Tough issues raised by US split from UK, Canada over FATCA

Differences in how new accounts are treated by the US, the UK and Canada under the Foreign Account Tax Compliance Act are raising tough questions for banks across many jurisdictions, practitioners told Bloomberg BNA.

“This is not an insignificant issue,” said Alan Granwell, of counsel with Sharp Partners P.A. in Washington. “People are opening accounts all the time. Banks could take different positions and there could be a competitive advantage or disadvantage. It’s overwhelming.”

At issue is the flexibility banks have to open new accounts under FATCA, which requires foreign banks to report US-owned accounts to the IRS or face, in some cases, a 30 per cent withholding tax on their US-source income.