The FATCA Hunt Continues
Last month, President Obama traveled to India where he famously befriended Narendra Modi and others. There, he heralded a new era of joint cooperation on many fronts, including the exchange of offshore account information.
Last week, US Treasury Secretary, Jacob Lew was in India to follow up and meet with Indian officials. After meetings, a joint India-US statement was issued stating “We are committed to share our experiences in tackling offshore tax evasion and avoidance. We affirmed our shared commitment to fostering an enabling tax environment and expressed our satisfaction at the progress made in resolving tax disputes.”
The joint statement further added “We noted the need for an early conclusion of reciprocal arrangement on the Foreign Account Tax Compliance Act [FATCA] and look forward to working for an early adoption of the new global standards on automatic exchange of information on a fully reciprocal basis.”
Over 100 nations, including India (which has agreed in “substance” last April), have thus far agreed to share information under the US’ new FATCA law. Under the FATCA regime, overseas financial institutions provide details about accounts held by US-connected persons and entities.
It is widely expected that a new US-India FATCA Inter-Governmental Agreement will be formally signed soon.
Unfortunately, the compliance requirements under FATCA have led most Indian mutual fund houses to no longer accept investments from US-connected persons. Many NRIs have experienced significant resistance from Indian financial institutions to open and maintain their Indian accounts. US-connected NRIs with unreported Indian accounts should expect tax problems in the future as Indian financial institutions eventually disclose their account information to the US government.
