Many lawmakers have vowed to veto what they describe as an "unfair" agreement that Taiwan signed last week to facilitate a U.S. tax evasion crackdown reportedly set to target up to 5,000 Taiwanese who are also American citizens.
The lawmakers said the freshly-signed agreement on the Foreign Account Tax Compliance Act (FATCA) allows the U.S. government to collect data on "non-cooperative" clients from Taiwan's banks, but does not require the United States to reciprocate the favor.
Questioning Finance Minister Sheu Yu-jer over the fairness of the FATCA agreement at the Legislature's Finance Committee meeting Thursday, the lawmakers vowed to block the pact, which requires the Legislature's approval.
Sheu told the lawmakers that Taiwan would seek to sign a tax information exchange agreement (TIEA) with the United States.
The FATCA agreement is expected to affect 4,000 to 5,000 Taiwanese with U.S. citizenship, according to the Ministry of Finance.
At present, Taiwan's financial institutions have only provided the United States with the number of "non-cooperative" clients and the amount of money in their accounts, but they have not provided personal information on the clients themselves.
The Banking Bureau under the Financial Supervisory Commission (FSC) said that, under the agreement, the U.S. government would be entitled to ask for more detailed information on clients who do not cooperate with requests for information.
Under the agreement, local financial institutions that refuse to provide the information that the U.S. government asks for would be subject to a 30 percent punitive withholding tax on U.S. source payments paid to the financial institution or its clients.
During the Thursday meeting, the finance minister admitted that the FATCA agreement enabled information flow only in one direction.
But Sheu stressed that Taiwan had to cooperate with the United States in order to avoid the U.S.' punitive measures. He added that so far, 113 countries had joined the FATCA program.
To be continued with www.chinapost.com.tw