By Kirsten Hastings, InternationalAdvisor.com
The United States will become the last global tax haven as the Common Reporting Standard (CRS) comes into force, making a repeal of Fatca very unlikely, says Nuri Katz, chief executive and founder of Apex Capital Partners.
By not signing up to the CRS, America has ensured that it will be the last country in which people wanting to avoid disclosing their assets will be able to hold their wealth, Katz explained.
“America started with the [Foreign Account Tax Compliance Act], encouraged the world to sign on to the CRS, but they didn’t sign on themselves.
“Through Fatca, the United States is capturing American money but they don’t want to be reciprocal, which CRS would require.”
US financial institutions do not have to provide similar information to other jurisdictions under Fatca.
According to Katz, this was done intentionally, in a bid to encourage the flow of foreign money and assets into the US: “They want to allow foreigners to open up accounts in the United States and not report it to their home countries.”
The CRS will see more than 100 countries and jurisdictions automatically share information for tax purposes. The first tranche of countries will start reporting in 2017, with the second tranche starting in 2018.
Countries agreeing to exchange information include Bermuda, Liechtenstein, the Isle of Man, Jersey, Guernsey, Mauritius, Switzerland, and the Cayman Islands.
With the list of countries and jurisdictions to anonymously hold assets shrinking, the US will soon be the only tax haven left, Katz said.
Fatca repeal unlikely
Under Fatca, foreign financial institutions are required to provide information on US citizens’ assets to the United States. Failure to do so can result in hefty fines. The onerous compliance requirements have seen many overseas institutions refuse to service US citizens.
Despite strong demand to repeal Fatca, Katz thinks it is unlikely.
“To the best of my knowledge, Trump has not touched or spoken about Fatca. It’s not on his radar at the moment and is unlikely to be so because all of his slogans are about ‘making America great again’ and ‘bringing jobs back to America’.
“Fatca ensures that American tax money is paid to America.”
A document paid for by the Committee on Arrangement for the 2016 Republican National Convention (RNC) expressly stated that Fatca was a “warrantless seizure of personal financial information without reasonable suspicion or probable cause”.
The document was not authorised by Trump. and he is not known to have any association with it.
It bears the signatures of Republican policy committee chair senator John Barrasso, and RNC co-chairs governor Mary Fallin and representative Virginia Foxx.
The RNC’s platform to repeal Fatca, however, does not mean that it is any more likely.
Katz said: “Trump is not a Republican. He just used the Republican party to become president. A lot of his views don’t match the Republican views, including huge deficit spending, which is what he is talking about. Those were things Obama wanted to do but the Republicans wouldn’t let him.
“I think his deal is for America to be less interventionist, more focused on itself. Therefore, I think he’s going to do what he can to make sure that American money stays in America.”