The expected onslaught of intergovernmental agreements (IGAs) implementing the tax reporting and withholding procedures associated with the Foreign Account Tax Compliance Act (FATCA) has begun. This is not surprising considering the recent US Department of Treasury (US Treasury) announcement that it is engaged with more than 50 countries around the world to combat offshore tax evasion.
The US Treasury signed IGAs on November 19, 2012 with Mexico (the US/Mexico IGA) and on November 15, 2012 with Denmark (the US/Denmark IGA). Although the Articles and Annexes for the Mexico and Denmark IGAs follow a similar format as the Model IGA, some differences do exist. As expected, the most significant differences are contained in Annex II which is customized to identify the local entities, accounts, and products that present a low risk of being used by US persons to evade US tax.