According to Marcelo Castro Alves of Focus Investment Advisor, within a period of up to two years, the financial world will be working under the new normal requirements. Marcelo Castro Alves comments about the publication of Fernando Muniz of Door Consulting on the summary of the most important events that are transforming the world and about the strange words such as: FATCA, CRS, BEPS, CFC, which are part of the new reality that hardly anyone will be able to escape. The time now requests for succession planning and adaptation to the new normal. For the Portuguese version, click here.
The main reason why many countries have been meeting in a global effort to increase fiscal transparency is simple: government deficit.
The OECD implemented the CRS (Common Reporting Standard), a common standard of information exchange in order to facilitate the automatic exchange of information. Right after, an agreement was signed between 51 countries (including Brazil and the most popular destinations for offshore resources for Brazilians citizens such as Luxembourg, Bermuda, Cayman and BVI) for the implementation of this standard and its enforcement. In total, 66 countries in additions to the European Union that have pledged to adopt the new international standard.
FATCA (Foreign Account Tax Compliance Act)
Approved as a law in the US in 2010 the FATCA started getting steam after 2014. Today there are more than 110 countries that have signed bilateral agreements with the US or accepted in substance to fulfill the terms of the law.
The FATCA was established to force all American citizens to declare their accounts held outside the US so tax over non-US assets may become possible for collection by the IRS. Well, if it stopped here, there would be nothing for those people to worry about.
CFC (Controlled Foreign Corporation) and BEPS (Base Erosion and Profit Shifting)
CFC is a set of rules governing the offshore entities and how its accounting is made in its country of origin and taxation. These are long-standing rules in the international world that have gained strength in Brazil with the conversion into law thru MP 627/13, which probably many have heard. The question is not whether the governments will take note of the undeclared structures out there, but when.
The need to structure or restructure adequately estate planning, investment vehicles and asset protection, to avoid penalties and maintain benefits such as tax deferrals, is more urgent than ever, as the world becomes more transparent and more complex every day. It is time for planning and adaptation to the new normal.
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