With this mess, I do not blame local banks who refuse to open an account for a U.S. citizen…simply not worth the hassle from U.S. I think Taiwan govt. will agree to U.S. requests. However, how long to implement is hard to say. I do not think U.S. will push too hard at this point. They probably think they caught 50% of world’s “tax avoiders” when they clamped down on BVI type companies and the swiss personal banking groups. Now they are making their way around the world and will push places like Singapore, H.K., etc. in Asia to get a better feel of how much is stashed over here. I think they don’t have the bandwidth to tackle all the countries info so quickly. Seems they are still have trouble figuring out how to deal with all of the voluntarily submitted info.
Well I agree and disagree at the same time. Banks generally should not reject any nationality or person from openeing an account, it would open up the bank and government to all sorts of protests and human rights issues. What banks should be doing instead is protesting against the government over this regulation arguing that it is a paperwork nightmare and that the government should either pay for the lawyers and accountants they need to implement the proposed IGA or send their own people to do it. Right now banks are having to spend millions of NT to hire people to understand what FATCA is and all the rules and amendments there are, it is a paperwork nightmare indeed.
I think the government here is stupid enough to sign the agreement also, and it’s sad, but… Something is on the table for Taiwan… more ships? more subs? more missles? something… I don’t think Singpore is going to sign this right now, maybe in a few years, but not now. I do agree that the US gov’t does not have enough man power nor money to tackle all the countries at once. They have a bunch now already, but they want as many as they can at the beginning so they can have more data. Who needs the NSA when you have FATCA! Just another extenstion of it essentially. All the banks around the world will become spies for the US, or IRS agents so to speak. This is just all going towards the new OECD regulations for GATCA! ey.com/Publication/vwLUAsset … andard.pdf.
All one could hope for is that they just collect the information but never have time to look through it at this point…
Here’s another great example of what is about to become a huge reality! How ridiculous is this?!
scmp.com/business/companies/ … ages-taxes
Cathay to withhold US pilots’ wages for taxes
Airline says new laws are forcing it to hand over 30 per cent of salaries to American authorities
PUBLISHED : Monday, 03 March, 2014, 2:59am
UPDATED : Monday, 03 March, 2014, 2:59am
Phila Siu
Cathay Pacific Airways is to start withholding about 30 per cent of its American pilots’ salary every month and pass the money to the US tax authorities together with the pilots’ personal information this year.
While the airline told the South China Morning Post the move was designed to comply with US tax regulations, its decision has been challenged by legal and tax experts in Hong Kong.
They said companies in Hong Kong had no obligation to fulfil demands made by a foreign government because of the two different jurisdictions.
Lawyer Albert Luk Wai-hung said that if the airline observed the US regulations, the affected pilots could sue the airline for underpaying them because part of their salaries would not find its way into their pockets. That could violate the spirit of their contracts.
“The company also cannot pass their employees’ personal information to any third parties without their consent,” Luk said, pointing to the Personal Data (Privacy) Ordinance.
At the centre of the controversy are two US tax regulations - an income tax withholding requirement in the Internal Revenue Code and the Foreign Account Tax Compliance Act.
Patrick Yip, a national financial services tax leader at Deloitte Touche Tohmatsu, said the tax withholding law required overseas companies which hired US citizens to withhold an amount of tax and pass it to the US Internal Revenue Service. It applies to US citizens who make more than US$97,600 a year - about HK$63,000 a month.
“But practically, Hong Kong and the US are two jurisdictions so I have never seen any companies here which comply with this law,” Yip said, adding there would be no penalty even in the case of non-compliance.
“Even the US companies in Hong Kong which have US employees don’t do it … no wonder the pilots have such big reactions because no one has ever heard about it.”
Cathay will start withholding tax from the second quarter of the year, and pilots said it would affect 300 to 500 of them - up to 18 per cent of cockpit crew.
The pilots said they already had to pay Hong Kong and US taxes, but before Cathay changed its policy they could file US taxes themselves once a year.
CPA Australia’s divisional president for Greater China, Ronald Yam, and the chair professor of accounting at the University of Hong Kong, Amy Lau Hing-ling, said they had not heard of a local company withholding US employees’ taxes.
As for Fatca, it was passed into law in 2010 but will only take effect in July this year.
The anti-tax evasion law requires foreign financial institutions such as banks to declare to US tax authorities the foreign holdings of anyone liable under US tax.
