Opposition to US law on tax evasion mounts

The US government faces growing criticism over a new tax law, which expands the information that foreign financial institutions must provide to US tax authorities about their US investors.

The aim of the Foreign Account Tax Compliance Act 2009 is to tackle tax evasions by US citizens using offshore structures and investments. But foreign banks and governments argue that the rules will place an excessive cost burden on overseas fund managers, who would have to prove that they are not hiding US tax evaders.

The US Internal Revenue Service could impose a 30 per cent withholding tax on payments arising from US source income unless firms disclose information on their US investors.

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