Saudi Gazette report DAMMAM – Americans living in Saudi Arabia and the other five Gulf Cooperation Council (GCC) countries will have to comply with the US Foreign Account Tax Compliance Act (FATCA) starting July 1, 2014, an Arabic language business daily reported on Monday quoting sources at the Bahrain-based Union of Arab Banks (UAB). UAB's member Adnan Yousef said GCC banks have enumerated bank account numbers of US citizens working in the region so as to provide information about them to the US Internal Revenue Service (IRS). He said a number of Saudi and GCC banks have signed agreements with many international financial consultancy companies to arrange for the implementation of the FATCA and have also prepared the required technical programs and regulations that would comply with the new American law. “The United Arab Emirates (UAE) will be the top country in terms of the taxes that will be collected because it has the largest number of US citizens while Saudi Arabia will be in the second place followed by Kuwait and Bahrain,” Yousef said. He expected the amount of tax to be collected from the Americans in the GCC countries to be more than SR1 billion. “This amount will be collected from the individuals, not the companies,” he explained. Yousef expected the GCC governments to sign similar agreements with the US Administration to enforce the implementation of FATCA. “Such a step will be reflected positively on the GCC banks,” he said. Yousef said only central banks in the GCC will relay the information about the bank accounts of US citizens. “The GCC commercial banks will have no direct dealings with the US Internal Revenue Service (IRS) in this connection,” he said. He said the GCC banks will apply the FATCA gradually so as to prevent American citizens from evading the payment of taxes to their government from the incomes they earn in the GCC countries. Under the American law, the US financial institutions and other US agencies can both withhold up to 30 percent of money transfers to foreign financial entities which fail to document their FATCA. The United States is the only country out of 34 in the Organization for Economic Co-operation and Development (OECD) that continues to tax citizens regardless of where they live around the world. Now, facing a high national debt and drastic cuts in government spending, US tax enforcers are employing stricter asset-disclosure laws under the Foreign Account Tax Compliance Act (FACTA). For that reason, more Americans living abroad are weighing whether it is worth holding on to their US passport. In the three months through June, 1,131 American expatriates turned over their passports at US embassies around the world. It was a drastic surge from the same time span in 2012, when just 189 people renounced their citizenship, according to the Federal Registry. The first six months of 2013 alone has seen 1,810 such instances, compared to 235 in all of 2008.
