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This Wednesday, the Chilean Finance Minister, Felipe Larraín and the Business Director of the American embassy in Santiago, Stephen Liston, signed the implementation agreement for the `Foreign Account Tax Compliance Act` (FATCA).
The agreement requires that financial institutions abroad inform the United States’ Internal Revenue Service (IRS) of accounts American taxpayers hold in foreign financial institutions.
Those financial institutions that fail to comply will be subject to a 30% withholding tax on the return coming into force as of July 1, 2014.
Larraín referred to the above as a “milestone”, and added that “Chile is the first Latin American country to sign the agreement”.
"In the last two years we have been working side by side with the Chilean private sector and with the American government in order to reach an agreement on this subject”, said the minister.
Moreover, he assured that “this agreement is accompanied by the submission to the National Congress, yesterday, of the agreement to prevent double taxation between Chile and the United States” and “excludes the pension industry from the FATCA agreement”.
In turn, Liston stated that the agreement “represents an important step forward to fight tax evasion” and assured that it is “one more example of the ties between the United States and Chile ".
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