Trump victory places FATCA in question, as Homelanders contemplate emigration

As the shock of Donald Trump’s win in the just-ended US presidential election began to fade away this morning, many in the expat American community began to wonder whether the Trump presidency really will mean the end of FATCA, the anti-tax-evasion legislation brought in by the Democrats in 2010. 

FATCA obliges all non-US financial institutions to report to the US Internal Revenue Service on any accounts held by Americans, to enable the IRS to ensure that these Americans don’t avoid paying the taxes they owe. Since its inception, banks and other financial institutions around the world, including the overseas operations of American companies, have declined to take on American clients, and many have forced their existing American clients to take their accounts somewhere else, thus making life exceedingly difficult for many US expatriates.

Back home, meanwhile, enough Americans were mulling the idea of emigrating in the wake of the election result in the early hours of this morning US time to cause the main immigration website of America’s favourite alternative jurisdiction in times of crisis, Canada, to crash, according to numerous media reports.

Those attempting to access the Citizenship and Immigration (www.cic.gc.ca) website saw nothing but an error message.

Platform called for repeal

As reported, the Republican Party’s 2016 Platform calls for the repeal of FATCA (the Foreign Account Tax Compliance Act), as well as “for a change to residency-based taxation for US citizens overseas”. However, these positions seem not to have been addressed by president-elect Trump himself during his campaign, American expats say.

The acronym “FATCA” only appears twice in the 66-page Republican platform document, where it is mentioned in a section which spells out how the party intends to make the US government more “constitutional”. FATCA, it says, along with FBARs (Foreign Bank Account Reports) “result in government’s warrantless seizure of personal financial information without reasonable suspicion or probable cause”.

“Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned,” the platform statement continues.

“The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them.

“Thus, FATCA not only allows ‘unreasonable search and seizures’ but also threatens the ability of overseas Americans to lead normal lives.”

While the platform document may not play up FATCA as an issue, elements in the Republican party have opposed FATCA – which they tend to view as a piece of Democratic legislation, as it was proposed by Democrats (in the form of the so-called HIRE Act, of which it was a part) and signed into law by one – almost since it was first introduced.

In September, a Republican member of the US House of Representatives, Mark Meadows of North Carolina, introduced a bill  aimed at repealing it. An earlier attempt to do the same thing was made in 2013 by another Republican, Senator Rand Paul.

Israel-based Republicans  also initiated a Supreme Court challenge  to the law in Israel, where they are awaiting a final ruling after having secured a three-month stay in the enforcement of the law’s provisions in the country.

An unanswered question in the event that FATCA were to be repealed, meanwhile, is whether the US would then sign up to the new global version of FATCA, officially called the Common Reporting Standard but sometimes referred to as GATCA (as in “global FATCA”). The CRS is being promoted by the OECD and, like FATCA, calls for jurisdictions that sign up to it to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis”.Thus far, 87 countries have signed up to the CRS, but the US has not, on the grounds that it doesn’t need to because it has FATCA.

To read and download a copy of the 66-page Republican Party platform, click here.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

preloader
Close Window
View the Magazine





You need to fill all required fields!