Next Tuesday, two bankers who now work for Taiwan’s executive branch will meet some people from the Bankers Association (yes, that’s their official name, not Bankers’ Association) in order to get recommendations on how to help banks deal with FATCA. Unsurprisingly, the Bankers Association is recommending complete and total surrender, without even asking for anything in return from the IRS. And the worst part is, the media are barely paying any attention to it. The only coverage I’ve seen at all is an article in Taiwan’s Apple Daily earlier this week, which I’ve translated below.
U.S. collecting taxes with FATCA; Bankers Association to present recommendations on 21st
|建議簽跨政府協議合約 並接手解決問題||Suggests signing inter-governmental agreement, handing over resolution of problems to government|
|2012年08月14日||14 August 2012|
|【廖珮君╱台北報導】美國政府全球大追稅有解，銀行公會建議由台灣政府和美國簽「跨政府協議合約」，取代國銀和美方簽約。一旦台美可簽跨政府協議，國銀將可免除被美方課稅、免報送、免關閉不合作帳戶，也不違反個資法。||[Liao Pei-chun/Taipei] There’s a solution for the U.S. government to collect taxes all over the world. The Bankers Association suggests that an “Inter-Governmental Cooperation Agreement” signed by the Taiwan government and the U.S. can take the place of the country’s banks each signing agreements with the U.S. side. This would avoid the need for reporting and for the closure of uncooperative accounts, and would not violate the Personal Information Protection Act.|
|我力爭「非互惠版」||Our side strongly recommends “non-reciprocal version”|
|銀行公會將在21日與行政院長陳冲、金管會主委陳裕璋座談時提出建議。據了解，美方在7月時提出跨政府協議模式合約（model agreement），分互惠版和非互惠版兩大版本，我方力爭採免簽租稅協議「非互惠版」跨政府協議合約。||On the 21st, the Bankers Association will hold a meeting with Premier Sean Chen and Financial Supervisory Commission Chairman Chen Yuh-chang at which they will present their recommendations. According to sources, in July the U.S. presented its inter-governmental model agreements, consisting of reciprocal and non-reciprocal versions. Our side strongly recommends the “non-reciprocal” version of the inter-governmental agreement which does not require the adoption of a tax treaty.|
Germany firmly told the U.S. that if the IRS wanted German banks to foot the bill to become American tax collection agents, then American banks would have to do the same for Germany. Russia’s Ministry of Foreign Affairs told their banks to quit their incessant whining and deal with their own problems because Putin wasn’t going to sign some disgusting surrender agreement. But none of that messy resistance for Taiwan, which is apparently happy to sell its territorial sovereignty to the lowest bidder.
What’s really sinister about this whole situation is that we don’t even get the names of the bankers who are pushing this thing. A journalist giving anonymity to a corporate source is one thing — the source might not be authorised by PR or legal to speak on the record, for example — but this article doesn’t even tell us the name of any of the officers of the Bankers Association, which is public information that can be found on their website. So let me fill in that deficiency: the chairman of the Bankers Association is named Liu Teng-cheng (劉燈城). He is concurrently the president of the Bank of Taiwan, a government-owned commercial bank.
Furthermore, in as thorough an example of regulatory capture as you can get, Sean Chen himself came from a banking background himself before entering politics, and may in fact know Liu Teng-cheng personally from many years ago. Liu is practically the same age as Chen. Both men studied in National Taiwan University’s Faculty of Law around the same time (Liu as an undergraduate, Chen as a master’s student) and served in Taiwan’s Ministry of Finance together. The two have even held the same position of Deputy Minister of Finance at different times.
Fortunately, we have FSC head Chen Yuh-chang to introduce some diversity into the mix: he is younger, graduated from a different department of NTU, worked in different sections of the Ministry of Finance before joining the private sector, and is the chairman of a different bank. Also, the picture attached to the article clearly shows that the men involved favour different numbers of buttons on their suits. I’m sorry, what’s that, you wanted ordinary members of the public to have a say in what’s going on here with their bank accounts and their privacy laws? You think this is some sort of democracy? Hah!
|據美方官網，互惠版是屬兩國資訊交換，但適用和美方簽有租稅協議和個案資訊交換，如歐洲5國（法、德、英、義大利、西班牙）。非互惠版則適用和美方未簽租稅協議者，如台灣。若雙方簽屬、成為美方「肥咖夥伴國（FATCA Partner）」後，台灣就需提供美籍客戶在台資料給美方，屬單向資料提供，美方不需提供資料給我方。||According to a U.S. government website, the reciprocal version allows for the exchange of information between two countries, but is applicable only to those countries which have already signed conventions with the U.S. on taxation and exchange of information, such as the five countries in Europe (France, Germany, the U.K., Italy, and Spain). The non-reciprocal version applies to countries which have not signed tax conventions with the U.S., such as Taiwan. If the two sides sign, and Taiwan became a U.S. “FATCA Partner”, then Taiwan would have to provide information about customers with U.S. nationality unilaterally, while the U.S. side would not have to provide any information to our side.|
Ms. Liao should be congratulated for her description (in bold above) of whose data will be provided to the US, which can also be seen in her second article on the topic. It’s only a one-character difference (美籍客戶 vs. 美國客戶) from how the rest of the Chinese-language media describes FATCA’s targets, but it at least alludes to the fact that the U.S. imposes tax based on citizenship rather than geography like every other civilised country on earth. This is a welcome contrast to all of those dishonest IRS press releases which obliquely refer to “U.S. taxpayers” without clarifying the uniquely broad scope of that term. Liao also clearly points out the grossly unequal nature of the relationship which the Bankers Association would like to impose on Taiwan. But sadly, her article doesn’t spend any more time exploring the implications of this deal for the tens of thousands of people in Taiwan with U.S. passports or green cards.
