An Analytical Study of the Accounting and Tax effects of Applyingthe American Foreign

Accounting Tax Compliance Act (FATCA) on Financial Institutions

(Evidence from EGYPT)

Dr. Nabil Abd- El Raouf EbrahimAssociate Prof in Accounting Department

Al-Sherouk Academyhttp://www.elshoroukacademy.edu.eg/

www.drnabil4362.wordpress.comhttps://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

Words: FATCA, Income Tax, financial institutions, Banks, Tax Compliance.

Abstract

The (FATCA) Foreign Accounting Tax Compliance Act addresses theforeign financial institutions that practice financial activitiesoutside the USA and do not have a headquarter as a permanentestablishment. This law obliges these institutions to notify theIRS with all the transactions of the Americans in order toimprove tax compliance for purposes related to disclosing taxableincome for taxpayers of United States (natural and Juridicalpersons) of their investments in financial institutions abroad.The banking sector faces a problem in comporting with and meetingthe requirements of implementing the FATCA law. Theserequirements include preparing financial reports, and disclosingthe clients' confidential data to the IRS since they shouldprovide the IRS with all their clients' information andtransactions; otherwise, they will be subject to financialpenalties as a result of non-compliance to providing such data.

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Therefore, legal, financial, informational, administrative andmarketing amendments should be made. That is what the researcherhas put forth for scientific research to study the cost of theimplications of making those amendments for developing the bankfinancial reports and the bank contracts with their clients whocan cause a decrease in the bank profits in case they stopdealing with them. In addition, the Account Privacy law and theAnti-money Laundry agreements should be reconsidered. Moreover,bank employees should receive professional training. Furthermore,the tax agreements conducted with the U.S. government should bereconsidered as well. After conducting the field study andstudying the results of the statistical data showing, theresearcher has found out that the research hypotheses are invalidaccording to the SPSS and that the implementation of the FATCAwill lead to a decrease in the bank revenues and therefore, theirprofits will be decreased too. Consequently, there will be adecrease in the tax revenues of Egyptian Tax Authority (ETA).

The results of operating the data have shown that the revenues ofthe ETA are threatened because most of the financial assets ofthe US bank investments are in banks outside Egypt, and are notin Egyptian banks. Therefore, there is no impact on the revenuesof the Egyptian banks, and hence, there is no impact on theincome tax. The researcher has recommended that reciprocityshould be a condition in the agreement of complying with therequirements of FATCA. In addition, he has also recommendedmaking the procedural, legislative, and financial reportingamendments he proposed in the research when complying withrequirements of the FATCA.

Introduction:The American Congress passed the Foreign Accounts Tax ComplianceAct (FATCA) on the 18th of March 2010 as a part of the Hiring

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Incentives for Restoring Employment Law (HIRE)1 to restore theemployment rates; that was one of the significant changes made bythe Americans to fight tax evasion.The American Internal Revenue Service’s (IRS) pointed out thatthe main purpose of FATCA is improving tax compliance of allthose who have the American nationality and it includesdisclosing all their foreign accounts. According to this Act, theAmerican taxpayers whose Foreign Financial assets have exceededcertain limits must disclose their assets to the Internal RevenueService’s (IRS) on the (FORM: 8938).This report is an enhancementto the Financial report of white funds (FBAR)2 which obligatesall Americans to disclose their foreign accounts (for anti-moneylaundry concerns) outside the United States of America. However,these reports became insufficient for the Internal RevenueService’s (IRS) concerning bringing back taxes out of commercialprofits of Americans staying outside the USA.

The Research Problem:The research problem is about the challenges that the bankingsector- generally all over the world and specifically in Egypt,faces in meeting the needs of the application of FATCA and inbeing compatible with its requirements, such as revealingfinancial reports and disclosing the secrets of FinancialInstitution clients who are outside the USA as the FATCAobligates them to submit the American taxes authorities with allthe transactions and data of their American clients, otherwisethey will be exposed to financial penalties because of notcomplying to the law. Consequently, there should be a number offinancial, legal, informational, administrative, and marketingreforms, in addition to the accounting amendments the researcherdiscussed to improve the bank financial reports and the clientcontracting documents in order to ensure that bank clients willnot leave the bank and lead to a decrease in the number of bank1- Hiring Incentives to Restore Employment2- Foreign Bank and Financial Accounts.

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clients causing a decrease in the bank revenues .Therefore,there should be an accounting study to explore the effects of theFATCA on banks, reconsider the account privacy law and anti-moneylaundry agreements, and qualify bankers, as well as reconsideringthe tax agreements conducted with the American government. So,the researcher presents all these challenges to be studied andtested so that certain conclusions, results , and recommendationscan be reached and presented to decision makers to decide whetherto agree or not on conducting agreements with the Americangovernment and decide to what extent the FATCA law should becomplied with.

The research importance:The importance of the research lies in the interest of theAmerican government in maximizing its tax revenues throughobligating the Foreign Financial Institutions to provide the taxauthority with a set of data about their American clients tocollect taxes on the revenues of their financial assets investedoutside the American region3 without taking into account thatthis is considered as a violation to the client privacy accordingto the laws of client account privacy, and also that this maycause a decline in bank profits as a result of a decrease in theclient numbers evading revealing their data. It is also importantin knowing the data of the forms of the American Treasury forfinanciers to disclose data about the revenues that the Americanindividuals (Natural or Juridical) get out of their investmentsoutside the American region.

The Research Objectives:The main objective of the research is:Studying the effects of implementing the FACTA on Egyptian Financial Institutions and the total revenue of income taxes, in addition to other secondary objectives like:3- Jorge Morley-Smith says, "Cutting claws of the FATCA", Money Marketing, (Nov 17, 2011)

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1- Presenting financial reports according to the FATCA regulations;

2- Knowing the most important financial reports that Foreign Financial institutions comply with;

3- Tackling the challenges facing implementing the FATCA in the financial institutions (Banks) and the Egyptian Tax Authority and suggesting solutions to these challenges.

The Research Limits:Studying the financial effects of implementing the FATCA law onthe revenues of the Egyptian banks and income taxes. So, studyingthe effects of implementing the FATCA law on insurance andreinsurance companies, investments funds, special funds, andother financial institutions is not within the research scope.Therefore, studying the effects of implementing the FATCA law ontaxes of bank revenues is all what the study is focusing on.

The Research Hypotheses:1- There are no statistically significant differencesamong the answers of the study groups on whether thereare concrete effects of FATCA requirements on therevenues of the financial institutions in Egypt.

2- There are no statistically significant differencesamong the answers of the study groups on whether thereare concrete effects of FATCA requirements on therevenues of the Egyptian Tax Authority.

