A FATCA Of Our Very Own
The world-wide reporting of tax payers’ information, which we will all be familiar with from the US Foreign Account Tax Compliance Act (FATCA), is set to become a reality for 51 other jurisdictions around the world, including the United Kingdom. In addition, 39 further jurisdictions are committed to joining the agreement.
The trend of world-wide tax transparency continues with the signing of the OECD’s Common Reporting Standard. Of the 51 signatories, many of the participating jurisdictions would be considered tax havens due to low or non-existent income tax rates.
For some of the signatories, the reporting of non-resident account information is due to start by 2017. In most cases, jurisdictions will need to enact domestic legislation to implement the agreement. In addition, financial institutions located within the signatory jurisdictions will need to develop reporting systems to meet local requirements. It remains to be seen whether the ambitious timetable is achievable.
It is likely that individual taxpayers whose affairs span two of the signatory jurisdictions can expect tax authorities to have more information about their affairs than they do currently, and we would expect this to lead to an increased level of query and challenge from tax authorities, irrespective of how legitimate those affairs may be.
For those individuals who have income which they have delayed reporting in the correct manner, the advice remains the same; you should bring your affairs up to date as soon as possible. The voluntary disclosure of taxable income is invariably viewed in a better light than income which is subsequently discovered by tax authorities and it is undeniable that these developments have only made these discoveries more likely.