Govt to minimise FATCA business costs

The Government is aware of financial institutions’ compliance concerns about the FATCA tax information exchange agreement being negotiated with the United States and is looking at options to help alleviate some of these concerns, Revenue Minister Peter Dunne said today.

FATCA – the Foreign Account Tax Compliance Act – is US legislation requiring non-US financial institutions, such as banks, life insurers or managed funds, to provide the US Internal Revenue Service and US Treasury with information on their dealings with US clients.

Cabinet agreed last October to New Zealand lodging an expression of interest in negotiating a FATCA intergovernmental agreement (IGA) with the US. Negotiations are now underway.

Under the agreement, instead of New Zealand businesses having to provide information directly to the American authorities to conduct business with US organisations, they will be authorised to pass the information to Inland Revenue for passing on to the United States.

“FATCA is part of New Zealand’s commitment as a good global citizen to doing its bit to clamp down on tax evasion and an important way of doing that is through tax information exchange agreements that we regularly enter into,” Mr Dunne said.

“We currently have 37 double tax agreements and more than 20 tax information exchange agreements either signed or already in force.

“We are negotiating the FATCA agreement on the same basis, but we are very aware of compliance cost issues and looking at how we can minimise any burden,” he said.

Mr Dunne said the agreement will be reciprocal, so the US will also provide New Zealand with information about New Zealand investments in the US.