More Countries Agree to Help U.S. Crack Down on Tax Dodgers
The Treasury Department added 19 nations to its list of countries that have reached agreements with the U.S. on carrying out a far-reaching law aimed at preventing offshore tax dodging by American citizens.
The Treasury and the Internal Revenue Service said the 19 nations – including Australia, Brazil, South Africa and South Korea, as well as several tax havens, such as British Virgin Islands – had achieved agreements in substance with the U.S. on implementation of the Foreign Account Tax Compliance Act. At least for 2014, those countries will be treated as having formal agreements.
The announcement, which brings the total number of countries with effective agreements to 45, gives foreign financial institutions in the affected countries more certainty about their responsibilities under the Fatca regime. In general, the law requires foreign financial institutions to provide information to the U.S. about Americans’ overseas accounts.
In practice, the U.S. has allowed foreign governments to serve as conduits for the information in many cases. Without an intergovernmental agreement of some kind, foreign financial institutions face potentially stiff penalties in their dealings with U.S. financial institutions. The number of countries with agreements is expected to grow in coming weeks, ahead of July 1 when important aspects of the Fatca law go into effect.
The 19 countries being added to the list include Australia, Austria, Belgium, Brazil, British Virgin Islands, Czech Republic, Gibraltar, Jamaica, Kosovo, Latvia, Liechtenstein, Lithuania, Poland, Portugal, Qatar, Romania, Slovenia, South Africa and South Korea.
The U.S. previously had reached formal agreements with about two dozen countries, including major European nations such as France, Germany, Italy and the U.K., as well as several tax haven countries including Cayman Islands.