44 countries agree to global FATCA

A group of 44 countries is taking the lead on the Organisation for Economic Co-operation and Development’s (OECD) planned global tax information exchange.

In late March, the countries issued a joint statement committing themselves to adoption of the exchange. The proposed tax plan largely mirrors the US’ Foreign Accounts Tax Compliance Act (FATCA) by allowing tax authorities to share information on overseas account holders, including private equity investors.

The countries want financial institutions, including private equity firms, to report certain tax details on their citizens holding foreign accounts to local tax authorities where that account is held, who will then in turn share that information with their counterparts around the world.

The group stated the first exchange of information will take place at the end of September 2017, 18 months after the equivalent deadlines set out in FATCA.

So far the OECD has laid out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. Further details on the tax plan are expected when G20 finance ministers meet in Australia this September.

The OECD originally expected the tax exchange to be up and running by 2015. But legal sources speaking to PE Manager said this was highly unlikely.

“This is going to happen, and this is the way forward, but the timetable of 2015 is wildly optimistic, I think that is extraordinarily unlikely,” said one UK-based tax lawyer. “What we have learnt from FATCA is everyone started to plan very early and things changed so much, there is a lot to be said for just sitting tight at the moment.”

The 44 countries are: Argentina, Belgium, Bulgaria, Colombia, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Malta, Mexico, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden, and the UK ; the UK's Crown Dependencies of Isle of Man, Guernsey and Jersey; and the UK's Overseas Territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat, and the Turks & Caicos Islands.