The Research Methodologies:1) The Inductive Methodology:

Through a field study of the research hypotheses that include preparing lists of questionnaires depending on five ranking

2) The Extrapolation Methodology:

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Through going through the foreign, regional and local previous studies, scientific researches, and articles related to the research topic.

The research Plan:The researcher divided the research into several chapters:

The First chapter: Challenges Facing Banks in Implementing FATCA Law and Suggestions for Solutions

The Second chapter: The Challenges Facing the Egyptian Tax Authority in Implementing the FATCA law and the suggested solutions.

The Third chapter: A Field Study for Evaluating the Effects of Implementing the (FATCA) on Bank Revenues and Total Tax Income on Bank Profits in Egypt

The Achieved Results Recommendations References

The Previous Studies(Marsan, Dean: 2010)Study4

The study pointed out that it is necessary that the globalFinancial system fulfills now the FATCA requirements, preparesthe Financial reports, and deducts the withholding taxes from allthe foreign accounts of all Americans for anti-tax evasion in theUSA and the countries that will have agreements of liability tothis law as it brings tax profits on the governmental level. Thestudy recommended complying with this law and suggested that allother countries should make agreements to enforce this law aslong as it brings about mutual benefits and reciprocity.

(Hany Abou Al –Fotouh 2012)Study5

4 - Marsan, Dean, "The Global Financial System Must Now Implement a New U.S. Reporting and Withholding System for Foreign Account Tax Compliance, Which Will Create Significant New Exposures-Managing This Risk" Taxes, (Sep 2010)P.P:128,144.

5- Hany Abd Elfatah. 21agst 2012 Elwafdportal - http://www.alwafd.org/'D1J'6)/254982

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The study pointed out the challenges facing the banking sector inEgypt because of the American tax law issued in 2010 which willbe enforced in 2013.The study shed light on the increase in theoperating costs and the radical changes in the payment systemsand the customers data that the banking institutions will endureas a result of implementing the FATCA law .The study alsopresented some solutions for the challenges some banks mayencounter as a result of implementing the FATCA law.

(Fariz Huseynov: 2012)Study6

This study tackled the relationship between tax avoid and thetaxes-department of companies from the social responsibilityperspective on implementing the FATCA law and the possibility ofimproving the operating costs and decreasing any kind of possiblelosses as a result of complying with the FATCA law. It reached asolution of how to get rid of aggressive tax avoid as itrepresents the negative part in contributing to bearing theshares of the juridical persons in the public expenditure and itis essential for the tax authority to present a complete,sufficient and honest disclosure of all the transactions ofAmericans outside the USA with a complete liability in paying thetaxes as they are holders of the American nationality to avoidpenalties and fines.

(John Hussledein: 2012)Study7

It tackled the effects of tax avoid on social responsibility ofcorporations from the perspective of the compliance of theforeign banks which are in agreement with the American Financialinstitutions with implementing the FATCA law. There should be aclear disclosure of the financial assets invested outside the USA

6 - Fariz Huseynov, Bonnie K. Klamm, "Tax avoidance, tax management and corporate social responsibility". Journal of Corporate Finance, Volume 18, Issue (4, September 2012), Pages 804-827

7 - John Hasseldine, Gregory Morris, "Corporate social responsibility and taxavoidance: A comment and reflection". (Accounting Forum), Journal of Accounting & Finance, Volume 65, Issue 2, June 2012, P.P: 804-827.

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and hence, paying taxes from the revenues that come out of itwhich will contribute in the public revenues. Consequently, thegoal of implementing the FATCA law in fighting unemployment andtax avoidance will be achieved. The study recommended a fullcompliance with the law so that the banks will not be exposed toa decrease in its revenues as a result of the deduction that willbe done by the American Treasury on their transactions with theAmerican Financial institutions and which reaches 30% of theirtransactions.

(Christopher: 2012)Study8

It tackled the profits that the corporations get out of taxplanning to avoid the risks of not complying with FATCA law;these risks could be fines because of not fully disclosing of theforeign Financial institutions transactions, not presenting afull disclosure of the Financial Assets outside the USA, ordealing with the transferring prices to avoid paying high taxrate in the country of residency. The study pointed out that theimportance of tax planning of corporations is to keep the taxsavings that they get when depending on a tax consultant thathelps them in avoiding a high tax rate or at least in avoidingfines. The study also recommended that banks should have abalance between costs and revenues before starting to implementthe FATCA law.

(Roberta: 2012)Study9

The study tackled measuring taxable revenues and full compliancewith the requirements of implementing FATCA law from a behavioralperspective. The study pointed out the importance of thepsychological dimension in implementing FATCA law and thedisclosure of the taxable revenues whether gained inside or8 - Christopher S. Armstrong, Jennifer L. Blouin," The incentives for tax

planning". Journal of Accounting and Economics, Volume 53, Issues1- 2, (February–April 2012), Pages 391-41.

9 - Roberta Calvet Christian, James Alm, "Empathy, sympathy, and tax compliance", Journal of Economic Psychology, (13 October 2012)

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outside the country and which are related to the FATCA law or tothe income taxes as empathy and voluntary tax liability increasethe resources of the homeland country. The study recommended thatit is necessary to develop an interest in the psychologicaldimension in issuing tax laws. Banks dealing with the Americancustomers should study the dimensions related to the possibilityof the decline of its profits as a result of the American penaltyimposed on them if they don’t comply to providing the AmericanTreasury with data and information about their American clients.

Chapter one

Challenges Facing Banks in Implementing FATCA Law and Suggestions for Solutions

The FATCA law addresses Foreign Financial Institutions (FFIs)10

existing outside the United States of America with noheadquarters within the American territory as a permanentorganization and obligated by the law to inform the AmericanInternal Services with all its transactions with Americannationality holders through reports prepared annually, otherwisethere will be a 30% deduction from the transactions of theseFinancial institutions when dealing with its Americancounterparts11.So, the foreign Financial institutions that don’thave agreements with the American government will face deductionsfrom its transactions (Interests, profits, securities, revenues,dividends, etc.) with its correspondents with Americaninstitution and that for the sake of avoiding tax evasion ofAmerican individuals whether (Natural or Juridical Persons) inreturn for their assets in investments abroad. For example:12

10 - Forgin Financial Institutions, such as: Banks, Stock exchange, insurance companies, brokerage houses, Companies Financial Brokers, Mutual Funds, money funds…and etc.

11- Jaeger, Jaclyn. "IRS Seeks Input on Foreign Withholding Rules". ComplianceWeek (Dec 2010) P.P: 33, 64.

