Jae-wan met with Timothy Geithner at the G20/IMF/World Bank meeting this weekend and came to an agreement on the implementation of FATCA in South Korea. Their journalist has written a shoddy and clueless article which makes no mention of the potential effects on Korean Americans, returned South Korean expatriates still holding on to their green cards, Americans working in South Korea, South Korean privacy laws, or anything else — just the usual cross-border services firm propaganda on “minimising the burdens of financial institutions”. Translation after the jump.
“한·미 양국 금융·조세정보 공유된다”
“South Korea, US can share finance and tax information”한·미 재정당국, FATCA 시행시기 협의; 독일 등 유럽 5개국과 유사한 수준에서 결정될 듯
South Korea, U.S. fiscal authorities agree on implementation schedule for FATCA; decided on standard resembling that of five European countries including Germany한·미 재정당국이 미국의 해외계좌납세순응법(FATCA) 시행과 관련해 적용 당사자인 금융회사들의 부담을 최소화시켜야 한다는데 공감하면서 구체적인 시행시기 조율에 나섰다.
South Korean and U.S. financial authorities have come to a consensus on minimising affected finance companies’ burdens regarding the implementation of the U.S.’ Foreign Account Tax Compliance Act (FATCA), and started to coordinate regarding a concrete implementation timetable.22일 기획재정부에 따르면 G20 재무장관·중앙은행총재 회의에 참석 중인 박재완 재정부 장관은 티모시 가이트너 미국재무장관과 양자면담을 갖고, FATCA 시행시기, 보고대상 범위 등 구체적인 사항에 대해 협의했다.
On the 22nd, according to the Ministry of Strategy and Finance, while attending the G20 Finance Ministers and Central Bank Governors’ Meeting, Finance Minister Bahk Jae-wan sought a bilateral meeting with U.S. Treasury Secretary Timothy Geithner and came to an agreement on FATCA’s implementation timetable, scope of reporting, and other concrete items.FATCA는 미국이 지난 2010년 3월부터 자국 납세자의 역외탈세를 방지하고, 해외금융정보를 수집하기 위해 제정한 법으로, 협약 당사자 과세당국이 금융회사로부터 금융정보를 수집해 미국에 정보를 제공하는 조건으로 미국도 미국 금융회사가 보유하고 있는 상대국 거주자 금융정보를 제공하는 제도다.
Under FATCA — a law enacted by the U.S. in March 2010 which seeks to prevent domestic taxpayers from evading taxes extra-territorially and to collect information from overseas financial institutions — on the condition that tax authorities which are parties to agreements collect financial information from finance companies and provide it to the U.S., the U.S. will also provide financial information held by U.S. financial companies regarding residents of the partner country.쉽게 말해 역외탈세를 시도하는 양국 거주자들의 금융정보를 맞교환하는 방식으로 과세인프라를 확충하는 제도인 셈.
To put it simply, it’s a system which expands the taxation infrastructure through the method of exchanging financial information on residents of the two countries who are trying to evade tax extraterritorially.한·미 양국은 이번 협의를 통해 미국과 영국, 프랑스, 독일, 이탈리아, 스페인 등 유럽 5개국 사이의 이뤄진 협의와 유사한 수준에서 향후 FATCA 제도 운용과 관련해 긴밀히 협의해 나가기로 했다.
Through this agreement, South Korea and the United States have decided to cooperate closely regarding the future operation of the FATCA system, similar to the the multilateral agreement between the U.S. and the five European countries the United Kingdom, France, Germany, Italy, and Spain.
The rest of the article goes on to talk about Jang’s meeting with Russian finance minister Anton Siluanov regarding energy policy. Fortunately, any agreement that Jang has made with Geithner will likely require conforming amendments to national data protection laws to be passed by South Korea’s National Assembly. The problem is, they are not so susceptible to voter pressure at this point in the cycle, because South Korea just held legislative elections two weeks ago.
At least some members of the South Korean public understand what’s at stake. There’s dozens of other countries — particularly non-Anglophone ones — where the vast majority of local information about FATCA comes from self-serving press releases put out by cross-border services firms, who are the only ones who have the resources to translate new material week after week and analyse it in terms of local laws. But in South Korea, at least, there have been at least a few FATCA and FBAR-related articles in the Korean-language press, which have have mentioned the negative effects of the U.S.’ extraterritorial laws (I translated one such article on my blog a few months ago), and Atossa Abrahamian’s article on Americans renouncing their citizenship was also published in some major Korean newspapers last week (including the JoongAng Ilbo and the Hankook Ilbo).
Thanks Eric for sharing this. South Korea is essentially a protectorate of the United States. What else do you call a country with formidable US military presence? How could they do otherwise? But why would China or India participate? Brazil? Russia? I would think that the BRICs will regject FATCA, and many others will follow.
It’s reported today that Ireland wants to take the easy way out and enter in FATCA discussions.
These clueless governments are leaving it for an unhappy citizen to mount legal challenge so they can go back to the Americans and blame their own legal system for FATCA roadblocks. Any country that uses referendums should get a FATCA question on the ballet to bypass their own government officials.
Most of the developed (i.e. high tax) world will find a way to accommodate FATCAT.