“The US Internal Revenue Service is actively seeking airlines flying into the US to ensure they are fully compliant with all US income tax requirements,” Cathay said. “As an international airline flying into the US, we are working with the IRS on this compliance.”
Cathay added that no disclosure of information would be made to the IRS without “notifying” the pilots.
Yip, an expert on Fatca, said that if Cathay did not comply, the US tax authorities would withhold 30 per cent of its US-source income.
He said it was “strange” that the tax authorities had demanded airlines declare pilots’ financial details because airlines were not financial institutions.
Two American pilots employed by Cathay said the plans would create cash-flow problems for them. They also said that filing tax was a complex matter and they were concerned they might pay more than they should.
.
This article appeared in the South China Morning Post print edition as Cathay to withhold US pilots’ wages for taxes
Answers recieved so far:
[quote]Thank you for your e-mail of 11th February, 2014 expressing your concern over the negotiation of the Inter-Governmental Agreement (IGA) on the implementation of the US legislation of the Foreign Account Tax Compliance Act (FATCA) between the US and Taiwan. Regarding the statement that you made in the letter “47. What analyses and studies have been undertaken as to whether the proposed FATCA regime constitutes an override of the existing double tax convention?..”, at present, Taiwan has concluded 25 double taxation agreements (DTAs) with various countries, but the United States is not included amongst them. Therefore, Taiwan and the US impose taxes solely based on their own respective domestic laws.
Given that the information requested by the US is related to financial institutions, thus, it is the Financial Supervisory Commission (FSC) that plays the lead role in negotiating the IGA between the US and Taiwan. FSC has formed a working group with several related governmental organizations so that the government can make sure that the IGA signed in the future will reduce the burden of financial institutions and also give consideration to the rights of investors. Your suggestions and concerns are highly appreciated.
Ministry of Finance [/quote]----------------
[quote]We received your e-mail to Finance Minister Chang on Feb 12, 2014, at the question no.117 where you mentioned about “have any studies or analysis taken place with respect to FATACA s impact on immigration to Taiwan by persons subject to this legislation?” The following is our reply:
The National Immigration Agency, Ministry of the Interior currently hasn’t investigated or planned any related immigration legislation in Taiwan to adapt to the new Act -FATACA(Foreign Account Tax Compliance Act ) . However, we will coordinate with the Ministry of Finance or the Ministry of Economic Affairs in implementing their policies.
As to any related studies by persons, we suggest you consult with other related authorities.[/quote]Ministry of Interior
Regarding the Cathay case above…how did the IRS decide to ask for 30%? Each individual must calculate their estimated taxes owed and make pre-payments on quarterly basis. So why are citizens abroad treated differently? Perhaps I am not familiar with some IRS rules and 30% is used in some cases per IRS regulations.
Scary.
[quote=“Flakman”]Regarding the Cathay case above…how did the IRS decide to ask for 30%? Each individual must calculate their estimated taxes owed and make pre-payments on quarterly basis. So why are citizens abroad treated differently? Perhaps I am not familiar with some IRS rules and 30% is used in some cases per IRS regulations.
Scary.[/quote]
A great queston indeed.
All I can think of, and I am ont an expert, but maybe because FATCA withholding is 30% on banks that don’t comply with this law. So probably Cathay thought, well HK isn’t going to sign FATCA, but many of the American pilots have accounts in HK or in the US and as our banks aren’t going to comply, the banks in HK are going to charge Ameicans 30% for services. I just wonder how many other companies are going to try to pull this. It would be very interesting if the pilots union came together on all of this and striked. What a mess it would create.
Flakman, actually after reading the article again and also going through the comments about this isaacbrocksociety.ca/2014/03/02/ … /#comments I am starting to wonder if there isn’t another reason why they are taking the 30%, as the article does not specifically mention FATCA, I wonder if the author got confused about the tax issues and FATCA. I am really not sure… As there is only one article about this that I can find, it is hard to say.
JeffG…thanks for the links. In reading through some IRS stuff I see they require withholding taxes in some situations. I don’t have the patience to see when must do withholding tax or can just make prepayments. I just make prepayments as just makes life easier for me. I think asking a Taiwan employer to withhold taxes and see directly to IRS would be impossible unless is very large international company. I previously worked for such a company but could not see them providing this service as they only deal with IRS in their U.S. office. They already were withholding taxes for Taiwan govt…no way they were going to do a second withholding for U.S. IRS.