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Financial institutions accepting deposits

Financial institutions having Financial assets of others

Financial institutions concerned with investmentsor reinvestments

-Specialized Banks.-Commercial banks.-Associations donor loans.-Credit Union.-Condominium. -Co-operative building societies.

-Corporations.-Clearing Companies.-Affiliated companies-Security.-Insurance companies.-Reinsurance companies

-Mutual Funds.-Special funds.-Futures & Option-Investments capital.-Services and products management.-Pension funds.

According to a study made by the Union of Arab banks in thisfield, they suggest the amount of money that could be collectedfor the American Treasury can be estimated by 800 million dollarsif 30% is to be deducted in the first year of implementing thelaw and more than tens of milliards if these amounts are to bededucted directly through banks.13

Egypt and other countries are getting ready to apply theregulations of the law to pursue clients of American nationalitywho did not paid their taxes to their countries through creatingbank accounts, or investing in countries that don’t impose taxeson capitalist transactions. That is to avoid penalties imposedon the banks that don’t co-operate with the American Treasury;estimated by 30% of the transferring value; regardless to theowners of these processes. That forces American taxpayers to paytheir taxes and prevents them from taking advantage of deposits,funds, etc. in other countries to hide their money and evadetaxes according to the American law. So, this law focuses mainlyon caring about the American interests regardless to the othercountries' interests unless there is reciprocity since relations

12 - Foreign Ministry against direct FATCA agreements between banks and U.S. Russia & CIS Banking & Finance Weekly. Financial Policy, (Jul 20, 2012).

13 - Foreign Ministry against direct FATCA agreements between banks and U.S. Russia & CIS Banking & Finance Weekly. Financial Policy, (Jul 20, 2012).

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between countries is to be based on mutual interests.Consequently, Financial institutions that have mutual interestswith America will sign agreements by which they will be assignedto disclose their American clients' data and transactions throughannual reports to the American Treasury represented in theAmerican Internal Revenues of Services (IRS) including their dataand transactions as they are assigned to pay their taxes even ifthey have their green cards for pursuing those who evade payingtheir taxes and for financing the American Treasury.

International Banking Institutions:A state of debate and worry prevailed among banking sectors ofhow possible it is to implement the FATCA. They wondered if theForeign Account Tax Compliance Act is a set of procedures aimingat forcing and enslaving all countries to serve Americaninterests, and if it is a real attempt to prevent tax avoidance,anti-money smuggling and money-laundering. The number of peoplewho must pay their taxes outside America and who evade taxesthrough smuggling their money outside America reached 17 millionpeople since a citizen is to pay taxes as long as he has theAmerican nationality even if he is not staying in America.14

Thus, banks will be required to update the data of all theirAmerican clients and specify which of them are obligated to paytaxes according to the FATCA. Also, they should update the systemand create new systems to conduct annual reports to present allthe data requested by the American Treasury. All these issuescause banks to bear additional expenses.

The lack of a database as an only resource for information insome banks in some countries where data is stored to be recoveredthrough different systems no connected to each other may resultin doubting the accuracy of the customer data and hence, theextent to which we should depend upon it. In addition, it may be

14- Wolfe, Daniel, "Banks Face the Facts on FATCA". American Banker, [New York] 29 Dec 2011.

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hard to know all American clients whether inside or outsideAmerica and having the client's consent to disclose their data tothe American authorities and on the other hand, understandingwhat should be done for those who refuse disclosing their data.In addition, there is a lack of awareness of the law, itsrequirements, and its effects as well as the expenses banks willendure and which will badly affect its profitability.

Officers in banks and institutions have some concerns about thislaw as implementing the regulations of this law will beexorbitant. In addition, the new act regulations contradict withthe laws of the banking clients' privacy applied in manycountries. So, it can be said that this law is exploitingfinancial institutions to provide the American tax authoritieswith all the data available about American individuals (ordinaryor corporations). So, it is clear that financial institutionsshould comply with the Act and adapt to it for the mutualinterests among countries. However, some studies have shown thatit is difficult to implement the law now as financialinstitutions need some modifications in its financial systems andaccounting techniques to be ready for an ideal implementation ofthe Act. So, it is essential to postpone implementing the law forsome more years.15

A lot of banks in so many countries have showed a desire toimplement the FATCA law after studying it to know its requiredexpenses and resources, the stages of execution, and to whatextent it is suitable for its local banking system according tothe law on one side and the correspondent banks on the otherside. The American Treasury published in July 2012 or may be 2015a model agreement between five countries: Germany, France, Italy,Spain, and the United Kingdom. This agreement is concerned withexchanging data among these countries and it determined specific

15 - Firms still unprepared for FATCA, "Investment Week" (Jun 11, 2012) P.P: 32, 36.

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procedures of how to exchange this data. According to the law,foreign countries can get all the required data from the Americanadministration about accounts kept in American Financialinstitutions about those staying in their countries. However,other countries, such as China and Japan, refused to accept thelaw.16

The Egyptian situation:The Egyptian Central bank held a number of seminars for the Unionof Arab banks to discuss and consult each other to find ways ofdealing with the Act since Egypt has its own banking laws (TheEgyptian Central Bank Act)17 that ensure the privacy of bankclients' accounts dealing with the banking sector. So, a foreignAct, which may contradict with the Egyptian law articles, cannotbe imposed. As a result, there should be a legislative change forbank account privacy. Consequently, it is not logical andunacceptable to make amendments in the Egyptian law to allowAmericans implement a law on their citizens in countries havingtheir own sovereignty. So, the Egyptian Central Bank is the one

16 -Treasury Department Documents and Publications. "Joint U.S.-China EconomicTrack Fact Sheet- Fourth Meeting of the U.S. China Strategic and Economic Dialogue", (May 4, 2012).

17- Egyptian Central bank Low No. 88 for 2003 Year. Act.

