The New Zealand Bankers’ Association today applauded the government’s decision to seek an inter-governmental agreement between New Zealand and the United States which will help financial institutions comply with new US tax reporting requirements.
The Foreign Account Tax Compliance Act, also known as FATCA, is designed to ensure US citizens resident in other countries meet their tax obligations. It requires foreign financial institutions, including New Zealand banks, to identify and report on customers who are US citizens.
“The government’s engagement on this issue will be welcomed across the financial sector,” says New Zealand Bankers’ Association chief executive Kirk Hope.
“It’s a useful step towards sorting out a very thorny and expensive compliance issue for us. We understand US moves to clamp down on tax evasion by Americans living around the world. But without an inter-governmental agreement, the US law’s provisions are virtually unworkable.”
The agreement is expected to provide a practical way of meeting FATCA’s aims and allowing New Zealand financial institutions to comply. “While our banks will still incur costs around designing and implementing customer identification and reporting systems, we see this as a positive step,” says Hope.