By Lisa Smithfrom iexpats

As the inexorable countdown towards FATCA starting on July 1, 2014 continues, every few days see more nations signing up to the US Foreign Account Tax Compliance Act (FATCA).

FATCA is an international network of tax authorities and financial institutions reporting to the US Internal Revenue Service (IRS) on the offshore banking and investment affairs of US taxpayers.

The law obliges an annual report on every foreign account controlled by a US taxpayer that is worth more than $50,000.

The latest nations to sign up to FATCA include the Chinese state of Hong Kong.

As one of the world’s leading financial centres, Hong Kong is a notable scalp for the US government especially as detractors claimed China would hold out from joining FATCA.

China ready to sign up to FATCA?

But as a member of the G20 group of developed nations, China has committed to improving tax transparency and joining and international tax information swapping network from 2015.

The opposite appears to be underway as China is drafting its own version of the law to root out tax avoidance at home as many corrupt officials, wealthy entrepreneurs and businesses are suspected of salting away their riches in Hong Kong that are earned in China.

Not only has Hong Kong agreed to join FATCA, but the government has also indicated more tax treaties are on the way with other nations.

Another major international financial centre to sign up to FATCA is Luxembourg.

The European duchy inked the agreement with US officials within the past week, although the state’s parliament still has to rubber stamp the treaty.

ECCU treaty talks

Meanwhile, the governments of the Eastern Caribbean Currency Union (ECCU) are negotiating the terms of a FATCA agreement with the US Treasury.

The ECCU consists of Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

In case the treaty talks are not concluded by July 1 and the start of FATCA, governments have warned banks based within the union to sign up with the FATCA online portal to avoid the risk of the US government withholding tax on any transactions within the dollar banking system.

Banks failing to sign up to FATCA and disclose information on the American clients could have a 30% withholding tax placed against all their US Dollar transactions and even face being locked out of the banking system.

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