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to decide whether to implement that law or not and the benefit ofthe Egyptian Banking Sector is to be taken into consideration.However, the researcher has found out that there is no problem inimplementing the Act in Egypt as we can demand a fair treatmentjust as what other countries like the United Kingdom, Germany,Italy, and others which accepted implementing the act did asthere are no clear penalties for the countries that refused toimplement the act, but there will be some indirect penaltiesrelated to dollar transactions and transfers to the bankinginstitutions that deal with American individuals. So, if this lawis to implemented, an article should be added to the applicationsof creating new accounts revealing clients' nationalities and ifthe applicant is American, then he should comply with this law.So, banks will deduct the amount of money estimated by theAmerican Treasury even if this law has cancelled all the Goldenlegal regulations of the prevailing law which say that laws arenot to be implemented outside its territory. As a result, thereshould be a revision of the accounting systems applied in bankslike requests for creating accounts, demand and time deposits,requests for letter credits. In addition, it is necessary torevise banking regulations, qualify those working in banks,prepare organograms to implement the regulations of the lawtechnically and legally, decide whether there are enoughsupplements or not, and check the availability of experts toupdate, support or create these organograms to know how to applythe law . Moreover, to be allowed to disclose the private data ofthe clients and their transactions through presenting annualreports, clients should sign a form that allows the bank to sharetheir data with the American Treasury and agree on deducting theAmerican taxes in case the American government asked for it. Thatshows the intelligence of the American tax authorities inbringing back their sovereign resources with all possible legalways even if that might be against other countries' sovereignty,

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so there will be a great increase in the American resourcesinside and outside the American territory.Moreover, the Central bank should shed light on the penalties incase that any bank refused to comply with the Act, implement thelaw, or take decisions like not to open any new accounts to theirAmerican clients or to get rid of their American clients as astrategic option for the bank. Therefore, it is essential to knowthe distribution of those clients in the Arab and regionalterritories and the effects of losing some of those investors inEgypt. In addition, it is necessary to know the economicpenalties that are to be imposed on those who refuse to co-operate and implement the FATCA law and how it will be reflectedon the marketing and competing position of the bank. All theseissues are challenges facing the banking sector. The unansweredquestion, which is one of the most significant challenges, iswhether this law gives the American government the right toinspect and supervise banks in general to check its accounts, theaccuracy of its data, and the amount of data of American clientsthey have.

For agreeing upon the Act, it is recommended that Egypt shouldfollow what other countries did, which is conducting agreementsallowing them to apply the FATCA law in the near future as itmight be normal that there will be reciprocity throughdifferential treatment according to the public interests withoutany clashes between the agreements of the two countries, anti-money-laundering regulations, or the common interests of the twocountries.

According to the Act, financial institutions are required to:

1) know the identities of the account owners through certain procedures,

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2) present annual reports to the American Treasury about the American customers there or any foreign properties that have an American ownership,

3) reserve and pay 30% of any amount of money of American source of income to the American Treasury and the total money of selling securities that brings income from an American source for the benefit of: a) Foreign Financial institutions, b) Individuals like account owners who failed in

saving enough data to determine whether or not the client is American or not.

c) Foreign companies' accounts that failed in havingenough data about the identities of their American clients who have big shares.

The Revenues the FATCA applies to be:1- Interests of deposits and revenues of bonds and

financing instruments,2- Dividends of shares and investment instruments,3- Royalty of trademarks and knowhow,4- Capitalist Gains,5- And others.

The Revenues of the Financial Assets the FATCA law applies:1-Banks deposits,2- Contracts of Hedging (Credit cards contracts, future

Options, contracts of exchanging banking prices and interests on bonds),

3-Contracts of mediation with trade institutions and traders,

4-Brokerage contracts,5-Securities of all kinds,6-Contacts of insurance and reinsurance.

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The FATCA law doesn’t apply real estate investments and revenuesof owning collections of antiques, jewels, gold, cars, and otherconcrete properties as long as it is for personal use.

The researcher suggests a package of modifications for banks to make if the law is implemented in Egypt:

1- Procedural modifications:They include revising documents and forms of the client accountsto provide banks with information about the client nationalitiesand their money sources. Modifications in the documents ofcreating new accounts are to be made, as well as adding anarticle that requests the client approval on exchanging theirinformation between the bank and the American government and thattheir data is not private anymore.

2- Modifications in Information Systems:They include informing clients with their transaction which theAmerican Treasury got notified with to be aware of what is beingdisclosed about their account as a part of their tax complianceof their foreign revenues. In addition, creating newtechnological scales by which the law can be appliedtechnologically. Moreover, there should be a financing resourcesto support and update the creation of this information technologyto prepare an infrastructure of information technology suitablefor implementing the Act.

3- Legislative Modifications: There should be an amendment in the Central Bank Law to

allow all banks in Egypt disclose all their American clients' transaction data to the American Treasury which is against account privacy rules.

They involve implementing an agreement based on reciprocity between the two countries involving exchanging information.

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4- Administrative modifications:They involve developing administrative structures by constructinga sector concerned with issuing financial reports and disclosingthem back to back to the American Treasury. In addition, theemployees working in the administration should be well-trained ina way that would help grab the American clients' attention thatthese procedures are important for them in order not to be fined.

5- Marketing modifications:They involve diversifying banking products and enhancingmarketing campaigns to activate marketing the bank products inmost of the American region to inform the American society abouthow banks comply with the requirements of the American laws sothat banks can gain the American government's trust for banks andhence, banks can attract more customers who are more committed topaying their taxes.Concerning costs and benefits, these modifications will certainlylead to increasing the operating costs which will affect theprofitability. However, these modifications will help inenhancing the Egyptian banks ranking in the internationalinstitutions based on banks categorization therefore; this willincrease their transactions with American clients andconsequently, increase the bank revenues on the long term.

Chapter Two

The Challenges Facing the Egyptian Tax Authority in Implementing the FATCA law and

The Suggested Solutions

The Act also addresses American taxpayers. It requires them topresent annual reports on a specific form (FORM: 8983) abouttheir Financial assets invested outside The United States ofAmerica in Foreign Financial institutions or any other Foreign

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institutions if these investments exceed 50 thousand dollars forNatural Persons, or 250 thousand dollars for Juridical Personsstarting from the date of issuing this law,18th of March 2010,Tax Return,. Those who will not report the required informationis going to pay a fine ranging from 10 thousand dollars to 50thousand dollars, in addition to an extra penalty reaching 40% ofthe due taxes of these hidden transactions with the ForeignFinancial institutions. Statistics showed that about 17 millionpeople evade taxes.18

It is worth mentioning that the American tax law obligestaxpayers now to submit reports about all their transactions withForeign banks (FBAR) to the tax administration. However, thesereports are not to oblige the Foreign Financial institutions todisclose their American clients' data to the American Treasury.So, it was necessary to issue the FATCA. In addition to that, thedata required in (FORM: 8983) is more comprehensive.19

The American Internal Revenue Service declared some instructionsfor implementing the FATCA law stating that the last date forconducting agreements with the foreign financial institutions is30th of June 2013. Those institutions are to submit to theAmerican tax administration annual reports about the previousyear with all the transactions of American individuals (Natural-Juridical). In case these reports were not submitted, theassigned penalty will be imposed on them. These penalties are todeduct 30% from all incomes earned from residing Americanindividuals for the benefit of Foreign Financial institutionsstarting from 1st of January 2014. Starting from the first of

18 - Luscombe, Mark, "Tax Trends: Proposed FATCA Regulations - Trying to Make It Work". Taxes (Apr 2012): P.P: 56, 87.

