This Is Guernsey

By Simon Tostevin

A PLAN has been introduced in the USA to crack down on offshore tax evasion.

Estimates suggest The Foreign Account Tax Compliance Act of 2009 would prevent $8.5bn of US tax leaking offshore in the next 10 years.

It would force foreign financial institutions, trusts and corporations to provide information about their US account holders, grantors and owners respectively.

‘This bill offers foreign banks a simple choice – if you wish to access our capital markets, you have to report on US account holders,’ said Committee of Ways and Means chairman Charles Rangel.

The move is part of wider international efforts to tackle abuse of offshore jurisdictions.

The bill is based on proposals in Obama’s 2010 budget, legislation proposed by Senator Carl Levin and Representative Lloyd Doggett and a draft released by Senator Max Baucus. Senator Levin’s Stop Tax Haven Abuse act named Guernsey among jurisdictions to be targeted.

He wanted the latest proposal strengthened as it was worked on by incorporating more of his suggestions.

‘Those additions include provisions that would authorise Treasury to take action against foreign financial institutions that impede US

tax enforcement, make sure that financial institutions look behind shell corporations and trusts to identify US account holders and close the offshore dividend tax loophole by ending scams involving stock lending as well as equity swaps,’ he said.

‘Cracking down on offshore tax abuses will bring in needed revenues which are owed to our Treasury.’

Article posted on 18th November, 2009 - 2.30pm