Obama administration pushes for automatic information exchange
Our senior adviser David Spencer, based in New York, has just submitted the following, which links back to our earlier blog about the Obama administration's wider plans to tackle tax evasion:
The Obama Administration is proposing to amend the U.S. Qualified Intermediary (QI) rules, in order to require foreign financial institutions to provide automatically to the US Government information about U.S. persons with foreign (non-U.S.) financial accounts whether those accounts generate U.S. source income or foreign source income.
The U.S. Qualified Intermediary rules in effect require a foreign financial institution which is a QI to report to the U.S. Government certain income derived by U.S. persons. Therefore, QIs provide information to the U.S. Government.
In exchange, a foreign financial institution which is a QI can invest funds of foreign persons in the United States without disclosing the identity of the foreign person. That is, the identity and the income of the foreign person investing in the United States is not disclosed by the QI to the U.S. payor nor to the U.S. Internal Revenue Service (“IRS”). Because the IRS does not have access to the information, the IRS does not have any information to exchange with the country of residence of the foreign person, not even exchange of information upon request: The QI rules in effect strengthen U.S. bank secrecy for foreign persons. This is a strong incentive for foreign financial institutions to become QIs.
The Obama Administration proposes to strengthen the QI procedures by enacting certain recommendations of the U.S. Senate Permanent Subcommittee on Investigations, in its July 17, 2008 report: “Tax Haven Banks and U.S. Tax Compliance:”
(a) QIs would be required to report to the U.S. Government information about their U.S. customers to the same extent that U.S. financial institutions must, both for U.S. source income and foreign (non- U.S.) source income.
(b) U.S. customers of QI’s would no longer be permitted to hide behind foreign entities.
Also, according to the Obama Administration proposals, the U.S. would impose withholding taxes on payments to non-Qualifying Intermediaries (non-QIs), with the foreign investor obtaining a refund by disclosing his/her/its identity. This would in effect provide an additional strong incentive for foreign financial institutions to become QIs and subject to the obligations in paragraphs (a) and (b), above.
The Obama Administration proposals would in effect require automatic exchange of information with the United States, not between two governments, but between foreign financial institutions which are QIs and the U.S. Government.
The Obama Administration is proposing to amend the U.S. Qualified Intermediary (QI) rules, in order to require foreign financial institutions to provide automatically to the US Government information about U.S. persons with foreign (non-U.S.) financial accounts whether those accounts generate U.S. source income or foreign source income.
The U.S. Qualified Intermediary rules in effect require a foreign financial institution which is a QI to report to the U.S. Government certain income derived by U.S. persons. Therefore, QIs provide information to the U.S. Government.
In exchange, a foreign financial institution which is a QI can invest funds of foreign persons in the United States without disclosing the identity of the foreign person. That is, the identity and the income of the foreign person investing in the United States is not disclosed by the QI to the U.S. payor nor to the U.S. Internal Revenue Service (“IRS”). Because the IRS does not have access to the information, the IRS does not have any information to exchange with the country of residence of the foreign person, not even exchange of information upon request: The QI rules in effect strengthen U.S. bank secrecy for foreign persons. This is a strong incentive for foreign financial institutions to become QIs.
The Obama Administration proposes to strengthen the QI procedures by enacting certain recommendations of the U.S. Senate Permanent Subcommittee on Investigations, in its July 17, 2008 report: “Tax Haven Banks and U.S. Tax Compliance:”
(a) QIs would be required to report to the U.S. Government information about their U.S. customers to the same extent that U.S. financial institutions must, both for U.S. source income and foreign (non- U.S.) source income.
(b) U.S. customers of QI’s would no longer be permitted to hide behind foreign entities.
Also, according to the Obama Administration proposals, the U.S. would impose withholding taxes on payments to non-Qualifying Intermediaries (non-QIs), with the foreign investor obtaining a refund by disclosing his/her/its identity. This would in effect provide an additional strong incentive for foreign financial institutions to become QIs and subject to the obligations in paragraphs (a) and (b), above.
The Obama Administration proposals would in effect require automatic exchange of information with the United States, not between two governments, but between foreign financial institutions which are QIs and the U.S. Government.
posted by TJN at 9:33 am
1 Comments:
Hey you bloodsuckers! You have NO RIGHT to steal my money! I EARN the money by using my MIND and my HANDS to create things that wouldn't have existed if I didn't create them, and then you come and SUCK my money out from me like you OWNED it! What gives you the right? Tell me, WHAT gives you the right to TAKE from me what I EARNED by PRODUCING things that people WANT to pay me for?
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