For years, Nigel Green, CEO of investment firm deVere Group, has been warning of a “dark day” looming on the horizon “for the seven million Americans living overseas, and for U.S. firms that operate globally.”
Now that day is finally here, as the U.S. Foreign Account Tax Compliance Act (FATCA) goes into effect after years of delays.
In a prepared statement, Green again blasted the global tax law he’s railed against for years, deriding FATCA’s “dragnet, untargeted approach” to enforcing American tax compliance abroad.
FATCA requires all non-U.S. financial institutions to report the financial information of American clients with accounts larger than $50,000 directly to the IRS, or face a crippling 30 percent withholding tax.
The law was passed in 2010 as a way to generate revenue by curbing offshore tax evasion, but critics, including Green, have derided it for its heavy-handed, “imperialistic” approach.
“Countries and [Foreign Financial Institutions] have been coerced into complying with FATCA’s expensive, burdensome, privacy-infringing, sovereignty-violating regulations by the U.S. – or have to face heavy penalties,” says Green in a written statement. “In effect these countries and FFI’s are now working as de facto IRS agents.”
Green also criticized the effect of FATCA on foreign firms’ willingness to work with U.S. clients, due to FATCA’s extensive reporting requirements.
“What it does – because of its plethora of serious unintended consequences – is to brand Americans who choose to live and/or work overseas as financial pariahs,” says Green in the statement. “Similarly, American businesses working in international markets are now often branded with a leprosy-like status.”
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