US president-elect Donald Trump must show some backbone and repeal the Foreign Account Tax Compliance Act (Fatca) as a priority, says deVere founder and chief executive Nigel Green.

“This must be a major priority as Fatca negatively impacts millions of US citizens,” says Green. “It has been responsible for the record number of Americans, most of whom are proud patriots, feeling that there is no other option than to relinquish their US citizenship.”

Pointing out that he has already promised to repeal several of Barack Obama’s executive orders, Green is urging Trump to add Fatca to that list.

Undesirable clients

The introduction of Fatca, which has seen foreign financial institutions refuse to accept US clients, is turning the approximately eight million Americans living overseas into “financial pariahs”.

“For instance, many US citizens cannot even now hold a bank account in their country of residence as foreign banks routinely feel Americans are too much trouble thanks to Fatca’s onerous and costly rules by which they would need to abide to take them on as clients.”

Green continued: “This is a golden opportunity for Trump to show his mettle and reverse a fatally flawed, misguided, imperialistic law that’s nothing more than a masterclass in the law of unintended consequences.

“Once in the White House, he must do the right thing and show some backbone on Fatca.”

What is Fatca?

Under Fatca which came into effect in July 2014, all non-US financial institutions; including banks, insurance companies, investment funds and pension funds, are required to report the financial information of American clients who have accounts holding more than $50,000 (£40,485, €47,204) directly to the IRS.

The official aim of the legislation is to try and combat tax evasion.

Ineffective, dragnet approach

A long-term critic of the legislation, Green says: “Tackling tax evasion is a noble and worthwhile objective, yet Fatca’s dragnet approach will be highly ineffective at achieving this as well as being prohibitively costly.”

With few alternatives, and with the campaign to repeal Fatca underway, Green says there are established solutions to help mitigate the legislation’s complicated, costly and privacy-infringing demands.

“These include supplementary overseas pension contracts which allow qualifying US taxpayers to make annual contributions to a pension fund over and above US$51,000 – which is not possible within the current US tax-approved regime.

“These products also allow tax-deferred investment growth and the opportunity to invest freely into Passive Foreign Investment Companies (PFICs), without incurring US tax penalties and burdensome tax reporting procedures,” Green says