19 - Roger S. Wise, Mary Burke Baker, "Next phase of FATCA guidance arrives with proposed regulations and announcement of possible intergovernmental approach". Journal of Investment Compliance Volume: 13 Issue: 2 2012

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January 2015, all the payments of residing American sources willbe completely blocked for these institutions.20

This Act is considered as a complete violation to the sovereigntyof all the country members of the General Assembly of the UnitedNations in a way that represents a danger to all the financialtransactions of banks with the outside world as its articlescontradict with the national sovereignty of countries. As aresult, it is considered as a violation from the United States tothe national sovereignty of countries. However, others mayconsider it a way of securing the American tax revenues and thatimplementing it is one of the ways of fighting tax evasion.Therefore, obliging financial institutions to reveal theirAmerican clients' data is for the benefit of the AmericanTreasury and for the sake of fighting tax evasion.21

The Assembly of Caring for the interests of taxes payers stayingabroad recommended the necessity of being aware when writing theForm (9838) on the level of an individual taxpayer or his wife ifshe has a separate tax file, and on the corporation level,taxpayers also should read the instructions written in the Formbefore filling the applications and ask for consultants' help ifneeded to answer any inquiries.22 (The Form attached among theappendences).

20- For more details: IRs-2012-15: Treasury, "IRS Issue Proposed Regulations for FATCA

Implementation", Treasury Department Documents and Publications. (Feb 8,2012)

Whitehouse, Tammy. "IRS Gives Long Lead Time for FATCA Compliance". Compliance Week (Sep 2011), P.P: 8, 10.

21- Moore, Bela, "FATCA may cause legal strife for super funds". Money Management :( 03 Oct 2012).22- For more details :

Merricks, Maria."FATCA: How it affects your firm". Professional Adviser (Aug 4, 2011) P.P:22-23

Treitel, David."Advising your American clients. Professional Adviser (Nov 3, 2011) P.P: 25. 31

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Some see that this law will cost the American Treasury more moneythan what it will gain as many global financial institutions mayrefuse to provide the American Treasury with information, or toreveal their clients' data to keep a good relationship with theirclients; this may cause them to refuse to meet the demands of theAmerican Treasury even if it will stop dealing with them.23

Implementing this law, we need to study the English experience inthis field as the United Kingdom decided to have an agreementwith the United States to implement this law as it hinders theBritish Financial institutions from investing with Americans asthe law imposes a penalty by deducting a tax from the maintransactions of these institutions with its Americancounterparts, or any of their assets in the United States ofAmerica. Consequently, they can’t be compensated for theseamounts of money unless they met the requirements of the FATCAand notified the American Treasury with all the transactions oftheir American clients. As a result, the American Treasury isgoing to notify all those institutions of late taxes of theirAmerican clients so that they can retain the existing assets intheir accounts and transfer them to the IRS. Consequently, it cancollect taxes and penalties from corporations outside America.

When the British government submitted the agreement to the Houseof Commons to approve on implementing the law in Britain. It isobvious that it approved it in order to ensure the profitabilityof its National Financial institutions whether the public or theprivate ones. These institutions have mutual interests with theAmerican Institutions and some of their clients are Americans.Moreover, they aim at ensuring the minimum possible participationrate in the business world.

23- Walker, David. "FATCA 'failure' will cost the US" Investment Europe, (Jun 28, 2012) P.P: 37, 38.

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One of the challenges facing the Egyptian Tax Authority onEgypt’s approval to implement the law lies in the answer to thebelow question:

Does the Egyptian government have the right to ask the American institutions toprovide it with all the data and transactions of their Egyptian clients staying in Americawith American accounts?

Also, another question is if the Egyptian government has thatright, the American government will deduct the amount of taxesrequired and transfer it to Egypt or not. Meanwhile, America havenot sent any of the smuggling money in their banks and Financialinstitutions owned by a number of Egyptians who were declared tobe guilty in the wake the 25th of January Revolution. So, thereshould be a condition of reciprocity in case of implementing theFATCA as in agreements of preventing double-taxes.

Chapter Three

A Field Study for Evaluating the Effects of Implementing the(FATCA) on

Bank Revenues and Total Income Tax Revenues on Bank Profits in Egypt

1- The Study Objective:The Field study aims at examining the hypotheses presented in theintroduction of the study and checking its accuracy concerningthe effects of implementing the American law on bank revenues,

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and also the losses that may result in case of the bank clientsrefuse to deal with the banks to avoid revealing the truth oftheir transactions with the banks, as well as the effects on thetotal tax revenues (Income Tax) as well.

2- The population of the StudyThe researcher tackled the following categories in his study:2/1- Managing directors, managers of administrative and financial

sectors, and financial managers in banks in Egypt. Theresearcher tacked also a sample of 12 different banks inEgypt; the total number of banks in Egypt has reached 32banks with about 65 managers.

2/2- Those responsible for supervising the performance and theplanning of monetary policies, and supervising the qualityof banking performance and the international agreements inthe Egyptian Central bank, as well as those responsible forthe professional training in the Egyptian Bankinginstitutions whose number reached 50 administrators.

2/3- Technicians of the Egyptian Tax Authority from FieldDirectors and general managers of the inspection division inthe tax offices of the joint corporations in Cairo andAlexandria and Large Taxpayer Center and the officials ofconducting the international agreements, who are 60directors and administrators.

2/4- Auditors from a partner , a manager partner and a co-director of the audit sector, professional staff inauditing offices in Egypt from foreign correspondentsoffices (big four) who audit the financial statements ofbanks operating in Egypt, who are about 75 auditors of jointstock companies.

3- The Study Sample:The researcher used a random natural sampling method, where thepopulation of the study consisted of 4 distinct groups. To

23

specify the study sample, the researcher explored the studycommunity through a pilot study consisting of a sample of (10)units prepared as follows:

3/1Calculate the study sample:The researcher used the ratio method to reach a samplerepresenting the population of the study in a statisticallybalanced way to meet the research results and that has been doneas follows:3/1/1-calculate the study sample when the withdrawal is byreturn.n = z /2 * P * Q / d2

n: A sample size when the withdrawal returnZ: A tabular value under the curve normal distribution and the

researcher has assumed that the level of significance (= 5%)and thus

Z /2 = Z 0.025 = 1.096 ~ 2 P: A percentage in the population of the study and has been

replaced parameter (the ratio in the study population) by thestatics value calculated by the survey. It has been foundthat the results of the study (P = 80%)

Q: The ratio represents a complementary factor community whereQ = 1 - P and thus due to the unavailability of the factorcommunity. Q= 1- p

d: An allowable error in statistical inspection and it has beenassumed that the error is in the range of 5%. Applying theprevious law by the results of the pilot study, theresearcher suggested the following:

n = 2 * 0.80*0.20 / (0.05)² = 723/1/2- calculate the study sample when the withdrawal returnedwithout: The researcher used the following law:

n0: A sample size when the withdrawal is without a returnN: the size of the community

24

n

n0 = ــــــــــــــــــــــــ 72

n 55 = ــ =ــــــــــــــــــــــــــــــــ

n: A sample size when the withdrawal and returns have been calculated in the previous step.

