“The reason Fatca is not going away is that, at the sovereign level, the US now has data-sharing agreements with over 100 countries.
“It seems that virtually all sovereigns like knowing where their citizens are ‘keeping their cash’, and with the promise that the US will share its data in return, the number of countries participating is skyrocketing,” Greg Dewald, chief executive of tax advisory firm Bright!Tax, told International Adviser.
Common reporting standard
Indeed, the Common Reporting Standard (CRS), due to come into force on 30 September 2018, will see the automatic exchange of information between countries in the Organisation for Economic Cooperation and Development (OECD) including the US.
When it comes to Foreign Account Tax Compliance Act (Fatca), introduced by Barack Obama in 2012, neither Hillary Clinton nor Donald Trump has explicitly addressed the reporting requirement which has led many of the estimated six to eight million US expats around the world being unable to open simple current accounts with foreign banks.
Clinton’s stance
Clinton has previously said that as if she wins she will work with Americans living abroad on “filing requirements” to minimise “unnecessary paperwork” but stands firm that the government should maintain its “capacity for monitoring illegal activity or tax avoidance facilitated by holding foreign bank accounts”.
“While Clinton has spoken to the problems that American expats face and states that she would work towards finding solutions, none have been offered,” said Brian Dunhill of Belgium-based IFA firm Cross Border Planning, which specialises in advising US expats living in Europe.
He thinks the problems around Fatca will prompt more US citizens living abroad to vote this year. Traditionally, expats have had the lowest turnout with just 15% of eligible overseas voters casting their ballots in 2012.
Dunhill believes that both Trump and Clinton view US expats – who as a voting group would make up the 11th largest state by population – as “insignificantly important and therefore I would assume neither candidate would bring major changes to the bill”.
Meanwhile, with self-confessed hatred of “over-regulation” and the country’s complex tax code, Trump’s only nod to offshore taxation is lowering the US corporate tax rate from 39% -currently the highest in the world – to 15%.
US fiduciary rule
Although Clinton has not made any mention of the financial advisory market during her campaign, Trump adviser Anthony Scaramucci, who runs the $12.4bn (£10.1bn, €11.1bn) SkyBridge Capital hedge fund firm, said last month that that the Republican presidential nominee repeal the Labor Department’s fiduciary rule if he is elected.
Describing the rule, which from April will require retirement advisers to put their client’s interests first, as the “dumbest decision to come out of the US government in the last 50 to 60 years”, Scaramucci explained that the new regulation was unfair as it would divert too much money from mutual funds into low-cost passive ETFs and index funds.
Democratic nominee Clinton favours the fiduciary rule and pledged to enact further reforms to the financial services industry.
“Wall Street shouldn’t be allowed to put its own interests before those of American families and their retirement savings,” Clinton said in a statement after the rule was enacted earlier this year.
Tax policies
Despite a recent survey by Natixis Global Asset Management showing that more than 40% of US advisers believe neither Clinton nor Trump will have a positive impact on the stock market, adviser’s main concerns are the pair’s tax policies and the possible implications for clients.
