Breaking News, World News and Taiwan News.

Financial institutions must comply with US tax evasion law: FSC

TAIPEI, Taiwan -- Financial Supervisory Commission (FSC) Chairman Tseng Ming-chung (曾銘宗) on Wednesday acknowledged that a number of regional financial institutions may become a haven to avoid taxation as Taiwan's participation in the U.S.'s Foreign Account Tax Compliance Act (FATCA) approaches on July 1.

As non-compliant financial institutions may face a 30-percent tax on income derived in the U.S., the impact of FATCA is widely regarded as greater than the ramification of the Cross-Strait Trade in Services Agreement, with Tseng pledging to ensure Taiwan's inclusion in the act yesterday during a Legislative Yuan briefing.

FATCA is a U.S. statute that requires all foreign financial institutions — including banks, insurance carriers, mutual funds, securities brokerage companies and the post office — to report the account statuses of their American clients to the Internal Revenue Service (IRS). Taiwan-based financial institutions must complete FATCA registrations prior to May 5 this year to avoid taxation on incomes derived in the U.S. beginning on July 1. Financial institutions must also begin submitting information on their American clients in March 2015, in particular for personal accounts with balances exceeding US$50,000 and institutional accounts with balances exceeding US$250,000.

The FSC stated that 34 member states of the Organisation for Economic Co-operation and Development (OECD) and China are pushing for regulatory statutes similar to FATCA, and that they are monitoring international developments closely.

Most notably, beginning in 2017, all gross proceeds and payments on investments made outside the U.S. will be subject to a tax of 30 percent. For example, redemption payment transactions of mutual funds and other fixed income securities will be subject to the tax, regardless whether a profit has been made over the principle.

FATCA Exempt Havens Emerge

Tseng previously stated that five regional financial institutions consisting of Kaohsiung Bank (高雄銀), the Bank of Taipei (瑞興銀), the Bank of Panshin (板信銀), Hwatai Bank (華泰銀) and Cota Bank (三信銀) will be exempt from FATCA stipulations, while acknowledging that these institutions may become havens to evade IRS taxation. In addition, 24 credit cooperatives, 302 fishermen's and farmers' associations, three credit card companies, the Central Bank of the R.O.C., public employees' pension, labor pension and retirement funds of private schools will also be exempt from FATCA terms, the FSC said.

Staggering Consequences for FATCA Non-Compliance

With U.S.-based investments made by Taiwanese insurance carriers estimated at NT$5 trillion to NT$6 trillion, accountants yesterday stated that the potential tax obligation impact may reach as high as NT$2 trillion if Taiwan's FATCA negotiations with the U.S. government fall through, averaging at around NT$30 billion to NT$60 billion for a single financial institution. In addition, with holdings of U.S.-based mutual funds and other managed investment schemes by Taiwanese nationals estimated at NT$2 trillion, IRS obligations may reach NT$600 billion if financial institutions fail to gain FATCA exemption.

1 Comment
April 15, 2014    nofatcataiwan@
Interestingly though the FSC has failed to answer ANY questions pertaining to HOW FATCA will negatively affect Taiwan and the local population and how much it will cost Taiwan tax payers and the banks!

What benefit from the US will Taiwan receive if they sign this law? Perhaps an upgrade to the F-16 fighter jet?

The local media seems to think that FATCA is a good thing as it weeds out so called FAT CATS, however, the media has not done their research, nor have they been given accurate information! FATCA is not just a FAT CAT law. This law is the worst tax law in history and aims to destroy the US economy and any country that signs it.

- How is the government getting around local privacy laws?
-Why hasn't the government been honest with the public in revealing the real truth about FATCA?
- What is the government going to do when banks start, and they already have, denying banking services to US persons?
- Has the government analyzed the potential risk of theft of private financial data of hundreds of thousands of citizens and expats?
- If FATCA is a US statue as you say above, why are you implementing this in Taiwan?
- What benefits is this really going to bring Taiwan?

The FSC seems only focused on this 30% withholding problem and is bowing down to yet another government. If the recent protests have taught us anything, the government should start being honest and stop hiding stuff from the public. Once the public becomes aware of the negative impacts of FATCA I suspect there will be more protests.

It seems to me that the local government has not done their due diligence to understand what FATCA is really going to do. And at a whopping 544 pages I venture to guess that no one has even read it.
Write a Comment
CAPTCHA Code Image
Type in image code
Change the code
 Receive China Post promos
 Respond to this email
WSJA
Subscribe  |   Advertise  |   RSS Feed  |   About Us  |   Career  |   Contact Us
Sitemap  |   Top Stories  |   Taiwan  |   China  |   Business  |   Asia  |   World  |   Sports  |   Life  |   Arts & Leisure  |   Health  |   Editorial  |   Commentary
Travel  |   Movies  |   TV Listings  |   Classifieds  |   Bookstore  |   Getting Around  |   Weather  |   Guide Post  |   Student Post  |   Terms of Use  |   Sitemap
  chinapost search