FATCA: The First Step toward Eliminating Banking Secrecy
Published in Siglo 21
(Guatemala) on 28 January 2014
by Editorial (link to original)
(Guatemala) on 28 January 2014
by Editorial (link to original)
Translated from
by Stuart Taylor.
Edited by Gillian Palmer.
Banks and financial institutions all over the world are working hard to enforce the controversial extraterritorial U.S. law called the Foreign Account Tax Compliance Act, which eliminates banking secrecy for U.S. citizens and forces global financial institutions to provide information related to them for tax purposes. The law was enacted in March 2010. Its aim is to prevent American taxpayers from using financial accounts outside of the United States in order to evade taxes.
The regulation requires banks to produce annual reports on certain accounts that U.S. taxpayers keep outside of the country. These reports will be made available to U.S. fiscal authorities either indirectly or through local regulatory bodies.
The FATCA will come into effect in stages, beginning on July 1, 2014. Financial institutions will have to subscribe to an agreement with U.S. authorities; those who do not will be subject to a sanction that consists of a 30 percent withholding tax at the sales price of assets that will begin in 2015.
Various countries are already negotiating an intergovernmental agreement with the United States over this new law; many others have already entered into similar agreements. Additionally, those countries that produce regulations aligned with FATCA will observe its fulfillment through their own regulatory bodies.
In the case of Guatemala, the system’s banks are still waiting to sign those agreements, which motivated the Guatemala Banking Association to launch an appeal to banks to enter into the respective agreements with the U.S. Internal Revenue Service. The system’s banks have been characterized by their robustness and trajectory. With the objective of delivering certainty to the system and generating a good image of the country, it is important to enforce this global policy.
Furthermore, the country still has to designate the institution that will be in charge of regulating the FATCA on a local level. Due to the installed capacity that it possesses, it would be ideal that the superintendent of tax administration be in charge, considering that it is an autonomous entity that boasts a technical team capable of responding to the requirements of the U.S. policy. Adopting the FATCA opens the door for this country to eliminate banking secrecy to Guatemalan citizens. This would allow for a control tool that would facilitate the increase of revenue for the tax authorities; at the same time, it would fuel the fight against corruption.
The regulation requires banks to produce annual reports on certain accounts that U.S. taxpayers keep outside of the country. These reports will be made available to U.S. fiscal authorities either indirectly or through local regulatory bodies.
The FATCA will come into effect in stages, beginning on July 1, 2014. Financial institutions will have to subscribe to an agreement with U.S. authorities; those who do not will be subject to a sanction that consists of a 30 percent withholding tax at the sales price of assets that will begin in 2015.
Various countries are already negotiating an intergovernmental agreement with the United States over this new law; many others have already entered into similar agreements. Additionally, those countries that produce regulations aligned with FATCA will observe its fulfillment through their own regulatory bodies.
In the case of Guatemala, the system’s banks are still waiting to sign those agreements, which motivated the Guatemala Banking Association to launch an appeal to banks to enter into the respective agreements with the U.S. Internal Revenue Service. The system’s banks have been characterized by their robustness and trajectory. With the objective of delivering certainty to the system and generating a good image of the country, it is important to enforce this global policy.
Furthermore, the country still has to designate the institution that will be in charge of regulating the FATCA on a local level. Due to the installed capacity that it possesses, it would be ideal that the superintendent of tax administration be in charge, considering that it is an autonomous entity that boasts a technical team capable of responding to the requirements of the U.S. policy. Adopting the FATCA opens the door for this country to eliminate banking secrecy to Guatemalan citizens. This would allow for a control tool that would facilitate the increase of revenue for the tax authorities; at the same time, it would fuel the fight against corruption.