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February 6, 2014updated 04 Apr 2017 2:31pm

US signs anti-tax evasion agreement with Canada, Hungary

The United States has signed anti-tax fraud agreements with Canada and Hungary as part of its efforts to combat offshore tax evasion.

By Verdict Staff

The United States has signed anti-tax fraud agreements with Canada and Hungary as part of its efforts to combat offshore tax evasion.

With this deal, the US has signed a total of 22 pacts to implement the Foreign Account Tax Compliance Act (FATCA).

The tax evasion agreement signed with Canada in Ottawa will come into effect in July and will exempt many registered accounts including RRSPs and tax-free savings accounts.

Under the agreement, US financial institutions must withhold a portion of certain payments made to foreign financial institutions (FFIs), which do not agree to identify and report information on US account holders.

Under the FATCA law, foreign financial institutions (FFIs) will require to report to the IRS information about financial accounts held by US taxpayers.

The US Treasury said it has a dozen more pacts that have not yet been signed.

Jim Flaherty finance minister Canada said: "Canada engaged in lengthy negotiations with the U.S. government to address our concerns and, as a result, significant exemptions and other relief were obtained."

Robert Stack, the Treasury’s deputy assistant secretary for international tax affairs, said: "The agreements clearly demonstrate the considerable international support behind FATCA and we are proud to lead the global charge on this pressing issue."

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