Date
24 September 2017
China will provide financial information of US citizens in China to America’s tax authorities, and China will also have access to its citizens’ bank account information in the US. Photo: Bloomberg
China will provide financial information of US citizens in China to America’s tax authorities, and China will also have access to its citizens’ bank account information in the US. Photo: Bloomberg

China, US reach preliminary deal on tax compliance

China and the United States have reached a preliminary deal to exchange information on bank accounts of their citizens, the Southern Metropolis Daily reported Monday, citing a statement on the website of US Department of the Treasury.

Under the agreement aimed at fighting tax evasion, China will provide financial information of US citizens in China to America’s tax authorities, and China will also have access to its citizens’ bank account information in the US.

The two parties will further negotiate details before an official agreement is signed.

Under the Foreign Account Tax Compliance Act (FATCA), which the US enacted in 2010, all financial institutions outside of the US are required to regularly submit information on financial accounts held by US persons to the US Internal Revenue Service.

Foreign financial institutions that do not comply with FATCA will face a 30 percent withholding tax on certain payments made to them from the US.

Shi Zhengwen, researcher with China University of Political Science and Law, said the agreement will help China’s tax authorities to examine overseas accounts opened by Chinese citizens in the US, thus supporting the country’s anti-corruption campaign.

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