Bloomberg reports that next year, the US may be put on the Organization for Economic Cooperation and Development’s (OECD) “blacklist” of tax haven countries alongside such notables as Guam and Trinidad and Tobago. The move comes as numerous countries continue to question the United States’ adamant refusal to participate in the international information exchange program, known as the Common Reporting Standard (CRS). The CRS requires countries to obtain information from their financial institutions and automatically exchange it with other countries every year.

The US maintains there is no need for it to join CRS since it has its own automatic information exchange program, the “Foreign Account Tax Compliance Act” (FATCA). However, as those in international tax and financial circles are well aware, the intergovernmental agreements (IGAs) put in place by the US with its FATCA signatory countries were not really “reciprocal”. The IGAs secured the agreement of the foreign countries to collect and send to the US tax authorities, financial information about US persons within their jurisdiction. On the other hand, the information sent by the US to these signatory countries about their tax subjects has been essentially non-existent. You can read full details on this topic at my earlier archived blog post here.

Due to FATCA, US persons abroad have suffered in various ways, including loss of banking services by their foreign banks, grave concerns over security and privacy, along with marital discord with non-US spouses and fears of kidnap and ransom risks. Tax advisory and compliance costs have increased substantially for professional assistance as expats grapple with reporting on numerous forms including Form 8938 (learn more about this FATCA weapon here and here) and the notorious FBAR (details here).

Looks Like the US May be in For a Surprising New Year

In addition to the tension wrought by the US refusal to join CRS, several other points are in dispute with the OECD. The US has been accused of violating trade rules through some of its recent international tax reform provisions, and it has opposed the OECD proposal to tax digital companies.

Most EU officials, tax experts and advocacy groups expect 2019 to be a very critical year because the OECD must take a firm stand and decide how to deal with the United States. Stay tuned!

Posted: December 18, 2018

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