3/2- distribution of the study sample: The researcher used the method of allocation Proportion in orderto distribute the study sample to the categories of the study bythe size of the class within the community. (55) questionnaireforms have been distributed, (7) of them were not answered andtherefore, the number of the correct forms is 48 forms. Thefollowing table shows the sample of the study distributedaccording to four categories, as well as response percentages foreach layer separately according to the correct forms receivedfrom the study sample.

Table No. (1) The distribution of the study groups

Sample ofthe study:

The RealSample ofthe Study

Study GroupsNo

Q%Q%14251225Managers in Egyptian

Banks 1

815817Officials of the Central Bank

2

16291529Managers in the Tax Authority

3

17311329Auditors 45510048100Total

4 - The Used Statistical Methods:4/1 The data were described statistically through the repeated

distribution and the percentage distribution and somemeasures that are describable as the arithmetic mean andcoefficient of variation.

4/2 (Chi-Square) Distribution and hypothesis testing todetermine the presence or absence of any tendency towardsa certain direction in the data making it more accurate.

25

The (Chi-Square) distribution is used to test hypotheses relatedto repeatability distributions and other probability and non-probabilistic distributions. Through this distribution, observedduplicates can be compared with expected frequencies todetermine whether the observed hypotheses among thesedistributions are due to mere coincidence, or there are realpowers behind this difference.

5- Results and Hypotheses TestingThe First Hypothesis:"There are no statistically significant differences among theanswers of the study groups on whether there are concreteeffects of FATCA requirements on the revenues of the financialinstitutions in Egypt."

First Question: Foreign Account Tax Compliance Act (FATCA) aims mainly toinquire about the American citizens' accounts in the foreignbanks and financial institutions. The matter that could leadthe clients of American Nationality to be reluctant to workwith the Egyptian banks, or lead them to cancel theirtransactions fearing of giving any statements related to theirfinancial asset accounts and its returns to the Americantreasury and therefore, there will be a decrease in therevenues of these banks as a result of the withdrawal of theseclients from these banks. The answers of the study groupsshown in table (2-A)

Table no. (2- A)The Extent of Difference between the Study Groups Concerning

the Impact of Banks' Commitment to FATCA Lawon the Bank Revenues

26

(Repeating scenes - the expected frequency) 2Chi-Square = Sub Total

Auditors Managers in

TaxAuthorities

CentralBank

Officials

BankManagers

% Q % Q % Q % Q

92,3 12 86,7 13 87,5 7 83.3 10 Yes.

7,7 1 13,3 2 12.5 1 16,7 2 NoChi-Square accounted= 0,419

Df = 3level of significance= 0,938 (not function)

As: Q= frequency

Second question:It addresses the required modifications from your opinionwhich avert negative effects on bank revenues and theanswers of the study groups are shown in table (2 - b).

Table No. (2-b)The Relative Importance of the Amendments Averting Negative

Impacts on Bank Revenues

Distributed According to the study Categories

27

ReasonsAccountant

s

Managersin Tax

Authorities

CentralBank

Officials

BankManagers

R V% M R V% M R V% M R V% MProcedural amendments 1 35

.04.71 4 47

.04.19 1 33

.04.66 1 34

.04.75

Amendments in information systems

5 49.0

3.99 1 34

.04.81 4 42

.04.12 4 41

.04.03

Legislative amendments 2 36

.04.63 2 44

.04.76 2 35

.04.42 2 36

.04.69

Administrative changes 4 42

.04.32 5 50

.03.98 6 49

.03.87 6 51

.03.55

marketing Amendments 6 51

.03.75 6 0.

523.85 5 44

.03.95 5 48

.03.85

All the previous amendments will lead to the increase of bank operational costs

3 38.0

4.53 3 45

.04.36 3 39

.04.29 3 39

.04.21

As M= mean V= Coefficient of variation R= Ranking (Rank)

Third question:It addresses the reasons that support the need to comply with therequirements of (FATCA) and that show that its implementationwill not lead to a decrease in bank revenues. The study groups'answers are shown in the following Table (2 - C).

Table No. (2- C) The Relative Importance of the Reasons Demonstrating That There

is No Decrease in Bank Revenues in Case of Bank CommitmentTo the (FATCA)

Distributed according to Study Categories Reasons

Accountants Managers in

TaxAuthorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% MIncreased confidence on thepart of the U.S. administration inthe management ofbanking operations and then, listing Egyptian banks inthe list of the reputable banks.

2 37.0 4.43 1 31.0 4.77 1 36.0 4.12 1 35.0 4.65

To reach by the bank policies to the highest levels of transparency and to a high rank inthe Internationalclassification byapplying the global policies and committing tothe application of international

339.0 4.31

339.0 4.59 3 43.0 3.72 5 48.0 3.76

28

ReasonsAccountants

Managers inTax

Authorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% MTreaties.Listing Egyptian banks in the lists of global banks and therebythe demand for its banking services increases.

1 32.0 4.58 2 33.0 4.61 2 38.0 3.94 2 38.0 4.34

The increase of U.S. investments in the financial and banking sector in Egypt as a result of the good reputation of Egyptian banks tothe U.S. administration

5 53.0 3.96 4 42.0 4.17 5 0.50 3.39 3 39.0 4.11

Increased attention from the internationalprofessional associations to qualify cadres ofglobal banking inEgypt and hence, enhancing their competence and professionalism.

4 46.0 4.19 5 51.0 3.79 4 47.0 3.56 4 43.0 3.89

The results of the previous tables have demonstrated that thereare no differences between the answers of the study groups. Thathas emphasized the value of the Chi-Square test (calculated as =0.419) which means a lack of statistical significance as thisvalue did not reach the extent that makes it a function at alevel of at least 0.05 and that at Degrees of freedom = 3. Theresults in Table (2 - a) have shown a tendency toward the fourcategories of the study approval, where the answers ranged

29

between:: (92.3% - 83.3%) indicating that the implementation ofthe FATCA law will lead to lower down the revenues of theEgyptian banks, see Table (2 - a).

