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FATCA and CRS are often mentioned in the same breath, but they aren’t identical twins.
They’re more like transatlantic cousins.
Both were born out of the post-financial-crisis push for tax transparency, and both involve the exchange of financial account information.
But their origins, scope, and enforcement mechanisms differ considerably.
FATCA is a US law.
It requires foreign financial institutions to report information about US taxpayers to the US IRS.
CRS, by contrast, is a global framework developed by the OECD.
It enables participating countries to share information with each other about their residents’ overseas financial assets.
FATCA has sharp teeth.
If a foreign institution doesn’t comply, it risks a 30% withholding tax on US-sourced income.
CRS doesn’t impose penalties directly – enforcement is left to participating jurisdictions. It’s a bit more carrot, a bit less stick.
FATCA applies to US persons: citizens, residents, and entities with substantial US ownership.
CRS casts a wider net.
It applies to anyone holding financial accounts outside their country of tax residence, no matter their nationality.
FATCA often works through intergovernmental agreements (IGAs), where local authorities collect and transmit the information to the IRS.
CRS is multilateral and reciprocal: tax authorities both send and receive data under standardised protocols.
| Feature | FATCA | CRS |
|---|---|---|
| Origin | US law (2010) | OECD initiative (2014) |
| Scope | US taxpayers | All tax residents |
| Reporting | To US IRS | To home jurisdiction tax authority |
| Penalties | 30% withholding | Local enforcement only |
| Data Exchange | Mostly one-way | Reciprocal |
Both FATCA and CRS have transformed the global tax landscape.
FATCA fired the first shot; CRS followed up with a coordinated global response.
For advisers and clients alike, understanding the nuances between the two is essential to staying compliant and informed.
If you have any queries about this article on FATCA v CRS, or tax matters in your country or internationally then please get in touch.
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The Foreign Account Tax Compliance Act, or FATCA, might sound like something from an international spy novel, but it’s actually a US tax law with global reach.
Enacted in 2010, FATCA was designed to combat tax evasion by US persons using foreign accounts.
Since then, it’s reshaped how banks and governments around the world interact with the IRS – and how taxpayers disclose their offshore assets.
The rules require foreign financial institutions (FFIs) to report information on accounts held by US taxpayers or foreign entities in which US taxpayers hold substantial ownership.
If they don’t comply, the IRS can impose a 30% withholding tax on certain US-source payments made to them.
In short: cooperate, or lose money.
To make FATCA function globally, the US signed intergovernmental agreements (IGAs) with over 100 jurisdictions.
These IGAs compel local institutions to report to their own tax authorities, who then share the data with the IRS.
FATCA affects a wide range of actors:
For individual taxpayers, FATCA introduced new reporting obligations, such as Form 8938 (Statement of Specified Foreign Financial Assets), which runs alongside but is separate from the more familiar FBAR.
This has had far-reaching consequences.
Some foreign banks have closed accounts held by US persons rather than deal with the compliance burden.
Others have upgraded their due diligence procedures significantly.
FATCA also sparked international efforts to develop broader information exchange frameworks.
FATCA isn’t just about Americans. It was a turning point in global tax transparency and signalled the start of a wider crackdown on hidden offshore wealth.
If you have any queries about this article on FATCA, or tax matters in the US or internationally then please get in touch
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The Common Reporting Standard (CRS) is sometimes described as the world’s answer to FATCA.
Developed by the OECD and adopted by over 100 jurisdictions, CRS aims to crack down on global tax evasion by enabling automatic exchange of financial account information between countries.
CRS requires financial institutions in participating jurisdictions to collect information about their account holders and report it to their local tax authorities.
These authorities then exchange the data with the relevant countries where the account holders are tax residents.
The scope is wide. CRS covers individuals and entities, and applies to a range of financial assets, including bank accounts, investment income, insurance products and even certain types of trusts and foundations.
Typical data reported includes:
Anyone holding financial accounts outside their country of tax residence could be affected.
Financial institutions have had to overhaul onboarding procedures and due diligence checks.
CRS also affects family offices, trusts, and private investment structures.
Unlike FATCA, which focuses on US taxpayers, CRS is multilateral – and it doesn’t rely on any one country enforcing it. Countries commit to reciprocal information exchange.
FATCA and CRS share many features but differ in scope and origin.
FATCA is a unilateral US initiative with global effects; CRS is a multilateral agreement coordinated through the OECD.
CRS doesn’t have the same teeth as FATCA (no 30% withholding), but it casts a wider net.
The Common Reporting Standard represents a new normal in cross-border tax compliance.
It marks the end of banking secrecy and the rise of a transparency-first global tax environment.
