US tax reforms could cost UK banks billions

UK BANKS are lobbying against reforms to US tax laws that will make them report American clients to the Inland Revenue Service at a cost of billions of dollars.

Under the Foreign Account Tax Compliance Act, which was passed last year and comes into force in 2013, banks will be required to scour records of their clients for US tax irregularities. This could cost them billions of dollars and conflict with domestic privacy laws, a report in the Financial Times has claimed. Only clients with $50,000 (£31,000) in their accounts would have to be reported.

Among those lobbying against the reforms include Barclays, Switzerland’s Credit Suisse and TD Bank of Canada, according to disclosure records.

Algirdas Semeta, the European tax commissioner, told the Financial Times that he shared the concerns of the financial sector. More meetings were expected with the US administration. “We can find alternatives that would ensure all necessary information on their taxpayers without imposing additional burdens on financial institutions in the EU,” he said.

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