As part of the patent reform in the US, a new bill was introduced into the US House of Representatives on 22 July 2013. Its aim is to protect innovators from frivolous patent litigation brought by the increasing number of patent trolls, particularly in the technology industry.
Pearse Trust Blog
Background To Latest Delay
Since 2011 we have written a number of blog posts on FATCA. In our blog post FATCA For The UK, we mentioned an implementation date of 1 January 2013. That date was later postponed to 1 January 2014. We highlighted this in our blog post FATCA – Implementation Deadlines and provided an overview of the key implementation deadlines following the release of IRS Announcement 2012 – 42. However, in July of this year, the US Treasury Department announced the further postponement of the withholding tax regime imposed by FATCA on foreign banks and other foreign financial institutions (FFIs) by six months until the 1 July 2014.
Further to our recent blog posts Does FATCA affect your business? and FATCA for the UK?, we are now able to provide an overview of the key implementation timelines for due diligence and other requirements under FATCA, following the release of IRS Announcement 2012-42.
Background to FATCA
The Foreign Account Tax Compliance Act (FATCA) is U.S. tax legislation which comes into legal force on 1st January, 2013. This new legislation was enacted by the Hiring Incentives to Restore Employment ("HIRE") Act 2010.
Commentary in the media suggests that many US companies are using a structure called the “Double Irish Dutch Sandwich” to reduce their worldwide taxation liabilities connected with Intellectual Property (IP). The companies said to be using this structure include Apple, Facebook, Google, Microsoft, Oracle Corp and Pfizer Inc. The structure utilises advantageous taxation rules in Ireland and the Netherlands to limit the taxation payable on flows of royalty income generated from IP, and is also tax efficient from a US perspective.
The Bank Secrecy Act was passed into law in the United States in 1970 in an attempt to combat money laundering in the US As a result of this Act, foreign financial accounts including bank accounts, brokerage accounts, mutual funds, unit trust and other financial accounts came under scrutiny as the United States Government became wary of United States persons utilising these accounts outside the US in an attempt to evade more stringent US laws. The Internal Revenue Service (IRS) began to enforce the disclosure of such foreign financial accounts by means of the Report of Foreign Bank and Financial Accounts (FBAR).
Lehman Brothers International (Europe) (LBIE), the principal European trading company in the Lehman Brothers group, regulated by the Financial Services Authority (FSA), was placed in administration in 2008, following the bankruptcy of Lehman Brothers Holdings Inc. The administrators sought the assistance of the UK Supreme Court to interpret the FSA’s Client's Assets Sourcebook Chapter 7 (CASS7) and the treatment of funds that had been paid to LBIE before it entered administration.
Two years ago, the United States and Western Europe were in the same boat: a recession on a scale that had not been seen since the 1930s. With images of the Dust Bowl swirling in the minds of lawmakers, the US, the United Kingdom, and the Eurozone took different tactics to attempt to pull their economies out of the recession. The US adopted Keynesian economic principles; namely, they tried to spend their way out of the recession. The UK and the Eurozone took a different tactic: cut spending. There are merits to each plan, even though they are at the opposite ends of the economic spectrum.
Lately, a vocal group of wealthy people have been calling for more taxes on the rich. From billionaire Warren Buffett in the States to L’Oreal heiress Liliane Bettencourt and other French high-earners asking the wealthy to pay more taxes on their incomes in order to help pull their countries out of debt, it’s inevitable that leaders will listen – and raise taxes. France announced a 3% tax increase on its top earners, and Italy followed suit. After plenty of debate, Italians earning over €500,000 annually will pay an extra 3%. Italy’s move is largely symbolic, however; only 4,437 Italians declared €500,000 or more on their tax returns. Spain is considering a similar measure, a 2% increase on high earners to raise €1.2 billion.
Unlike Buffett and Bettencourt, however, Italian footballers were not pleased with the Government’s decision to raise taxes. They threatened to strike, as Italians earning over €150,000 a year were going to be faced with a 10% tax increase.