If you have any queries about this article on the Common Reporting Standard, or tax matters in your country or internationally then please get in touch.
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Volkswagen’s India operations are under scrutiny following a $1.4 billion tax demand issued by Indian authorities.
The claim centres on allegations that the automaker misclassified imports to benefit from lower duties.
This case highlights the growing assertiveness of tax authorities in India and the risks faced by multinationals operating there.
The Directorate of Revenue Intelligence (DRI) claims that Volkswagen India under-declared the value of certain imported components.
This alleged misclassification resulted in the company paying lower customs duties than it should have over several years.
The tax demand, totalling approximately $1.4 billion, also includes interest and penalties.
Volkswagen has contested the claim and is challenging it in court, maintaining that its import classifications were in compliance with applicable rules.
This is not the first time India has taken aggressive steps against foreign corporations.
Similar high-profile cases have previously involved Vodafone, Nokia, and Cairn Energy – all of which raised concerns about India’s investment climate and legal certainty.
The difference now is that India is increasingly relying on established legal channels and dispute resolution mechanisms rather than retroactive laws.
Volkswagen’s challenge is expected to proceed through the tax tribunal and court system, rather than be subject to retrospective legislation.
This case serves as a warning to other multinationals operating in India – especially those reliant on import-heavy supply chains.
It underscores the importance of diligent customs compliance and the increasing appetite of Indian authorities to clamp down on perceived tax avoidance.
It also reveals the fine line between aggressive enforcement and protecting the country’s reputation as a business-friendly destination.
With India actively courting foreign investment, how this case is resolved could affect wider investor sentiment.
Volkswagen is currently defending its position through formal channels.
If the case escalates, it could lead to lengthy litigation or even international arbitration.
Alternatively, the company may seek a negotiated settlement, depending on the court’s early findings and precedent.
The Volkswagen tax dispute is another reminder that doing business in emerging markets comes with compliance challenges and regulatory scrutiny.
While India remains a vital market, it’s also one where multinationals must tread carefully.
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As the UK economy wobbles under the weight of fiscal strain and household pressure, something curious seems to be happening in Downing Street: the Prime Minister is looking the other way.
With public anxiety growing over cost-of-living increases and questions about the Government’s tax and spending plans, Sir Keir Starmer and his team appear more concerned with global diplomacy – namely, avoiding a full-blown trade spat with the United States.
So what exactly is going on?
And why are key domestic tax issues being quietly nudged to the sidelines?
Much of the current tension stems from the looming threat of retaliatory tariffs from the United States.
These are part of an ongoing row over the UK’s Digital Services Tax – a levy aimed at tech giants such as Google, Meta, and Amazon.
The US has long opposed this type of tax and hinted at trade consequences if the UK doesn’t repeal it soon.
Rather than front-footing domestic concerns like frozen tax thresholds or squeezed public services, Starmer’s team has prioritised de-escalation with Washington.
Chancellor Rachel Reeves has also kept her focus international, looking to manage the diplomatic fallout before it starts affecting export markets.
Meanwhile, the UK’s public finances are creaking. A key plank of the Government’s fiscal plan – expected savings on welfare reforms – hasn’t delivered.
This has left a budgetary gap that may need to be filled with future tax rises or spending cuts.
And while the headline tax rates haven’t gone up yet, people are feeling the pinch in other ways.
Stealth taxes – such as frozen income tax bands and thresholds – are dragging more earners into higher tax brackets without any formal announcements.
Inside the Labour Party, murmurs of discontent are starting to surface.
Some MPs are worried that the leadership is losing touch with core voters, especially as energy bills, food prices, and interest rates remain stubbornly high.
There’s also growing concern that the Government’s silence on long-term tax strategy could backfire.
Without a clear plan to either reform or rebalance the tax system, uncertainty continues — and that’s not good for businesses or families.
There may well be logic to the Prime Minister’s apparent side-stepping of tax reform talk. Avoiding political minefields in the early days of government is a time-honoured strategy. But it comes at a cost.
The UK tax system is showing signs of strain, and the public’s appetite for answers is growing.
Whether it’s fuel duty, inheritance tax, or the endless debate about non-doms – these are issues that won’t stay quiet forever.
The UK Government’s current focus on international relations, while understandable, risks leaving key domestic tax issues under-addressed.
With both internal party tensions and public dissatisfaction simmering, a clearer economic vision – especially on tax – may soon be unavoidable.
If you have any queries about this article on UK tax policy or international trade tensions, or tax matters in the United Kingdom more broadly, then please get in touch.
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Just when the world thought it was on the cusp of a global tax breakthrough, cracks are beginning to show.
