The US, on Wednesday, said it is working on an inter-government engagement with India and other countries to check non-compliance by American taxpayers using foreign bank accounts in their jurisdictions.
Through these engagements with more than 50 countries, the US is looking to implement information reporting and withholding tax provisions, commonly known as the Foreign Account Tax Compliance Act (FATCA).
Enacted in 2010, FATCA aims at checking non-compliance by US taxpayers using foreign accounts. It requires foreign financial institutions to report to the US tax department information about accounts held by US taxpayers, or by foreign entities in which they hold a substantial ownership interest.
Concerns have been raised in the past by various foreign banks and other financial institutions about the FATCA provisions, as it is feared that they might lead to increased compliance costs and might infringe upon the local financial secrecy laws of the jurisdictions concerned.
An agreement with India will allow the US tax department to seek information from the financial institutions operating in that country about their clients who are liable to pay tax in the US.
In a statement, the US Treasury Department said last night it has engaged with more than 50 countries and jurisdictions around the world to improve international tax compliance and to implement FATCA provisions.
"The jurisdictions with which Treasury is working to explore options for inter-governmental engagement include Bermuda, Brazil, the British Virgin Islands, Chile, the Czech Republic, Gibraltar, India, Lebanon, Luxembourg, Romania, Russia, Seychelles, Sint Maarten, Slovenia, and South Africa," it said, adding that it has already finalized an agreement with the UK.
The jurisdictions with which it is in process of finalising an agreement or it hopes to conclude negotiations by year-end include: France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands, and Norway.
"Jurisdictions with which Treasury is actively engaged in a dialogue towards concluding an intergovernmental agreement include: Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden," the Treasury said.
Negotiations with many of these jurisdictions are expected to be concluded by the year-end, it added.
"By working cooperatively with foreign governments and financial institutions, we are intensifying our ability to combat tax evasion while minimizing burdens on financial institutions," Treasury Assistant Secretary for Tax Policy Mark Mazur said.