WASHINGTON, (Reuters) – In a step toward reining in offshore tax evasion, the U.S. Treasury Department on Thursday said it was close to finalizing tax information-sharing pacts with countries ranging from Canada to islands such as Guernsey and the Isle of Man.
Treasury listed 47 jurisdictions, from India to Sint Maarten, that are in various negotiation stages on formal agreements governing how their local financial businesses can comply with the U.S. Foreign Account Tax Compliance Act (FATCA).
The department’s statement said the Cayman Islands, Gibraltar and Liechtenstein are talking with Treasury about FATCA compliance. These nations are widely viewed as tax havens.
Enacted in 2010, FATCA requires financial institutions that have accounts held by Americans valued at more than $50,000 to report some client information to the Internal Revenue Service.
Beginning in 2014, institutions that fail to comply could effectively be locked out of the U.S. financial marketplace.
When it was enacted, FATCA caused an uproar among foreign financial institutions about compliance costs and the law’s potential for infringing national financial secrecy laws.
Rather than imposing a one-size-fits-all approach, Treasury has pursued a process of government-to-government agreements that, in some cases, let banks report information to their home tax agencies, which will pass along the information to the IRS.
Proposed FATCA rules expected to spell out more details for financial institutions were announced in February but have not been finalized. Businesses are worried they will not have time to prepare for the law’s start date, tax experts have said.