|銀行主管說，依美方規定，簽屬跨政府協議後，金融機構須有實質審查程序，例如如何辨識美國帳戶、提供哪些帳戶給美方等實質審查，若台美要簽屬，需約束我方金融機構遵守這些審查程序。||A bank officer stated, according to U.S. regulations, after the signing of an inter-governmental agreement, financial institutions would be required to implement some concrete procedures, such as how to identify U.S. accounts, what data would need to be supplied to the U.S., and other substantive investigation. If Taiwan and the U.S. sign an agreement, our side’s financial institutions would be required to comply with these procedures。|
|公會籲政府接手交涉||Association recommends government take over the negotiations|
|據公會建議版本，建議由我方和美國稅務局直接簽政府間協議，解決銀行適法性和實務執行上的困難。也就是說，若可簽跨政府協議合約，國銀不需關閉不合作帳戶，也不會違反個資法，也因不需直接將客戶帳戶報送美方，免和美方連線，國銀可降低遵循成本。||Under the Bankers Association’s proposal, our side would directly sign a cooperation agreement U.S. Internal Revenue Service in order to resolve the problems of legality and implementation. That is to say, if an inter-governmental agreement could be reached, then banks would not have to close non-cooperating accounts, and would not violate the Personal Information Protection Act. Also, because banks would not need to directly supply customer information to the U.S., they would avoid the need to liaise with the U.S. side, and our country’s banks could lower their costs of compliance.|
This looks very similar to what we saw over in the Netherlands: the banks are making an end run around the legislature. If global information exchange (what Just Me calls “GATCA”) is really coming, then that should require a formal amendment to data protection laws to be drafted, introduced in the legislature, passed, and then treaties proceeded with. That way the diplomats could be confident in the knowledge that the information exchange proposed therein would be guaranteed legal under domestic law.
Right now, Taiwan’s data privacy laws are silent on the specific topic of international transmission of information by a government agency, but in any situation involving disclosure of personal data they require individual written consent, lack of harm to the interests of the person whose data is being transmitted, or an actual law authorising the transmission of the data as part of the job scope of the government agency involved. And the law is even more clear on the limits of non-governmental agencies (I’ve cleaned up the Ministry of Justice’s translation a bit for purposes of this post). This is the only law on the subject which has been enacted by a vote of the people’s representatives:
|第21條：非公務機關為國際傳輸個人資料，而有下列情形之一者，中央目的事業主管機關得限制之：||Article 21: If a non-government agency transmits personal information internationally in one of the below situations, the government authority in charge of the subject industry may take limiting measures:|
But instead of respecting existing laws, the banks want the executive branch to immediately jump into negotiating the sale of the country’s surrender to the IRS. Once that is done, the executive can present the legislature with a fait accompli which they will be pressured into ratifying on the grounds that failing to do so would affect the country’s international reputation. We can only hope that Taiwan’s legislators are as incensed by this anti-democratic behaviour as the Netherlands’ legislators were. I fear instead they will provide us with a real-life example of that old pro-Beijing canard: that Taiwan will happily sign any international agreement just to try to prove their government still exists diplomatically, without regards for the actual, humiliating contents of that agreement.
|銀行主管說，政府因應FATCA成立專案小組，但卻多由公會去函美方爭取放寬相關規定，力道和位階不如政府，而美方已提跨政府協議合約，應由金管會和財部接手和美方交涉解決海外帳戶課稅問題。||A bank officer stated, the government has set up a working group to deal with FATCA, but even though the Bankers Association has sent letters to the U.S. side urging them to relax the relevant provisions, they are not as influential as the government, and since the U.S. side has already brought up the idea of inter-governmental agreements, the Financial Supervisory Commission and the Ministry of Finance should take over the negotiations with the U.S. side to resolve the problem of taxation of overseas accounts.|
|美國「外國帳戶稅收遵從法」是為防堵美國人透過境外逃漏稅，美國國稅局要求業者提供美國籍客戶所得、收入、資本利得等資料。若台灣金融機構不從，恐將被課30%懲罰性稅負。||The U.S.’ Foreign Account Tax Compliance Act aims to prevent Americans from using foreign territories to evade tax. The U.S.’ Internal Revenue Service requires industry members to provide information on their U.S. customers’ capital gains, income, and interest. If Taiwan’s financial industry does not accede, they could have a 30% punitive withholding tax imposed on them.|
In otherwords, after having attempted to put up some resistance to FATCA and concluding that their efforts are useless, the banks are now attempting to push all the costs and harms onto the public, without any democratic consultation. Nothing new to see here. Move along, folks.