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US Seeks Comment On Foreign Account Law

Friday, April 9, 2010

The US Treasury and Internal Revenue Service have issued an alert to solicit comments on the recently enacted Foreign Account Tax Compliance Act (FACTA), as the government sets about drawing up draft guidance for the legislation.

The FACTA was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010 on March 18, and the legislation makes a number of changes to tax law affecting individuals with foreign bank accounts and assets held abroad.

The FACTA provisions of the HIRE Act amend the Internal Revenue Code to revise and add reporting and other requirements relating to income from assets held abroad by requiring foreign financial and nonfinancial institutions to withhold 30% of payments made to such institutions by US individuals unless such institutions agree to disclose the identity of the individuals and report on their bank transactions. The law also denies a tax deduction for interest on non-registered bonds issued outside the United States.

Any individual who holds more than USD50,000 in a depository or custodial account maintained by a foreign financial institution is required to report on any such account under this legislation.

Underpayments of tax attributable to undisclosed foreign financial assets will attract enhanced penalties under the new reporting regime.  In addition, the limitation period for assessment of underpayments with respect to assets held outside the United States is being extended.

Other provisions require US shareholders of a passive foreign investment company to file annual information returns, and allow the Secretary of the Treasury to require certain financial institutions to file returns related to withholding on transactions involving foreign persons on magnetic media (currently, electronic filing is required only for taxpayers filing at least 250 returns).

Furthermore, the FACTA imposes reporting requirements on owners of foreign trusts and sets forth tax penalties for failure to report on transfers to and distributions from such trusts.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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