The landmark OECD agreement aimed at overhauling how multinational companies are taxed is facing renewed opposition – and much of the resistance is coming from the United States.
This could have major implications for how, when, and even if the deal is implemented.
The OECD’s two-pillar framework was designed to tackle tax avoidance and ensure large multinationals pay a fairer share of tax, wherever they operate.
Pillar One reallocates taxing rights so market countries can tax a portion of profits.
Pillar Two introduces a global minimum corporate tax rate of 15% for companies with annual revenues above €750 million.
Over 135 countries, including the US, have committed in principle. But turning that agreement into domestic law is proving to be the real challenge.
Although the Biden administration supported the OECD framework, political realities have changed.
With a divided Congress and strong Republican opposition, passing necessary legislation has become difficult.
Critics in the US argue that the global minimum tax could hurt American competitiveness by effectively outsourcing tax sovereignty.
There’s also concern that other countries are implementing Pillar Two but dragging their feet on Pillar One – potentially putting US firms at a disadvantage.
US hesitancy could derail the entire project.
Other countries, particularly in the EU and Asia, are moving forward with minimum tax rules.
If the US doesn’t follow suit, it undermines the whole concept of a level playing field.
There’s also a risk that disputes over digital taxes, which Pillar One was supposed to resolve, could flare up again if countries lose patience with the OECD timetable.
All eyes are now on the US Congress and upcoming elections.
Without US implementation, the deal lacks weight — and countries may return to unilateral measures like digital services taxes.
This would be a setback for international cooperation and tax certainty.
The global tax deal was a diplomatic achievement, but its future is far from guaranteed.
If the US backs away or delays indefinitely, other countries may rethink their own commitments — and the dream of a fairer global tax system could stall once more.
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The UK government is reconsidering its Digital Services Tax (DST), a 2% levy on the revenues of large tech firms such as Amazon, Facebook, and Google.
With mounting pressure from the United States and a desire to advance trade negotiations, Chancellor Rachel Reeves is reportedly open to abolishing the tax.
The implications go beyond UK coffers—they touch on international tax diplomacy and digital fairness.
Introduced in April 2020, the DST applies to companies with global revenues over £500 million, and at least £25 million from UK users.
It targets revenues from search engines, social media platforms, and online marketplaces.
The US has been vocal in its criticism, arguing that DST unfairly singles out American tech giants. In response, the UK originally agreed to withdraw the DST once the OECD’s global tax deal is fully implemented.
Reeves’ latest comments indicate that the UK may act sooner.
By scrapping the DST, the UK could appease the US and unlock trade opportunities, while also aligning with the OECD’s broader tax reforms.
While the move may smooth over transatlantic relations, it risks domestic backlash.
Critics argue that the DST, though imperfect, is one of the few tools the UK has to tax digital giants who generate significant value from UK users without paying much local tax.
There’s also the matter of timing: the UK is in a fragile fiscal position, and dropping a revenue-generating tax may raise eyebrows unless a viable replacement is in place.
If the DST is removed, it will likely be replaced by measures under the OECD’s Pillar One framework.
This would reallocate some taxing rights over digital profits to market jurisdictions like the UK, although the precise timing and mechanics remain uncertain.
The potential repeal of the UK’s Digital Services Tax underscores how global tax coordination is now influencing domestic decisions.
Whether it’s about appeasing the US or moving toward multilateralism, the DST’s days appear numbered.
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The UK government is exploring ways to reduce the burden of its digital services tax (DST) on American tech giants as part of broader trade discussions with the United States.
The move comes amid rising international pressure and a growing consensus that digital taxation should be handled multilaterally through the OECD framework.
The UK’s DST, introduced in 2020, imposes a 2% levy on the revenues of large digital businesses that earn money from UK users.
This includes revenues from search engines, social media platforms, and online marketplaces.
The tax applies to companies with global revenues over £500 million and at least £25 million of UK-derived revenue.
Recent reports suggest the UK is considering adjustments or possible early withdrawal of the DST to avoid escalating tensions with the US, which has long criticised the tax as unfairly targeting American firms.
The US has threatened retaliatory tariffs against UK exports if the DST remains in place beyond the implementation of the OECD’s global tax framework.
As trade talks progress, the UK may offer concessions to secure a broader deal.
Under the OECD’s two-pillar agreement, countries that have introduced unilateral digital taxes are expected to remove them once Pillar One (which reallocates taxing rights over digital profits) is implemented.
The UK has committed to this, but with the global deal’s timeline uncertain, there’s growing pressure to act sooner.
Domestically, opinions are split.
Some MPs and economists argue that the DST is necessary to ensure tech giants pay their ‘fair share’, especially during times of economic strain.
