Gov’t Will Sign Agreement With the U.S. for FATCA
Taipei, Dec. 25, 2012 (CENS)--To cope with the implementation of the U.S. FATCA (the Foreign Account Tax Compliance Act) from Jan. 1 next year, the Financial Supervisory Commission (FSC) and the Ministry of Finance (MOF) will seek to jointly sign an agreement with the U.S. Department of the Treasury, in emulation of the practice of Japan, hopefully in the first half next year.
The agreement will exempt domestic financial institutions from the 30% tax for incomes deriving from the U.S. and help them cut related operating cost.
Chang Sheng-ford, minister of finance, noted yesterday (Dec. 24) that it is still uncertain whether the Executive Yuan (the Cabinet) will instruct the MOF to sign an agreement with the U.S. for exchange of taxation information, adding that the government will not randomly provide the financial data of overseas Chinese with the U.S. nationality even under the agreement. He assured that that exchange of taxation information will be based on the principles of “specific cases and reciprocity” and there will not be large-scale tax check.
Taiwan has signed taxation agreement with 24 countries but has provided taxation information on three to four individual cases to signatory nations of the agreement so far.
Under FATCA, the U.S. government asked financial institutions worldwide to provide the financial data of U.S. citizens, for the purpose of tax check. From next year, foreign financial institutions must sign FFI (foreign financial institution) agreement with the U.S. and provide financial data of U.S. citizens to the U.S. government starting from March 2015, bringing extra burden and trouble to financial institutions. Financial institutions refusing to sign the FFI agreement will be subject to 30% tax on all incomes deriving from the U.S.
The U.S. encourages other nations to sign government-to-government agreement with the U.S. for the provision of assistance for tax check, sparing the need of financial institutions to sign FFI agreement with the U.S. and deferring the provision of taxation information to Sept. 2015.
The Executive Yuan already adopted the suggestion of the FSC to sign government-to-government agreement with the U.S. for FATCA. As a result, domestic financial institutions will provide financial data of American clients upon their consent to the U.S. IRS (Internal Revenue Service), while only offering a total amount for those parts without the consent of American clients to the IRS.
(by Philip Liu)