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Wed 11 Jun 2014 12:54 PM

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UAE agrees to help US on tax evasion

New laws demand foreign banks, investment houses provide information to US authorities on accounts held by US citizens and firms

UAE agrees to help US on tax evasion

The UAE finance ministry has reached an agreement in principle with the United States to co-operate with Washington in its fight against tax evasion, AFP reported.

Starting from July 1, the US Foreign Account Tax Compliance Act (FATCA) will be implemented, and institutions in nearly 70 countries will work under its rules.

The law demands that the foreign banks, investment houses and others provide information to US authorities on accounts held by US citizens and firms.

If they do not do so, the US Treasury says it could institute a 30 percent withholding tax on payments made from the US to the financial institution, essentially a stiff tax on their US business.

UAE Minister of State for Financial Affairs Obaid Humaid Al Tayer said that, under this agreement, the UAE will be treated as having in effect an intergovernmental agreement on FATCA.

“Meetings and business workshops will be conducted at different committee levels during the coming months to finalise all required procedures in regards to signing the final draft of the agreement," he added in a statement reported by AFP.

US officials said this month that more than 77,000 banks and other financial institutions worldwide have joined its fight against tax evasion.

Looking for ways to close its budget deficit and clamp down on tax avoidance, Washington has particularly aimed the FATCA effort at traditional tax havens like Switzerland.

On May 19 Credit Suisse was fined $2.6bn for actively helping Americans hide money to avoid taxes over many years.

US Treasury Secretary Jacob Lew is expected in the UAE June 16 on a three-day trip that will also take him to Saudi Arabia, Israel, and Germany.

During his visit, Lew will discuss “the state of the global economy, as well as regional economic issues”, a Treasury statement said.

His meetings “will also focus on other issues of common interest, including continued cooperation on efforts to disrupt the financial and support networks of terrorist organisations.”