Others argue that it’s a temporary fix and should be removed in favour of multilateral rules that apply consistently across jurisdictions.
Any softening of the DST is likely to be politically controversial.
However, it may help the UK achieve its long-term goal of securing a comprehensive trade agreement with the US – and could also pre-empt future disputes if Pillar One implementation drags.
The UK’s digital services tax has always been a stopgap measure.
With global reforms on the horizon and trade talks with the US intensifying, its days may be numbered – either replaced by multilateral rules or scrapped to preserve trade harmony.
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Lakshmi Mittal, one of the world’s most prominent industrialists and among the wealthiest residents of the UK, is reportedly considering leaving the country.
The reason?
Changes to the UK’s non-domicile (non-dom) tax rules.
This news has stirred debate about whether tax policy should prioritise fairness or global competitiveness — and whether the UK is risking an exodus of its wealthiest residents.
Mittal is the executive chairman of ArcelorMittal, the world’s largest steel company.
He has lived in the UK for many years and is famously known for purchasing the lavish Kensington Palace Gardens residence, dubbed the “Taj Mittal.”
His presence in the UK has often been seen as a symbol of London’s status as a hub for international high-net-worth individuals.
The UK has long offered favourable tax treatment to individuals who are resident but not domiciled in the UK.
Under this regime, many such individuals can elect to be taxed on the “remittance basis,” meaning foreign income and gains are only taxed if brought into the UK.
However, recent government reforms aim to abolish the remittance basis of tax system.
From 2025, long-term residents will face tighter rules, with the remittance basis being removed as a means of taxation.
The remittance basis will be replaced by a foreign income and gains exemption (“FIG”) that provides an exemption to certain people arriving in the UK for a maximum of 4 years.
Mittal, like many non-doms, has complex international affairs and substantial income from assets held outside the UK.
If his tax burden increases significantly, relocating to a more favourable jurisdiction becomes a viable option.
Dubai, Monaco, and Switzerland are often cited as alternative homes for mobile billionaires.
His departure would be both financially and symbolically significant.
It raises the question of how many other wealthy residents might follow.
Proponents of reform argue that all UK residents should contribute fairly to public finances, especially during a cost-of-living crisis.
Critics warn that targeting non-doms could reduce inward investment and encourage capital flight.
The UK’s challenge is to balance modernising its tax rules… without undermining its attractiveness to global wealth.
This balancing act is not unique to Britain, but it’s one that may shape its economic future.
Mittal’s possible exit underscores the sensitive balance between tax fairness and international competitiveness.
Whether this is the beginning of a broader trend or a high-profile exception remains to be seen — but policymakers and advisers will be watching closely.
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India has announced the removal of its 6% Equalisation Levy, often referred to as the “Google Tax,” marking a significant shift in its digital tax policy.
This move comes as part of an effort to ease trade tensions with the United States and aligns with international negotiations for a global minimum tax.
But what does this mean in practical terms for India, global tech firms, and the wider international tax landscape?
The Equalisation Levy was introduced in 2016 as a 6% tax on online advertising revenues earned by non-resident digital companies.
This included giants like Google, Meta (Facebook), and Amazon.
Over time, the tax was expanded to include e-commerce services, creating friction with the US government, which argued that the levy unfairly targeted American firms.
The repeal of the Google Tax is closely tied to the Organisation for Economic Co-operation and Development’s (OECD) global tax reform deal, particularly Pillar One, which aims to reallocate taxing rights to market jurisdictions.
As countries prepare to implement this deal, the removal of unilateral digital taxes is seen as a step towards global harmony.
Additionally, the United States had threatened retaliatory tariffs on Indian exports if the tax was not scrapped.
By removing the levy, India is likely avoiding a trade dispute while signalling cooperation on international tax reform.
For companies like Google and Amazon, the repeal simplifies their tax exposure in India. It also reduces double taxation risks and improves relations with one of the world’s largest digital markets.
However, this does not mean these companies will go untaxed.
The global minimum tax deal, particularly the reallocation of profits under Pillar One, will ensure they pay a fair share in market jurisdictions like India.
There’s a valid concern that scrapping the Equalisation Levy might reduce tax collections in the short term.
However, India hopes to recoup this through the multilateral OECD deal, which will give it new rights to tax profits of large multinational enterprises operating in the country.
India’s decision to scrap the so-called Google Tax is more than a domestic tax change—it’s a signal that global tax cooperation is finally gathering pace.
While it may look like a concession to the US, it’s also a forward-looking move that aligns India with evolving global norms.
If you have any queries about this article on digital services tax, or tax matters in India then please get in touch.
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