Governments around the world believe that tax evasion is widespread and that every country has a right to information about its own taxpayers. Well-publicised tax evasion scandals have affected a number of countries and there is an increased focus on offshore financial centres resulting from the global economic downturn. As a result, tax havens, the need for customer transparency and the implementation of information exchange agreements are high on political agendas.
Most recently, the US Department of the Treasury and the Internal Revenue Service (IRS) issued the proposed regulations providing guidance for foreign financial institutions (FFIs), non-financial foreign entities (NFFEs) and US withholding agents to implement various provisions under the Foreign Account Tax Compliance Act (FATCA).
It is important to recognise that FATCA is the latest in a series of tax evasion enforcement activities. FATCA has pushed tax to the forefront of the regulatory change agenda and under that agenda the spotlight remains firmly on the customer.
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