Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

U.S. eases moves on offshore tax crackdown

Getty Images/iStockphoto

The United States is enlisting the help of five European governments in its crackdown on offshore tax evasion and says it's open to the idea of a similar deal with Canada.

The Obama administration issued long-awaited regulations on Wednesday aimed at getting foreign banks and other financial institutions to identify their U.S. customers, while delaying and softening some key measures.

The crackdown has provoked a storm of protest in Canada, home to roughly one million Americans – many of whom could eventually be caught up in the tax sweep.

Story continues below advertisement

In response to a barrage of foreign criticism, the U.S. Treasury Department said it is now willing to work directly with foreign governments, rather than financial institutions, to enforce the Foreign Account Tax Compliance Act (or FATCA).

Canada and other countries have complained that the U.S. law might violate privacy laws and encroach on their legal turf.

Germany, Great Britain, France, Italy and Spain issued a statement Wednesday saying they have agreed to set up a "government to government framework." The governments would collect data and then remit it to U.S. tax authorities, under the terms of existing bilateral tax treaties.

Conspicuously absent from the statement was Canada.

Finance Minister Jim Flaherty said the U.S. announcement "appears to demonstrate an interest in greater joint government collaboration to address such concerns."

He also said Canada would "continue to work with our American counterparts toward an approach acceptable to both our countries."

Finance Department spokeswoman Mary Ann Dewey-Plante would not say if Canada is willing to agree to the same terms as the Europeans. "We are continuing to discuss a solution to this situation with the U.S.," she said. "When we have one, we'll say more."

Story continues below advertisement

A senior U.S. government official told Reuters the government is "open to exploring a similar arrangement with Canada."

In a statement, the Treasury department said the offer is not an exemption from FATCA, but provides a way for foreign financial institutions to deal with their own governments.

The Canadian Bankers Association said it's hopeful the European deal will be made available to Canada.

Also Wednesday, the U.S. Internal Revenue Service said it would delay some key FATCA income reporting requirements by two years to 2016 and raise the account value ceiling (to $1-million U.S. from $500,000) for exhaustive manual checks on suspected U.S. account holders.

IRS commissioner Doug Shulman said the proposed regulations "reflect our commitment to take into account the implementation challenges of affected financial institutions while allowing for a smooth and timely roll-out of the law."

FATCA still requires foreign financial institutions, including banks, brokers, insurers and mutual fund companies, to identify U.S. customers with accounts valued at more than $50,000. Institutions, and customers, that do not comply would be hit with a 30-per-cent withholding tax on any U.S.-source income and transactions.

Story continues below advertisement

That's a powerful hammer for the big Canadian banks, all of which have U.S. operations.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies