The Foreign Account Tax Compliance Regulations Of America And Chinese Solutions

Anti-avoidance is an important issue in the field of international tax law. With the development of science and technology and the deepening of globalization, the Anti-ITA becomes more and more complex. America is a nation which has much overseas investment, it has always paid much attention to the regulation of offshore accounts of taxpayers, but the fact is that the US government fails to regulate these accounts and failed to achieve expected targets,although it has implemented much regime including qualified intermediary system, offshore voluntary compliance initiative and other measures, moreover, as we all know, LGT and UBS scandal is an accident that taxpayers use foreign financial institutions, such as banks, trust, factoring, finance companies and insurance companies, to escape the collection of revenue,makes the condition get worse. After the financial crisis, American federal revenue breaks the pale, the unemployment rate increases, in order to alleviate the plight of regulation and finance, Obama administration signs “The foreign account tax compliance act”, which is always known as FATCA. The main provisions of the act are information reporting system, withholding tax, intergovernmental agreements and exemption. These provisions constitute a complete system. As the American government imposes the information reporting requirements to the foreign financial institutions, these institutions need to disclosure the US accounts, or they should pay a 30% withholding tax on its American income, the act is widely questioned and criticized. The act was finally implemented in 2013. Chinese government has reached an agreement with American government in implementing the act, but the act impose oppressive reporting obligation to financial institutions and the act is in conflict with Chinese legal system, so the implement of the act will have a significant impact on the operating of Chinese financial institutions, the national sovereignty and our domestic law. Chinese legal system of taxpayer information collection has many flaws, FATCA make the shortcomings completely exposed, at the same time, with the development of international cooperation of tax information collection, intergovernmental tax information exchange will gradually develop into a trend. In order to avoid these effects, improve the legal system of tax collection and administration in our country, and to adapt to the future development trend of international tax law, we should proceed from the following aspects to minimize the impacts: improves our tax information management system, establishes multilateral tax information sharing system and participate in the setting of international tax rules.