In a significant move today the US Department of the Treasury and the Internal Revenue Service have set down the final regulations for the Foreign Account Tax Compliance Act (FATCA).
The proposed regulations were issued in February 2012 and after almost a year of extensive consultation with affected parties, notably governments, the final regulations have now been laid down.
The final regulations phase in the due diligence, reporting and withholding timelines which were originally under a much tighter time frame and which were hotly contested by stakeholders, of note, foreign financial institutions.
Other variations to the proposed regulations include clarification around the treatment of some governmental entities and retirement funds.
The United States government has now negotiated agreements (referred to as the inter-governmental agreements) with seven countries. Those countries are Norway, the United Kingdom, Mexico, Denmark, Ireland, Switzerland and Spain.
Note that there is no agreement as yet with Australia. New Zealand, like Australia, currently is underway with this negotiation process. As of March 2012, only five intergovernmental agreements were in place. Ten months later there are only seven, showing that this appears to be a slow process.
FATCA was enacted in 2010 as a move to combat international tax evasion.