UK Son Of FATCA Regulations In Force
by Jason Gorringe, Lowtax.net, London
17 April, 2014
The UK Government has published online the final, adopted version of The International Tax Compliance (Crown Dependencies and Gibraltar) Regulations 2014, which became effective on March 31, 2014, to bring into effect the expanded tax information exchange agreements signed between the UK and Jersey, Guernsey, the Isle of Man, and Gibraltar to implement a regime similar to that under the United States' Foreign Account Tax Compliance Act (FATCA).
The pacts, which are commonly known as "son of FATCA" agreements, were concluded between October and November 2013 to provide for a reciprocal enhancement to the territories' information-sharing commitments on assets held in bank accounts by their respective resident taxpayers. The agreements include a commitment to automatic annual exchange of information relating to accounts maintained by financial institutions in their territories.
Publishing the final regulations, the UK Government emphasized: "These agreements are an important part of the UK's policy of improving fairness in the tax system and tackling offshore evasion, through increasing the effectiveness of HMRC's compliance activity as well as increasing the deterrent effect – both of which stem from the increased use of automatic tax information exchange. Greater tax transparency and the automatic exchange of information is a key part of the Government's wider offshore evasion strategy, as outlined in the policy document No Safe Havens published at Budget 2013."
The agreements are consistent with the earlier agreement between the UK and the US to improve international tax compliance and implement FATCA (signed on September 12, 2012), and also include subsequent developments in the model used as the basis of that agreement. This consistency is intended to minimize tax administration costs and the compliance burden for businesses. There are, however, some differences from the agreements being signed with the US that reflect the differing risk profiles posed by the closer integration of the financial markets of the UK and the territories involved.
The regulations came into force on March 31, 2014, and will have effect for Guernsey, Jersey, Isle of Man, and Gibraltar financial accounts (as defined in the legislation) maintained on or after June 30, 2014.
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