Friday, May 4, 2012

Brazil Banks to US: Fix FATCA

The Brazilian Federation of Banks has some ideas on FATCA:
We are supportive of regulations that increase tax transparency and reduce tax evasion, as well as prevent money laundry. However, we also understand that these regulations should be enacted by national authorities of each country or through international treaties so that they have reciprocity and are fully compatible with the constitutional and legal order of each country concerned.  
Due to certain legal constraints and high operational costs, F.A.T.C.A., as currently established, may not be fully implementable in each country even if its financial institutions desire to do so, nor achieve the intended results in the most efficient manner. In order to try to minimize these legal constraints and risks, and optimize costs, while still pursuing the major objective of F.A.T.C.A., we have worked on a set of proposals and requested clarifications that we submit to your consideration.
...F.A.T.C.A. clashes with certain aspects of the Brazilian Federal Constitution, especially concerning the fundamental rights of non-prejudice and equality of a US person as compared to any other person, the right to privacy and secrecy of financial data, and the prohibition to use unlawful pressure to do otherwise. F.A.T.C.A. also goes against the Brazilian tax system, since income tax can only be collected according to Brazilian law and to the benefit of the Brazilian Federal Union. Financial market regulations do not allow financial institutions that operate in Brazil to charge the US withholding costs to their customers contractually. The acts of Brazilian financial institutions to pursue F.A.T.C.A. enforcement may thus be considered as illegal and unconstitutional, putting those institutions in a position of having to face unfair US tax costs, civil and regulatory legal suits in Brazil.

Much more in the letter. This sounds similar to the Canadian perspective, perhaps an ad hoc multilateral coalition to oppose FATCA is forming.

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