Robert Stack, Deputy Assistant Secretary (International Tax Affairs) at USA Department of the Treasury, announced in a recent interview that the Obama administration was working on a law to end tax secrecy in the considered tax heavens of Delaware, Wyoming and Nevada.
Speaking to French newspaper Le Monde, Stack said the new rule would apply to offshore companies incorporated in those states and would require them to disclose their shareholders, which thus far was not a legal requirement.
"It is unacceptable that business entities are created on our territory without us knowing who are their shareholders and what the purpose of these entities are," he told Le Monde. "It is a loophole in our regulation and we have to close it."
However Robert Maas, tax consultant at CBW (DFK International), said it would be difficult for the Obama administration to deliver on this unless it signs up to the OECD’s Common reporting Standard (CRS).
"They have two major problems before they can do so," Maas said. "The first is that Congress has made clear that it is not going to pass any more of Obama’s legislation, so it is hard to see how this can happen during Mr Obama’s presidency."
The second, he continued, is that CRS undermines banking confidentiality as it requires a country’s domestic banks to give its tax authority specified information in relation to accounts held by residents of other CRS assenting countries. "And in the USA bank regulation is split between the Federal and State Government and most States do not take kindly to the Federal government seeking to interfere in their affairs."
Read Maas’s full comment: Will the USA adopt the common reporting standard?
