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AIC: US govt must answer basic questions on Fatca

The Association of Investment Companies says the US government has not yet answered basic questions about how firms will implement the foreign account tax compliance act.

The Fatca legislation is designed to tackle tax avoidance by US taxpayers. It requires foreign financial institutions to disclose details of US shareholders or face a penalty of up to 30 per cent withholding tax on gross proceeds of US assets.

Speaking at the annual AIC conference, AIC public affairs director Guy Rainbird said complying with the act will be “a nightmare”.

When asked how firms are supposed to identify their US shareholders, Rainbird replied: “This is one of the fundamental problems the Americans have not really thought about.”

He explained there are scenarios where a person’s US tax liability may be unclear, for example, an American who marries a UK citizen and takes a UK citizenship or someone who holds a US visa.

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  1. Dual Citizen and FATCA 23rd March 2012 at 12:26 pm

    There a number of scenarios the Americans haven’t thought out –

    – dual EU / US resident citizens (not just UK citizens – resident EU citizens should enjoy the same rights as UK citizens)
    – foreign born US citizen lies to bank denying they’re a US Citizen
    -discrimination based on the place of birth (which is illegal to the best of my knowledge)

    This is all going to boil down to these issues?

    Is it right for UK financial institutions basically to be bullied by the US to comply? – perhaps the EU should slap a withholding tax on US Banks

    Does the US have the right to this data from resident US citizens in Europe? (Americans with US only passports)

    Is it right that one EU citizen (because they’re a dual US EU) should have their data sent to the IRS while a foreign born US citizen or dual citizens of other countries are treated differently?

    At the very least the EU should put its foot down and say to the US that resident EU citizens will not be subject to FATCA of anything else? Those Americans without dual citizenship well….who knows maybe they’ll have to comply.

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