From July 1, 2014, the world is divided into two distinct halves – those confirming to the US Foreign Account Tax Compliance Act (FATCA) and those who are not.
The United Nations officially lists 229 nations in the world. According to the US Treasury, 112 are either signed up FATCA members or have indicated they are ready to sign a tax treaty with the United States.
Two leading economies are missing from the list – China and Russia. Privately, both have indicated they want to be part of FATCA, but neither are for different reasons.
China wants the renminbi, not the US dollar to be the global default currency and believes that as the country vies with the US to become the leading economy, this might happen. China also has different tax laws from the US and has no reason to swap sensitive information about taxpayer.
Russia is out in the cold because of the Ukraine crisis. The US has imposed a bar on Russia signing a FATCA treaty as a silent economic sanction, but one that could cost Russia millions of dollars in compliance costs as each bank and financial institution trading in US dollars has to register to comply with the law.
Here are the two full lists of FATCA compliant countries as of July 1, 2014:
Nations with signed FATCA treaties
- Cayman Islands
- Costa Rica
- Isle of Man
- New Zealand
- South Africa
- United Kingdom
Nations considered FATCA compliant
- Antigua and Barbuda
- British Virgin Islands
- Czech Republic
- Hong Kong
- St. Kitts and Nevis
- St. Lucia
- St. Vincent and the Grenadines
- Saudi Arabia
- Slovak Republic
- South Korea
- Turks and Caicos Islands
- United Arab Emirates
Banks and final institutions in unlisted nations must individually register as FATCA compliant with the Internal Revenue Service (IRS).
So far, 77,000 have applied and thousands more are expected to join around July 1.