India Signs Up For FATCA To Block Black Money
The Indian government’s crackdown on black money is continuing with the signing of a Foreign Account Tax Compliance Act (FATCA) agreement with the USA.
Both countries have agreed to swap financial information about bank accounts and investments controlled by US taxpayers in India and Indian taxpayers in the States.
Hundreds of thousands of non-resident Indians live and work in America and remit a large slice of their income home, while the Indian government wants to track down taxpayers who invest in the USA.
The government is trying to work out what ministers describe as ‘the scourge’ of black money which deprives the Indian treasury of billions of rupees every year.
Signing the treaty with the US also grants a reprieve to Indian banks that feared delays in negotiations may have triggered FATCA sanctions against them.
Philippines in FATCA
Under the US law, banks failing to declare the financial interests of US taxpayers could face up to a 30% withholding tax on their transactions in the US.
India has recently moved to stamp out tax avoidance with the Black Money Undisclosed Foreign Income and Assets Imposition of Tax Act of 2015 which allows the tax authority to impose fines of up to 120% of the value of unreported foreign assets or income.
Meanwhile, the US and the Philippines have also struck a FATCA deal.
Both governments have agreed a two-way arrangement to inform tax authorities in both countries to receive updates from the other about the overseas bank accounts and investments of their taxpayers.
The US and the Philippines have close political ties. Many Filipinos live and work in the US, while the Philippines are a popular stop-over destination for retired US taxpayers and expat workers.
The FATCA network
The US State Department says 65 FATCA information swapping agreements have been signed with foreign governments and 47 are agreed in principle awaiting signature. Others are under negotiation.
More than 165,000 foreign financial institutions have also registered directly to report to the Internal Revenue Service (IRS).
US resident taxpayers controlling offshore accounts or investments valued at more than $50,000 and US expats with cash and investments worth more than $200,000 must declare their financial interests to the IRS.
Personal tax returns are then compared to FATCA data to ensure taxpayers are correctly declaring the full extent of any foreign earnings or chargeable gains.
Source: iExpats – India Signs Up For FATCA To Block Black Money
