Taipei, Nov. 13, 2012 (CENS)--To cope with the implementation of the U.S. Foreign Account Tax Compliance Act (FATCA) next year, the Executive Yuan (the Cabinet) leans to adopt the proposal of the Financial Supervisory Commission (FSC), which calls for government-to-government negotiation to help domestic financial institutions and mutual-fund investors avoid 30% tax, alleviate the impact on the financial industry, and attain longer grace period.
The proposal is similar to the practice adopted by the Japanese government but is different from the suggestion of the Ministry of Finance (MOF) asking individual financial institutions to sign foreign financial institution (FFI) agreement with the U.S. government. The FATCA task force, consisting of representatives from the FSC, the MOF, and the Ministry of Foreign Affairs, submitted the two proposals to the Executive Yuan for selection the other day.
Bankers Association, ROC, urged the government to adopt the proposal of the FSC, saying that requirement for individual financial institutions to sign FFI agreement with the U.S. will create greater impact on the financial industry.
An official in charge revealed that the Executive Yuan appeared to lean towards the proposal of the FSC, according to which financial institutions will provide related data to the U.S. Internal Revenue Service (IRS) under the agreement of clients. For other data which clients disagree to provide, the financial institutions will just give a total amount to the IRS.
The reporting method will not be at odds with the law for protecting personal information and financial institutions will not be subject to a 30% tax for their incomes deriving from the U.S. Moreover, via government-to-government negotiation, financial institutions will not have to provide the data until September 2015.
According to FATCA, the U.S. government requires financial institutions worldwide to provide financial data of U.S. citizens to the U.S. government.
(by Philip Liu)