Hiding wealth from the Chinese tax offices might be harder for the rich, as today the Foreign Account Tax Compliance Act (Facta) kicks in, reports WSJ wealth editor Wei Gu at the Wall Street Journal. Foreign countries not only have to share their data on US citizens, they get something back.
China is getting something in return for its agreement. In exchange for giving financial information to the U.S. about its citizens and green-card holders, the U.S. will give China information about Chinese taxpayers in the U.S., according to people involved in the discussions. The negotiators expect to clear the legal hurdles necessary to make that happen, according to lawyers and people involved in the discussions.
Two types of people in China will be affected by this new rule. The first group will be hit by Fatca itself and includes people who have U.S. green cards or passports but haven’t disclosed their financial interests in China to the U.S. This includes not just bank accounts, but also retirement accounts and life-insurance plans.
The second group includes Chinese citizens who will be hit when the U.S. reaches a final agreement with China to hand over financial information about its citizens. This affects Chinese who made their money illegally and are trying to hide it in the U.S., and possibly the many Chinese who have exceeded the $50,000 a year limit on moving money out of China.
A large number of Chinese, including some prominent business and government leaders, could be affected. While the number of Chinese who surrender their U.S. passports or green cards has been rising in recent years, more are emigrating to America.
Are you interested in more experts on China luxury goods industry at the China Speakers Bureau? Do have a look at this recent list.