Here is the cop out answer I received from the FSC today, I am working on a reply to them which I will also post here after it has been sent.
Briefly… basically in my opinion, they but wish to hear from people on this issue as they believe the information they have gathered is enough and so they will comply with the US’ request. What bothers me is they are so uninformed as to tell me there are 50 jurisdictions that have signed it when in fact so far there are only about 20. Their show of ignorance is both amusing and pitiful at the same time. Their letter proves they really have not carefully considered the implications FATCA is going to bring on Taiwan and its people.
Flakman, sorry for my late reply to you, I have been busy, I will get back to your question soon.
With the number of Taiwanese holding green cards and U.S. passports…this is a huge issue for Taiwan. Can Taiwan banks actually know which clients have U.S. green cards and passports? Or will U.S. push them to start asking for such information from clients? I remember that ARC that I used passport as my ID for opening bank account…but later I just used ARC (if I remember correctly)…so maybe even U.S. citizens here with ARC may not be on current list provided to U.S. government. However, I just read article which said that the banks will be required to ask their clients if they are compliant with IRS tax laws…so going forward banks will simply cancel services if you do not say are IRS compliant.
I don’t have much information on this, only this link for your reference: irs.gov/Individuals/Internat … ign-Person As I am not an accountant I cannot be certain, but it appears they might be able to do so. Although I highly doubt most companies would take the trouble to do it, it seems possible. This is something that needs more investigation.
You are absolutely right, and I stated that in my latest response to the FSC. And I wrote it somewhere in one of my threads, but indeed, what banks are going to do is ask all NEW account holders if they have any US passport or greencards, and as soon as they open a new account it may link all of their accounts, thus exposing them. So for a Taiwan account holder of a US passport or greencard, they had better not open any new accounts, EVER! At least some banks will do this. But I would venture to say that some banks will start annoying old customers also and start asking them if they have any US connections, anything is possible once it is implemented. And you are right again, a couple of days ago I also saw an article that foreign banks are going to ask US account holders if they are IRS tax compliant. So anyone who is not compliant, which is probably more than 90% of foreign account holders are going to be screwed in way or another. The only hope is that general account holders with little money in their accounts won’t be touched as the IRS does not have the man power to look at every individual account, however, who knows how they are going to find those who are not compliant. And indeed some banks would just close your account if you are not compliant.
Frankly I think the banking system in Taiwan is not prepared for the backlash from foreign companies and US account holders, because many of them will have no policy in place if an account holder simply refuses to sign any new agreement with the bank, it is going to be a total cluster f***.
My response to FSCs letter.
[quote][b]
Your response on 3/11 to my inquiry on 3/3 concerning FATCA, exposes my biggest fears that the ROC government has not taken FATCA seriously nor understands its implications for Taiwan or its people. You are plainly wrong. Firstly, there are only 20 jurisdictions that have signed on to FATCA, not 50 like you stated in your previous letter. FATCA is implementing US laws in Taiwan and frankly if the FSC cannot answer those 121 questions Taiwan should not be signing this agreement, I am quite disturbed by your department’s utter lack of knowledge and understanding about this law.
If Citizenship Based Taxation is right for America, then why doesn’t Taiwan implement it on its citizens as well?
Is the ROC simply signing FATCA because there is defense support from the USA which is clouding your sensibilities?
For your reference check this link: papers.ssrn.com/sol3/papers.cfm? … id=2407264 maybe it will help you to understand more clearly why FATCA is bad.
FATCA will affect my family, including my Taiwanese wife, who is NOT a US citizen! With the amount of US passport holders in Taiwan I am appalled by the government’s lack of judgment.
[/b][/quote]
I think the IRS will use a blanket approach to communicate with everything they “find” did not provide all the account numbers requested by FBAR. I think they will simply first send fine notices and the amount of fine to pay to IRS. If you don’t agree with the fine then must start fighting it out with the IRS. Of course, meanwhile non-payment will lead to interest owed on amount outstanding and then threats of criminal prosecution.
I think the IRS net will be thrown very wide and then they will slowly haul in what fines they can get with the first net…then settle in to find the really large fines on large amounts they discover.
[quote=“Flakman”]I think the IRS will use a blanket approach to communicate with everything they “find” did not provide all the account numbers requested by FBAR. I think they will simply first send fine notices and the amount of fine to pay to IRS. If you don’t agree with the fine then must start fighting it out with the IRS. Of course, meanwhile non-payment will lead to interest owed on amount outstanding and then threats of criminal prosecution.
