FATCAT. Opps I mean FATCA
I’m sure someone with a sense of humour thought up this acronym. Now some of you may be asking what an earth is FATCA? It is the: “Foreign Account Tax Compliance Act” to be imposed by the United States of America in 2013. What does this mean for little ol’ New Zealanders in the financial industry?
Friday, December 2nd 2011, 6:05AM 6 Comments
To put it simply the USA is going to impose fines on any financial company, investment portfolio or custodial service who do not collect tax for them and pay to the Inland Revenue Service.
Why is the rest of the world bowing to this draconian imposition from the USA? Are we all running scared – and from what I ask?
I bet there are quite a few countries that totally ignore this imposition and tell the USA to run and jump.
Anyway, back to FATCA, what does it mean for us?
From what has been issued to date, it is going to be a huge cost to companies in the financial sector.
The following are just a few things I have heard about:
• First you have to become a registered company and enter into an agreement with the US.
• You have to investigate all of your customers to find out if they should be US tax payers and,
• Annually report to the US.
• Also there is a requirement to withhold payments for ‘recalcitrant’ US folks (the naughty ones who try to avoid paying tax back home) – 30% of both Income and proceeds from sale, I have heard.
You might think how will they know, but if any other financial organisations you deal with in the chain is registered they have an obligation to report. And it seems that most of the global companies are already acquiescing. I suppose with electronic trading they can trace all sorts of things.
If you think you can avoid this problem you will have to: restrict who you deal with and what you invest in – that is, no US folk and no US assets.
Probably well nigh impossible so we will all have to run along like little sheep and agree to do the USA’s work for them.
Why didn’t the rest of the world just say, “No”?
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