Deal to let U.S. scrutinize accounts

JIJI

The U.S. and Japanese governments signed a pact Thursday to simplify procedures for the implementation of the U.S. Foreign Account Tax Compliance Act in Japan.

The law is aimed at combating tax evasion by U.S. citizens using bank accounts outside the country. The act will cover Japanese banks from 2013.

The intergovernmental agreement will exempt Japanese banks, under certain conditions, from a duty under the law to directly contract with U.S. authorities in reporting information about the accounts held by their U.S. clients.

“FATCA is an important part of the U.S. government’s effort to improve tax compliance,” Acting U.S. Assistant Treasury Secretary for Tax Policy Emily McMahon said.

The latest accord will help implement the law “in a way that addresses domestic legal impediments and reduces burdens on financial institutions,” McMahon said, adding, “We welcome Japan’s willingness to intensify our cooperation in combating international tax evasion.”