Despite the lack of differences between the study groupsconcerning the existence of effects when implementing the lawcausing the bank revenues to fall, there is a considerablevariation in terms of the degree of the relative importance ofthe amendments proposed to be applied when complying with therequirements of the law for its positive impact on the bankrevenues and for that it reduces the potential loss as a resultof the cancellation of some Americans to their dealings with thebanks that will report their financial assets and their returnsto the U.S. Treasury. The results of the operation have shownthat most of the questionnaire respondents have agreed on thatminor procedural and legislative amendments come ahead of therequired amendments to be implemented when committing toimplementing this law. Meanwhile, the amendments in informationsystems and modifications marketing come at the end of thepriorities of the amendments. However, all of them agreed thatthe required amendments lead to raise the operating costs of thebank, see Table (2 - b).

Also, Table (2 - c) the Variance a large variation in terms ofthe degree of the relative importance which points out the lackof decline in bank revenues when committing to implementing therequirements of the law, as most of the sample have agreed thatthe main reason for this is the increased confidence on the partof the U.S. administration in the management of bankingoperations and hence, listing the Egyptian banks in the list ofreputable banks. However, Most sample Surveyed have agreed onthat there are other reasons coming at the end in theirsignificance for not decreasing the bank revenues when complyingwith implementing the requirements of the law, such as:(Increasing the U.S. investments in the financial and bankingsector in Egypt as a result of the good reputation of Egyptianbanks for the U.S. administration as well as increased attentionfrom professional associations to qualify the banking cadres inEgypt and hence, enhancing their competence and professionalism).

30

The Second Hypothesis:"There are no statistically significant differences among theanswers of the study groups on whether there are concreteeffects of FATCA requirements on the revenues of the EgyptianTax Authority (Income Tax)."

The Fourth question: The FATCA law aims mainly to review the accounts of Americans inforeign banks and financial institutions, in addition to thecommitment on the part of taxpayers before the IRS to discloseall their earnings and their assets in the foreign accounts.Hence, this law is one of the ways of fighting tax evasion.

Could the Egyptian Tax Authority revenues (income tax) beindirectly affected by being declined as a result of thecommitment of the banking institutions in Egypt to implementingthis law? The answers of the study groups are shown in table (3-A).

Table No. (3- A)The Extent of Difference between the Study Groups Concerningthe Impact of the Commitment to Implementing the Law on the

Returns of the Income Tax

Auditors Managers in

TaxAuthorities

CentralBank

Officials

BankManagers

% Q % Q % Q % Q

73,4 11 77 10 75 6 75 9 Yes.

26,6 4 23 3 25 2 25 3 NoChi-Square accounted= 0,418

Df = 3level of significance= 0,879 (not function)

As: Q= frequency

Fifth question:

31

The causes leading to lower the tax revenues (income tax).The answers of the study groups shown in table (3-b)

Table no. (3-b)The relative importance leading to lower the tax revenue

(income tax). Distributed according to the study categories

ReasonsAuditors

Managers inTax

Authorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% MThe result of thedecrease in bank revenues and hence, the decrease of the income tax on theprofits of these banks as a resultof many Americanscancelling their accounts and dealings with theEgyptian banks because of implementing the FACTA.

2 47.0 3.95 1 35.0 4.3

2 2 47.0 3.86 2 40.0 3.8

5

The end of some U.S. investments in Egypt, for thedesire to go to countries that reject the implementation ofthis law and thus, lower tax revenues. The escape of these investments outside Egypt leads to a failure in collecting incometax on their profits.

3 51.0 3.75 3 44.0 4.0

0 3 0.32 3.79 3 51.0 3.7

5

32

ReasonsAuditors

Managers inTax

Authorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% MAs a result of banks' commitmentto not disclosing their American clients'transactions to the U.S. Treasuryin accordance with the privacy law, the U.S. government will decide deduct 30%of their dealingsas a penalty and thus, lower theirprofits and hence, lower the income tax.

1 41.0 4.17 2 39.0 4.0

9 1 48.0 4.21 1 36.0 4.0

0

Sixth question: Reasons for not decreasing the tax revenue (income tax) whenputting the FACTA into action. The answers of the study groupsare shown in table (3-c)

Table No. (3- c) The relative importance leading to not to decline the tax

revenue(Income Tax) distributed according to the study categories

ReasonsAuditors

Managers inTax

Authorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% MThe small number of American clients in the Egyptian banks

2 37.0 4.63 4 53.0 3.77 4 53.0 3.92 3 43.0 3.68

Most financial assets of U.S.

1 0.32 4.74 1 38.0 4.591

37.0 4.481

0.32 4.43

33

ReasonsAuditors

Managers inTax

Authorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% Minvestments in branches of banks outside of Egypt and not in the Egyptian banks and hence, there is no impact on the revenues of Egyptian banksThe U.S. investor is always seeking the banking institutions with the highest profitability and the lowest risk, away fromthe Arab regionin order to avoid politicalrisks in the Middle East.

4 49.0 4.32 3 49.0 4.06 3 47.0 4.19 4 51.0 3.55

If there will be reciprocity between Egyptian banks and U.S. counterparts, the U.S. banks will notify theEgyptian Tax Authority on the transactions ofthe Egyptians in the U.S. banks and consequently,

343.0 4.58

2

41.0 4.242

42.0 4.322

39.0 4.21

34

ReasonsAuditors

Managers inTax

Authorities

Central BankOfficials

BankManagers

R V% M R V % M R V% M R V% Mthere will be a possible increase in thetax revenue as a result of pursuing Egyptian financial assets abroad.