I think the IRS net will be thrown very wide and then they will slowly haul in what fines they can get with the first net…then settle in to find the really large fines on large amounts they discover.[/quote]
It’s possible yes. I have no idea, if everything is automated and computerized, like the FBAR is now then it is very likely they won’t have to look through the million of records they are going to get, but someone still has to type those in, so I guess, we won’t be seeing any real effects for many years as they start collecting the data.
A couple of new articles for your reading enjoyment:
marketwatch.com/story/nearly … _news_stmp
I think it is more like 99% not 1/3.
mainjustice.com/justanticorr … ain-wreck/
Think Obamacare is a trainwreck? No no, FATCA is much worse as I have been saying for months!
thenewamerican.com/usnews/co … t-on-world
More Obama executive orders?
The latest reply from the FSC. They are now replying in formal official Chinese which is very difficult to understand. Basically their response is more of the same, nothing new and they still haven’t answered any of my first 121 questions or any of my second questions, so I replied a third time and asked more specific questions: See below:
Their response:
My reply:
I think finding the answer to #1 is already difficulty. If you succeed… 
Ive dealt with the FSC on another matter before and didn’t find them too helpful.
The woman did not want to answer my question to my satisfaction, and then said, ok, ok, thank you, and tried to hang up on me because I dared insist on a direct answer. I cut her off and said, you didn’t answer my question to which she went quiet, said ok thank you again and hung up on me 
I’m not so hopeful either.
[quote]by dan2006 » 22 Mar 2014 22:54
Ive dealt with the FSC on another matter before and didn’t find them too helpful.
The woman did not want to answer my question to my satisfaction, and then said, ok, ok, thank you, and tried to hang up on me because I dared insist on a direct answer. I cut her off and said, you didn’t answer my question to which she went quiet, said ok thank you again and hung up on me 
[/quote]
I’ve spoken to them several times over the years for different matters, and including FATCA. Not really much problem on the phone other than, I can’t quote them as saying this or that, but they were willing to talk to me. However, by email, their messages are short, uninformative and go around in circles. :fume:
Two more great articles: Why the new tax haven laws are a disaster in the making — nomadicpolitics.blogspot.tw/2014 … s-are.html
Is Fatca just for fat cats? US expats beware — bangkokpost.com/news/investi … ats-beware
I received the following response from the FSC on Friday.
there reply was:
[quote]Thank you for your concern about the FATCA issues and we have acknowledged your questions.
However, given that FATCA is an U.S. domestic tax law, we suggest that you should consult U.S.
government directly if your concern is related to the explanation of the Act. Furthermore,
we will forward your emails to American Institute in Taiwan and the U.S. tax authorities (IRS)
in the future in order to appropriately address your questions.
[/quote]
From here, it appears there is no where to go with the FSC because no matter how many letters I send them they 1. don’t answer any of my questions and 2. want to redirect my questions to those who cannot answer my questions anyway because NONE of my questions relates to AIT or the IRS!!! (see the list on page one of this thread) If someone is willing to translate my letters to Chinese I will try another approach, writing in English and writing from an American perspective is getting no where, go figure right?!
In addition I have also attempted to get in touch with AmCham in February, after waiting a month I sent a follow up letter and basically got nothing other then, hmmm yeah, maybe this is bad… So I sent them the following email about 10 days ago…
My letter asked:
[quote]Has AmCham stated a position? If so was it done publically? If not, why not? And if it was can you send me a copy of that statement please?
What is AmCham doing to combat this law with the local government? If so, what? And if not, why not?
Perhaps AmCham should read this: maplesandbox.ca/2014/us-chamber- … -on-fatca/ This is from the Canadian AmCham charter, they took a serious position against FATCA in Canada. Shouldn’t the Taiwan charter be doing the thing?
[/quote]
However, until now I have received no reply and am not expecting one… If Amcham is not interested in getting involved and the FSC wants to continually take this sort of attitude, then I’m at a loss. UNLESS local citizens and more Americans in Taiwan start getting vocal about this everyone else will find out in July about this law and then of course there will be another public outcry why didn’t the government have open public hearings about this before they signed another agreement with another country. All I can say at that point is I told ya so. Though I do not think anything at this point is really going to stop FATCA from implemented in Taiwan, though it would be nice if the government would address those questions publically in order to let the citizens know what it is doing and why and how much it is costing the government.