2,000 Firms Use BearingPoint FATCA Service
BearingPoint’s FiTAX catches on while a FATCA critic says that more Americans are renouncing their citizenship because of the controversial tax law.
While controversy swirls around the Foreign Account Tax Compliance Act (FATCA), management and technology consultancy BearingPoint reports that between March and August 2015, more than 2,000 financial institutions in 45 countries have been using its FiTAX financial information about U.S. clients to meet reporting requirements for local tax authorities and to the Internal Revenue Service (IRS).
Starting this year, foreign financial institutions (FFIs) have had to engage in FATCA reporting to the IRS and to foreign tax authorities. The FiTAX reporting solution targets the reporting requirements of FATCA and the related Inter-Governmental Agreements (IGAs), officials say.
Headquartered in Amsterdam, BearingPoint officials add that the FiTAX solution helps financial institutions automate the regulatory reporting processes from “a single and centralized platform” for QI, EUSD, FATCA, UK FATCA and CRS, officials say. “Each module is independent, but in order to ease the implementation, all the reporting modules can share the same user interface (Helios), the same IT infrastructure, the same access rights management and the same data,” officials add.
The technical and functional teams from BearingPoint “were very active and widely involved in all stages of the FATCA project,” says Xavier Lambillotte, IT project director at Societe Generale, in a prepared statement. “Their ability to work and act quickly has been essential for the success of the project and for staying in line with the complex and ever-changing regulation.”
Financial institutions have to stay “up to date with the ever-changing reporting requirements imposed by tax authorities, which frequently request modifications,” says Ronald Frey, a partner at BearingPoint. “Monitoring and implementing changes both punctually and reliably is thus increasingly difficult for financial institutions.”
While financial institutions grapple with FATCA reporting, individual Americans are having second thoughts about their citizenship, says FATCA critic Nigel Green, deVere Group CEO and founder, says the U.S. law is “a masterclass in fiscal imperialism” that is causing many to give up their U.S. citizenship.
As evidence, Green points to the U.S. Department of Treasury, which he says “has recently revealed that an increasing number of Americans relinquished their U.S. passports between July and September — in fact it was more than in any previous quarter,” Green says.
Treasury Department officials reported in late October that 1,426 Americans had renounced their U.S. citizenship during the third quarter and that 2015 may set a new record, beating the 3,415 now former Americans who changed their status last year.
“It is forecast that by the end of the year, more people would have given up their American citizenship than at any point,” says Green who adds that FATCA is causing the “steady and growing trend” of citizenship relinquishments.
“For instance, many U.S. citizens cannot even now hold a bank account in their country of residence as foreign banks routinely feel Americans are too much trouble thanks to FATCA’s onerous and costly rules by which they would need to abide to take them on as clients,” Green says.
Green also notes a deVere Group survey done earlier this year that uncovered “a massive 73 per cent of Americans living overseas are tempted to give up their U.S. passports.”
In America and abroad, FATCA is being seen as “a masterclass in fiscal imperialism and the law of unintended consequences,” says Green.
“First, by using its superpower status, the U.S. has over the last few years been coercing foreign financial institutions (FFIs) around the world into accepting FATCA, or facing stiff financial penalties and, in effect, being frozen out of U.S. markets,” Green says. “Under FATCA, and the intergovernmental agreements that foreign governments were cowed into signing, FFIs have to hand over automatically to the U.S. authorities what would be private financial data on American depositors. In return, the U.S. promised to provide ‘equivalent levels of reciprocal automatic exchange’ to foreign ‘FATCA partners.’ ”
Green says that the recently published Financial Secrecy Index 2015, a report detailing “global financial secrecy,” the Tax Justice Network says the reciprocity is not happening. The Tax Justice Network, which is not affiliated with any political party, describes itself as “an independent international network” that conducts high-level research, analysis and advocacy on international taxation and international financial regulation issues. “The U.S. has moved up from sixth to third place in the secrecy ranking — ahead of the Cayman islands. Doesn’t this make America a bona fide tax haven? ” Green says. “No longer can the American government claim that FATCA is anything other than a one-way, extraterritorial diktat that burdens other countries’ financial institutions and their clients, which violates other countries’ sovereignty, and which is detrimental to their taxpayers.”