The results of the previous tables have shown that there are nodifferences between the study groups. That has emphasized thevalue of the Chi-Square test (calculated as = 0.418) which meansa lack of statistical significance, as this value did not reachthe extent that makes it a function at a level of at least 0.05and that at Degrees of freedom = 3. The results in Table (3 - a)have shown a tendency toward the four categories of the studyapproval, where the answers ranged between:: (77- 73,4), seetable no. (3-a)

Despite the lack of differences between the study groups aboutthe existence of an impact on the revenues of the taxadministration that the income tax will decline when implementingthe law, there is a discrepancy in terms of the degree of therelative importance of the reasons that support the necessity ofthe commitment of the Egyptian government to implementing therequirements of this law taking into account not to affect thebanking revenues by being declined and hence, the indirect impactof lowering revenue on the department of tax (income tax) ofthose banks. So, the reason that has come on the top of the listand all the study groups have agreed on is that: (Most financialassets of U.S. investments in branches of banks outside of Egyptand not in the Egyptian banks and hence, there is no impact onthe revenues of Egyptian banks), but the reason that: (The U.S.investor is always seeking the banking institutions with thehighest profitability and the lowest risk, away from the Arabregion in order to avoid political risks in the Middle East), has

35

come at the end of reason list that ask the Egyptian banks toapply the requirements of the law and not to fear the lawenforcement. Look at table no. (3-c)

On the other hand, table (3 - b) shows the convergence of viewsbetween the study categories about the reasons that could lead tolower revenues of tax administration (income tax) when applyingthe requirements of complying with the law. So, most of the studycategories have agreed that the (as a result of banks' commitmentto not disclosing their American clients' transactions to theU.S. Treasury in accordance with the privacy law, the U.S.government will decide deduct 30% of their dealings as a penaltyand thus, lower their profits and hence, lower the income tax)will be an influential factor on the decline of the profit ofbanks and hence, the revenue of the tax administration (incometax) in Egypt. However, the study sample unanimously agreed thatthe (escape of some U.S. investments from Egypt, heading to thestates that reject the application of the requirements of thislaw, and thus will lead to the decline of taxes as a result ofthe escape of these investments outside Egypt and then failure tocollect income tax on their profits) comes at the end of thereason list that will lead to lower total income tax due tolowering bank profits.

Results:

The first hypothesis: SPSS results confirmed the exclude of this hypothesis: FACTAimplementation will lead to a decline in bank revenues and hence,a decline in its profits. The results of the operation datashowed that: all the members of the sample have agreed that thecosts incurred by the bank as a result of the amendments proposedby the researcher to comply with the requirements of the law willlead to higher operating costs of the bank, and hence, a declinein the revenue on the short term, but it will rise again as aresult of the confidence of the U.S. government in Egyptian banksand hence, directing not only U.S. investments, but also globalinvestments to deal with Egyptian banks.

36

The second hypothesis: SPSS results confirmed the exclude of this hypothesis:Implementing the law will lead to a decline in the revenues ofthe Egyptian tax Authority (income tax). It was evident from theresults of the data operation that there is no fear on therevenue of the Egyptian Tax Department (income tax) because mostof financial assets of the U.S. investments are in banks outsideEgypt and not in Egyptian banks. Hence, there is no impact on therevenues of Egyptian banks and therefore, there is no impact onthe profits of those banks.

Recommendations:

1- The necessity of agreeing on reciprocity when conducting anagreement for implementing FACTA requirements.

2- Making the amendments proposed by the researcher whenimplementing FACTA, those include procedural, legislativeand marketing amendments.

Reference is arranged according the content and the pages of theresearch:

1- Hiring Incentives to Restore Employment Act providedincentives to combat unemployment

2- Foreign Bank and Financial Accounts. Report on foreignfinancial accounts in banks

3- Jorge Morley-Smith says, "Cutting claws of the FATCA",Money Marketing, (Nov 17, 2011)

4- Marsan, Dean, "The Global Financial System Must NowImplement a New US Reporting and Withholding System forForeign Account Tax Compliance, Which Will CreateSignificant New Exposures-Managing This Risk" Taxes, (Sep2010) PP: 128,144.

5- Hany Abu Afatouh , a study published on Wafad portal21/8/2012, http://www.alwafd.org/ 'D1J'6) / 254982

6- Fariz Huseynov, Bonnie K. Klamm, "Tax avoidance, taxmanagement and corporate social responsibility". Journal

37

of Corporate Finance, Volume 18, Issue (4, September2012), Pages 804-827

7- John Hasseldine, Gregory Morris, "Corporate socialresponsibility and tax avoidance: A comment andreflection". (Accounting Forum), Journal of Accounting &Finance, Volume 65, Issue 2, June 2012, PP: 804-827.

8- Christopher S. Armstrong, Jennifer L. Blouin, "Theincentives for tax planning". Journal of Accounting andEconomics, Volume 53, Issues1-2, (February-April 2012),Pages 391-41.

9- Roberta Calvet Christian, James Alm, "Empathy, sympathy,and tax compliance", Journal of Economic Psychology, (13October 2012)

10- Foriegn Financial Institution, such as: Banks, Stockexchange, insurance companies, brokerage houses,Companies Financial Brokers, Mutual Funds, moneyfunds ... and etc.

11- Jaeger, Jaclyn. "IRS Seeks Input on Foreign WithholdingRules". Compliance Week (Dec 2010) P.P: 33, 64.

12- Foreign Ministry against direct FATCA agreementsbetween banks and US Russia & CIS Banking & FinanceWeekly. Financial Policy, (Jul 20, 2012).

13- Specialized workshop organized by the InternationalUnion of Arab Bankers and the Union of Arab Banks onOctober 3, 2012 in Sharm El- Sheikh , on the operationalprocedures for the application of FACTA.

14- Wolfe, Daniel, "Banks Face the Facts on FATCA".American Banker [New York] 29 Dec 2011.

15- Firms still unprepared for FATCA, "Investment Week"(Jun 11, 2012) PP: 32, 36.

16- Treasury Department Documents and Publications. "JointUS-China Economic Track Fact Sheet-Fourth Meeting of theUS China Strategic and Economic Dialogue", (May 4, 2012).

17- Act 88 of 2003 the law of the Central Bank and thebanking system and cash

18- Luscombe, Mark, "Tax Trends: Proposed FATCA Regulations- Trying to Make It Work". Taxes (Apr 2012): P.P: 56, 87.

19- Roger S. Wise, Mary Burke Baker, "Next phase of FATCAguidance arrives with proposed regulations and

38

announcement of possible intergovernmental approach".Journal of Investment Compliance Volume: 13 Issue: 2,2012.

20- For more details, see: IRS-2012-15: Treasury, "IRS Issue Proposed

Regulations for FATCA Implementation", TreasuryDepartment Documents and Publications. (Feb 8,2012 )

Whitehouse, Tammy. "IRS Gives Long Lead Timefor FATCA Compliance". Compliance Week (Sep2011), P.P: 8, 10.

21- Moore, Bela, "FATCA may cause legal strife for superfunds". Money Management: (03 Oct 2012).

22- For more details, see : Merricks, Maria. "FATCA: How it affects your

firm". Professional Adviser (Aug 4, 2011) P.P:22-23

Treitel, David. "Advising your Americanclients. Professional Adviser (Nov 3, 2011)PP: 25. 31

23- Walker, David. "FATCA 'failure' will cost the US"Investment Europe, (Jun 28, 2012) PP: 37, 38.

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