This blog was last updated on August 28, 2015
The U.S. Foreign Account Tax Compliance Act has made impressions all over the globe. While many countries are signing on to FATCA agreements with the U.S. government in an attempt to uncover hidden foreign accounts, there are some countries that are going a step further and establishing tax compliance regulations of their own.
This is not really a surprise, as FATCA is demonstrating to the world that there is no avoiding taxes, and due dates are due dates regardless of where your account is located. Governments have realized that they are missing out on a great deal of tax revenue, and when one government body decides to collect what it feels rightfully belongs to it, it is only natural that other governments would follow suit.
What is surprising, however, is the incredible rate at which these compliance regulations and agreements have emerged onto the scene. Regarding FATCA, Wealth Management noted that 112 foreign governments signed compliance agreements with the U.S. as of June 1, 2015. As these regulations are highly complex, the speed at which countries are willing to participate is impressive, but also revealing.
"The speed at which countries are willing to participate is impressive."
Countries don't want to miss out
Governments and financial institutions all over the globe are not hesitating to jump on the tax compliance bandwagon and secure the revenues they are entitled to. What's more, this practice is happening outside of FATCA as well, as countries form their own partnerships and compliance laws. A recent example is a deal made between India and the Seychelles which aims to eliminate tax evasion, also known as black money, as highlighted by The Hindu.
By signing this agreement, Seychelles President James Alix Michel and Indian Prime Minister Narendra Modi hope that relations between the two countries will improve. This will lead not only to better financial standings, but security ties and overall cooperation as well.
India already has black money regulations in place within its own country. The reporting date for the country's black money compliance window ends on Sept. 30. According to the Economic Times, the country expects to see many more applications of declaration come through between now and then.
"We expect the number of applications under the [black money] compliance window to go up during the last two-three weeks," said Shaktikanta Das, revenue secretary. "I will not tell you how many people have filed applications under the compliance window. We believe that most of the applications will come towards the end of the period, which is September 30."
This compliance window is designed to be a one-time grace period opportunity to comply. After the grace period ends, penalties will be placed upon account holders who remain silent about hidden accounts.
Further, according to dna India, this compliance window will not be extended. Any assets or income declared after this date will be faced with a tax rate penalty of 120 percent. The tax rate of compliance within the established timeframe is half that at 60 percent.