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Compliance Under Consideration

Kitty Miv, Editor
07 October, 2021

In this week's column, we will be looking at enforcement and compliance, starting in the United States, where Senate Finance Committee Chair Ron Wyden (D-OR) recently addressed a letter to Swiss bank Mirabaud on its compliance with the Foreign Account Tax Compliance Act (FATCA).

The letter followed a Justice Department indictment of US billionaire Robert Brockman, which showed the bank held roughly USD1bn in undeclared income offshore for Brockman for nearly 10 years.

The department's case against Brockman is the largest tax evasion case brought against an individual in US history, Wyden said.

"These revelations raise important questions regarding Mirabaud's compliance with FATCA and whether Mirabaud reported the existence of Brockman's accounts to the IRS," Wyden said in a new letter addressed to Mirabaud Senior Managing Partner Yves Mirabaud. "Additionally, this calls into question Mirabaud's decision not to participate in the US DOJ's Swiss Bank Program, which provided Mirabaud the opportunity to voluntarily provide US authorities detailed information on an account-by-account basis for accounts in which US taxpayers have a direct or indirect interest."

FATCA, enacted by Congress in 2010, is intended to ensure that the US Internal Revenue Service (IRS) obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons.

Across the globe, legislation to repeal Australia's offshore banking unit regime has been enacted, with provisions to close the regime to new entrants were included in the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021.

The changes followed the regime's designation as a harmful tax regime by the OECD and the European Union. The OBU regime was established in 1992 to provide a more attractive tax rate for offshore banking activity conducted by Australian registered banks. In October 2018 the OECD's Forum on Harmful Tax Practices (FHTP) raised concerns during a review of this regime, including the concessional tax rate and the ring-fenced nature of the regime.

In the Philippines, meanwhile, attention was on the tax treatment of Philippine Offshore Gaming Operators, with President Rodrigo Duterte having signed into law a new tax regime for POGOs.

Since 2019, Duterte has pushed for a clampdown on POGOs – operators that provide gaming services to non-residents from the Philippines – raising concerns about industry tax non-compliance. In 2019, efforts focused on ensuring that those employed by POGOs in the Philippines were declaring their income. As part of these efforts, the Government issued a Joint Memorandum Circular (JMC) that required all foreign nationals and their employers or withholding agents to obtain a Tax Identification Number (TIN).

Filipino lawmakers have recently agreed a new tax bill, which provides for a five percent tax on gross gaming receipts for POGOs and a 25 percent tax on gross income for non-resident aliens working for the service providers of these licensees. The law also provides that POGOs will be liable to tax on their worldwide income from non-gaming activities. Last, it permits regulators to impose regulatory fees, in addition to the five percent gross gaming revenues tax, which must not exceed two percent of gross revenues.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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