UAE has reached an agreement in substance with Washington to implement the US’ Foreign Account Tax Compliance Act (FATCA).
The US law aims to plug as much as US$100 billion a year of lost tax revenue from US citizens concealing incomes and assets offshore.
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The law requires foreign financial institutions to share information with US authorities on accounts held by US citizens and firms. In case they fail to do, the US Treasury could institute a 30% withholding tax on payments made from the US to the financial institution, essentially a stiff tax on their US business.
The UAE has followed FACTA’s ‘Model 1’-type agreement with the ministry negotiating the exchange of data and information with the US Treasury Department.
Obaid Humaid Al Tayer, UAE’s minister of state for financial affairs, stated that this is an initial agreement between the UAE and USA, however the emirates will be treated as having an IGA in effect.
He ensured that meetings and business workshops will be conducted on different committee levels during the coming months to finalise all required procedures in regards to signing the final draft of the agreement.
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