Asia appears to be slightly behind Europe in getting ready for sweeping US anti-tax evasion regulations known as FATCA, but all regions need to push ahead in preparing for these rules, a global accounting firm says.
Asian firms appear to be behind their European counterparts in getting ready for the US FATCA tax compliance regulations, although all regions have much work ahead to prepare, accountancy firm WeiserMazars argues.
The Foreign Account Tax Compliant Act requires institutions, including what are called Foreign Financial Institutions to identify any US clients as such and provide such data to the US Internal Revenue Service. If they do not comply, the US will impose a 30 per cent withholding tax.
Since FATCA was passed by the US Congress more than a year ago, it has prompted fears that some institutions will refuse to deal with any US clients because of the compliance burden. So far, much of the commentary about the impact on expat US citizens has come from the UK and Switzerland, rather than from Asia, particularly given the US crackdown on Swiss banking and high-profile cases such as those of UBS and Wegelin.
Asia may not have been as vigorous in talking about Asia, but that is beginning to change, Susan Grbic, director at WeiserMazars, told this publication in a recent telephone interview from her office in New York.
“With respect to India and China, they are just starting to wake up to the fact that FATCA is here to stay,” Grbic said.
Her colleague, Stephen Brecher, a partner at the firm, agreed. “Some companies there [in Asia] may hope that their governments could negotiate the situation so that the legislation does not go ahead,” he said.
Early in February, the US and five European nations agreed to try and cut threatened heavy compliance costs of enforcing FATCA by co-operating on how data is transferred to the US. But no Asian countries were mentioned in that agreement.