AILO said a number of the proposals in the draft regulations are welcome, such as the intention to exclude low risk products such as retirement plans and the raising of thresholds for undertaking searches on individual life insurance business, but believes further improvements could be incorporated into the final regulations to “improve the likelihood of FATCA succeeding”.
Brendan Harper, chair of AILO’s Taxation Committee, said: “The intention of the US Treasury is to ensure improved tax compliance in respect of foreign financial assets and AILO is of course supportive of this in principle.
“However, the diverse regimes governing the EEA and other jurisdictions in which policyholders maintain their investments mean that a comprehensive set of regulations will be needed to cater for all circumstances. We hope that the US Treasury Department will accept AILO’s representations and take them into account in formulating the final regulations to ensure FATCA’s success.”
As reported, FATCA was signed into law in 2010 by president Obama with the intention of cracking down on the use of foreign bank accounts by Americans to avoid their US tax obligations.
It requires foreign financial institutions to report to the US government on the bank accounts and other holdings of all US taxpayers, including expatriates who hold other passports and who may not have set food in the US for decades.
A number of countries and organisations around the world have in recent months made representations to or agreements with the US Treasury with regards to the Act. Most recently the Investment Management Association in the UK called for the US Treasury to delay its implementation to allow non-US regulators time to put in place the “necessary operational structures”.