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Foreign banks sign up to help US battle tax evasion

US officials said on Monday that more than 77,000 banks and other financial institutions worldwide have joined its fight against tax evasion.

WASHINGTON: US officials said on Monday that more than 77,000 banks and other financial institutions worldwide have joined its fight against tax evasion.

That many institutions in nearly 70 countries have registered to work under the rules of the Foreign Account Tax Compliance Act (FATCA), which will be implemented beginning on July 1.

The law demands that the foreign banks, investment houses and others provide information to US authorities on accounts held by US citizens and firms.

If they do not do so, the US Treasury says it could institute a 30 percent withholding tax on payments made from the United States to the financial institution, essentially a stiff tax on its US business.

Three years after initiating the FATCA programme, the US Treasury says most institutions in most major economies have signed on.

"The strong international support for FATCA is clear, and this success will help us in our goal of stopping tax evasion and narrowing the tax gap," said Robert Stack, the Treasury's deputy assistant secretary for international tax affairs.

Looking for ways to close its budget deficit and clamp down on tax avoidance, Washington has particularly aimed the FATCA effort at traditional tax havens like Switzerland.

On May 19 Credit Suisse was fined US$2.6 billion for actively helping Americans hide money to avoid taxes over many years.

Credit Suisse was one of 14 Swiss banks under criminal investigation by the US Justice Department on suspicion they helped wealthy US clients hide billions of dollars in assets from tax authorities.

Countries continue to sign up to FATCA. Last month Liechtenstein, the small European tax haven, sealed an anti-tax fraud pact with Washington that requires banks in the principality to provide information about accounts held by US taxpayers.

"The unhampered access to US capital markets, which has been secured by the agreement, is essential for Liechtenstein providers of financial services," said Prime Minister Adrian Hasler.

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