The expert point of view regarding the effectiveness of the American legislation on taxation of foreign accounts differs in the inconsistency and polarity of estimates. Some believe that a progressive and effective system of international cooperation in taxation is being formed in the world. Almost all developed countries conclude intergovernmental agreements on the collection of taxes from foreign accounts of their taxpayers. What began in 2010 as part of the US FATCA Act continues in other processes around the world.
The financial occupation of the world?
Opponents have a different assessment of what is happening. Opponents of the FATKA law believe that over the past few years there has been an unspoken silent financial occupation of the world by the United States.
Their arguments: modern American laws are distinguished by their territorial "globalism." Their implementation is often entrusted to citizens and companies of other countries. The most striking manifestation of such extraterritoriality is FATCA tax withholding.
Context of law
Talk about the appropriateness of the new law has been going on for a long time; the idea arose more than one day. The background to the adoption of the law was the unprecedented struggle of the state for the full collection of taxes.
In the course of the debate in the US Congress, figures of financial losses were amazing. Due to the creation of muddy offshore schemes, budget losses amounted to about one hundred billion US dollars annually.
“And hide money offshore” - the phrase has become classic even in the series about love. But according to tax detectives and experts, the money was hidden not only in offshore, but simply in other countries of the world. American citizens have a bad habit of keeping their money in foreign banks and other financial offices. This did not fit into the American tax law, according to which US citizens should pay taxes only to the budget of their country, regardless of where the main income was received.
Independent financial player on the field
The USA is the only country that does not pay the slightest attention to the factor of territoriality in matters of taxation. As soon as a person receives a US citizen passport (and even a green card), he instantly becomes the subject of close attention of the IRS - the US tax office.
If, for example, an American specialist occupies a high post in a Russian company and receives high competitive salaries with various payments and corporate bonuses, he will be forced to pay more than substantial taxes to the American treasury.
How did it start
The famous FATKA is the Russian version of the English abbreviation FATCA - the law on tax reporting on foreign accounts. This law is almost ten years old; it was adopted in 2010 as a method of combating tax evasion. In the USA, tax crimes are traditionally considered heavy articles with very unpleasant terms and penalties.
But if earlier these features were exclusively an internal affair, then since 2010, foreign financial organizations have been involved in this cycle. Now they were forced to report cash flows of their customers, who were American taxpayers, to the US Internal Revenue Service.
Avoiding this kind of reporting, foreign financiers risked falling under severe sanctions, including fines and even closing correspondent accounts with US banks.
Switzerland surrendered first
It all started with a struggle to uncover a secret that has been untouchable for centuries. This was information about the deposits of Americans in Swiss banks, which Washington considered tax evaders. It turned out that at that time only one Swiss bank UBS had tax-free money owned by 52,000 American citizens.
In response to a U.S. Justice Department request, UBS was forced to pay a $ 780 million fine. At the same time, the bank revealed four thousand names of its American investors. This was the beginning of the victorious path of the tax authorities, their wings grew. It was against this background that the FATKA project was created - the US law on taxation of foreign accounts.
Shock in the community
State bodies and banks of different countries reacted negatively to the adoption of the FATKA law. Moreover, we can say that it was a shock associated with an unprecedented increase in dependence on the United States, in which European banks were for a long time and without a new law.
The whole point was one feature of the functioning of the global financial system, allowing the United States to control it. This is the monopoly of the American dollar, which is an international currency. The vast majority of transnational settlements are made in US dollars and through the American banking system. The New York Stock Exchange is a favorite place to place securities of major companies and banks from around the world.
Some financial experts believe that the current situation with the American financial dictate was formed as a result of targeted actions by the United States with the help of its famous Federal Reserve System. These actions are called the creation of a "dollar-centric financial system." There are also opponents of the conspiracy theological version, which will be described below.
But while before the introduction of the FATKA law, banks were under the indirect influence of the United States, the new scheme for combating American tax breakers led to direct control of the world's banks by the US tax authorities. If you look, then the independent financial systems of different countries in the past began to play the role of branches of tax and other US agencies.
Water sharpens a stone
It’s one thing to pass a law in your own country. It is quite another to agree on its execution by foreign states, especially against the background of general negative and a stream of critical articles in the media. The US Department of State has taken up this difficult task. He began negotiations on new international agreements on the so-called cross-border reporting.
American tax authorities have proposed two models of interaction to choose from. The first option included reporting to local tax authorities, which in turn sent consolidated documents to the United States. The second model involved reporting directly to the U.S. tax authorities.
The proverb “water sharpening stone” is ideal for the hard and patient work of the US Department of State from each country in the world. Before the law came into force in July 2014, not all countries signed standard FATCA agreements.
In order not to fall under penalties in 2014, a compromise was invented: a “principal agreement” signed by some countries about future intentions.
Three years later, an agreement (or “principal” agreement) was signed in 113 countries of the world.
Effects
Failure to comply with the requirements of the FATKA law is a significant risk for banks in any country, including Russian. The nature of these risks is connected both with the reputation of the bank and with fines in the form of a withdrawal of 30% of funds in the framework of international transfers.
Reputational losses are the loss of trust in the international banking community. From the point of view of this community, financial institutions that are not involved in the FATKA system are potentially unwanted partners due to money laundering, tax evasion, etc.
In addition to these troubles, conducting financial affairs with banks outside the FATKA system began to bring extra costs associated with additional administrative actions. It was a vicious circle: the more banks accepted the FATKA terms, the more difficult it was for freelance financiers to work.
FATKA and the Russian Foreign Ministry
In the Russian context, the law FATKA is connected with continuous legislative contradictions. First of all, this is due to banking and tax secrecy, as well as the confidentiality of personal data. In addition, the deduction of 30% of funds in the form of penalties is in no way legitimate, from the point of view of Russian laws.
Of course, the Russian Foreign Ministry could not stand aside and voiced an opinion about the violation of the sovereignty of countries and, most importantly, contradictions with Russian law. Forcing the tax requirements of a foreign state and other articles of the law makes it unacceptable for Russian banking institutions to cooperate with US internal revenue agencies. This point of view was voiced in a special letter from the RF Ministry of Foreign Affairs in 2014, at the time the FATKA law came into force.
Independent Banking Solutions
One way or another, Russian banks needed to find solutions for normal future activities at the international level. There is no interstate agreement on the law of FATKA with Russia. Therefore, each bank had to join the system independently with the help of accession agreements.
The text of such agreements contains information that American tax authorities reserve the right to evaluate the reports they provide and additional information for the purposes of FATKA from Russian banks. This right allows them to exclude the bank from the list of organizations that join the FATKA system if its reporting ceases to suit them.
Without conspiracy theories
Critics of conspiracy theories point out that the US tax authorities do not require, but ask foreign financial institutions to inform them if there are certain individuals with American citizenship among their clients.
At the state Russian level, the law of FATKA's status remained uncertain. The Ministry of Finance refers to old documents and believes that the treaty between the US and the Russian Federation “On Prevention of Double Taxation and Tax Evasion ...” that has been in force since 1992 will be sufficient.
As for the FATKA law of the European version, most developed countries, starting with Great Britain, Germany and France, have long concluded agreements with the USA that exempt local banks from separate agreements. Moreover, these agreements are bilateral in nature: the United States will also transfer information about American accounts of European citizens to the tax services of partner countries.
The history of the introduction of the FATKA law is an excellent case for behavioral research in the context of international cooperation in the context of globalization.