UK considers its own FATCA bill

The UK's International Development Committee (IDC) has floated the idea of a global tax information exchange network designed to catch tax dodgers. 

Specifically, the committee recommend in a report released earlier this month that the UK government: “…introduce legislation similar to the relevant section of the US Foreign Account Tax Compliance Act (FATCA), requiring tax authorities automatically to exchange information relating to UK citizens or corporations”.

The report added that the UK should leverage its status on the world stage to persuade other governments to follow suit in its efforts. 

The committee seems to think that “a way of decreasing tax avoidance is to have as much transparency as possible and FATCA achieves that as far as the US is concerned, so why not do a UK version?”, said in response to the report Kinetic Partners accounting consultant Nick Matthews. 

FATCA, set to go live in 2014, will require foreign private equity firms to provide US tax authorities information about financial accounts held by US taxpayers, or held by foreign entities in which US taxpayers hold a substantial ownership interest. Failure to meet the far-reaching law would result in a 30 percent withholding tax on any US source income. 

A patchwork of various FATCA-like bills passed by governments would be “baffling”, said Matthews. Every country would likely have its own legal definitions and sanctions, and so attempting to create a shared global information exchange network would likely be a “recipe for massive confusion”. 

Sources said the UK would need years to implement a bill similar to FATCA, which is going through its own delays and challenges.