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Sunday, 26 June 12:43 (GMT -05:00)

Business And Politics News

FATCA: USA Becomes World’s Tax Center In 2013


Everybody knows that the USA is the financial center of the world while its dollar is the world’s major currency. However, few of us know that the Foreign Account Tax Compliance Act (FATCA) will take effect on January 1st 2013. Since then, any financial organization around the globe (banks, hedge funds, insurance companies etc) that has any financial relations with US companies will have to send an annual report to the Internal Revenue Service (IRS), the U.S. government agency responsible for tax collection and tax law enforcement.
According to Eugene Olkhovsky, Masterforex-V Academy’s leading expert from Canada, the first attempt to eliminate the “bank secrecy” was successful. As a result, Swiss banks cannot withhold the data about their clients any more.




Foreign Account Tax Compliance Act
The Internal Revenue Service’s official website goes:
“The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.
Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.
In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.”
Expert Opinion: FATCA. Possible Consequences.
According to Masterforex-V Academy, the FATCA divides all the financial institutions in the world into 2 group: those banks that will cooperate with the IRS and those that won’t. Obviously, the news shocked the entire financial world.
The FATCA jeopardizes the age-old financial systems in many “offshore” countries around the globe. It is not a secret that such countries as Switzerland, Cyprus , the Cayman Islands, the Isle of Man and many others feed mainly off their banking sectors.
For China and some other major economies, it will be humiliating to obey the orders of the USA.  Moreover, the new regulation contradicts the legislation of numerous countries around the globe, including Russia. Yet, no country is probably going to willingly adapt its legislation to the USA’s demands.
USA Makes Concessions
Shortly after, Washington understood that they had gone beyond the mark with the initial edition of the FATCA. So, the US Department of the Treasury together with the IRS published a document containing preliminary recommendations and explanations (which were sort of amendments).
In particular, they extended the initial stage of concessions. Moreover, they slightly changed the procedure of complex expertise and specified the notion of a financial report. There were some other changes, which eventually helped the USA to promote the new law.
Possible Consequences
Despite overall discontent, the rest of the world hasn’t formed a clear attitude towards the FATCA. On February 8th 2012, numerous European countries (including Italy, Germany, Spain , France and Great Britain) agreed to follow the FATCA. At the same time, other countries keep pondering on whether to join the company.
The FATCA issue was on the agenda of the G20 summit in Mexico (Feb 2012) and the BRICS summit in Washington (April 2012). Obviously, there will be no global resistance against the FATCA.
While many Americans with businesses abroad are about to deny their US citizenship, many foreign banks in Europe and emerging markets are looking forward to cooperate with those entrepreneurs.
According to Masterforex-V Academy, the FATCA may favor the strengthening of the US Dollar against the Euro and other currencies.
The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of the USD index.




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