In addition, a significant part of the developing world with authoritarian governments (e.g. China, Saudi Arabia, etc.) will find participation in FATCAT very tempting for its potential to obtain foreign financial information about the possibly illicit hidden wealth of local officials.
For an example of the potential uses of such information see Nicholas D. Kristof’s opinion piece in the 21 April edition of the NY Times.
FATCAT is the logical answer to the problem faced by economies who want the burden of taxation to be shared by capital as well as labor and tangible assets.
Capital is exceedingly mobile and can vanish and reappear in a completely different form and a completely different location in milliseconds. Hence, absent a worldwide system of comprehensive data collection, identification systems and other – highly intrusive – measures, labor will continue to disproportionately bear the taxes of the world.
Culturally and politically many governments cannot initiate such things as FATCAT – even though they would dearly like to.
As usual, it is the United States that is taking the lead and inviting the others to follow. That it did so not by pussyfooting around in diplomatic backchannels but rather, by going upside the world banking community’s head with a 2×4 to get its attention is a testament to the kind of statecraft practiced in the world where its author, Charlie Rangel, comes from: Harlem, USA.
As the governments of the developed world jump on the FATCAT bandwagon and it becomes ever clearer to the “high net worth” community that their happy, warm and opaque swamp is being drained, it will be fascinating to see whether that capital will flee to riskier climes or pay the price of safety by letting it stay at home where it will have to contribute its fair share to the communities where its owners live in civilized comfort.
So why is the New Democratic Party of Canada(historically the furthest left party in Canada) opposed to FATCA. Is it that the “blood” of anti americanism in Canada is thicker than the “water” of shifting taxation from labor to capital.
http://jeancrowder.ndp.ca/post/jeans-column-on-the-u-s-foreign-account-tax-compliance-act-fatca-for-the-cowichan-valley-citizen-september-2011
http://denisesavoie.ca/ndp-position-on-the-us-foreign-account-tax-compliance-act-fatca
Tim,
I suspect you may be right about anti-Americanism among Canada’s leftish – but patriotic! – parties but once they get past their knee-jerk anti-Americanism it will dawn on them that the FBAR enhanced penalties, the FATCAT legislation and the proposed Stop Tax Haven Abuse provisions are all the product of America’s own left-of-center legislators.
They will then realize that the real target is not the odd US citizen living outside the US but FATCATs in all the developed world who take advantage of privacy legislation to hide their swag in nice, safe, uncommunicative foreign lands.
When it becomes clear to Canada’s and the rest of the world’s lefties that this legislation promises to rip the lid off of their FATCAT antagonists, their concerns about individual privacy and liberty – never paramount on the left – will vanish like $100 in New York City.
@todundsteuer
It will have to be quite a backflip though for the Canadian NDP to start supporting FATCA. While I have not historically been a supporter of the Canadian NDP many on this site are are quite involved in its internal politics and have been assured there will be no change in position by the NDP on FATCA. In fact a signed letter was sent to Canadian Minister of Finance Flaherty by all NDP MP’s from British Colombia(historically the most left wing part of the NDP). In this letter you had people such as Libby Davies(probably the most left wing of all 308 Canadian MPs)coming out against FATCA.
http://www.libbydavies.ca/parliament/openletter/2011/10/26/letter-ministers-flaherty-and-baird-urging-them-defend-canadian-us
However if I was an evil Ernst Stavlo Blofeld or Dr. Evil of offshore banking I would be quite eager to turn Canadian and American progressives against each other on the subject of FATCA.
The video below might be relevant to the respective position of offshore “tax evaders”, the Canadian Progressive movement, and the American Progressive Movement on FATCA
@todundsteuer
From Wikipedia on Canadian “nationalism”
In English Canada, support for government intervention in the economy to defend the country from foreign (i.e. American) influences is one of Canada’s oldest political traditions, going back at least to the National Policy (tariff protection) of Sir John A. Macdonald, and has historically been seen on both the left and the right. However, calls for more extreme forms of government involvement to forestall a putative American takeover have been a staple of the Canadian left since the 1920s, and possibly earlier. Right-wing nationalism has never supported such measures, which is one of the major differences between the two. Leftist nationalism has also been more eager to dispense with historical Canadian symbols associated with Canada’s British colonial heritage, such as the Canadian Red Ensign or even the monarchy (see Republicanism in Canada). English Canadian leftist nationalism has historically been represented by most of Canada’s socialist parties, factions with the social-democratic New Democratic Party (such as the Movement for an Independent Socialist Canada in the 1960s and 1970s), and in a more diluted form in some elements of the Liberal Party of Canada (such as Trudeauism to a certain extent). Today it manifests itself pressure groups such as the Council of Canadians. This type of nationalism is associated with the slogan “it’s either the state or the States”, coined by the Canadian Radio League in the 1930s during their campaign for a national public broadcaster to compete with the private, American radio stations broadcasting into Canada,[41] representing a fear of annexation by the United States. Right-wing nationalism continues to exist in Canada, but tends to be much less concerned with integration into North America, especially since the Conservative Party embraced free trade after 1988. As well, many far-right movements in Canada are nationalist, but not Canadian nationalist, instead advocating for Western Separation or union with the United States.
Brazil will comply.