The governments of the United States, France, Germany, Italy, Spain and the United Kingdom have today issued a Joint Statement regarding an Intergovernmental Approach to Improving International Tax Compliance and Implementing FATCA.
Also, the US Inland Revenue Service (IRS) has today published proposed regulations to implement FATCA (Foreign Account Tax Compliance Act).
According to original proposals, FATCA would impose a penal 30% tax on any investments in US equities, unless the fund requests every investor to provide evidence on whether or not they are US tax payers. Both US tax payers and those providing insufficient evidence of their tax status would suffer the 30% tax.
Commenting, Julie Patterson, Director of Authorised Funds and Tax at the IMA, said:
"We welcome today's joint statement by the governments of six major countries, which commits them to exploring a common approach to FATCA implementation.
"The approach envisages firms reporting to their domestic authorities and governments sharing that information. In practice, this would mean that UK firms and funds would not have to sign up to an agreement with the IRS, reducing many of the industry's legal concerns with the original proposals.
"On initial review the draft regulations take into account the IMA's lobbying by providing a special exemption for regulated investment funds where the distributors of the fund comply with certain criteria. We have yet to work through the technical details of this exemption, but we welcome this positive development.
"On the other hand, it is not clear whether the draft wording provides the exemption we are seeking for pension funds."
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