A U.S. law aimed at curbing tax evasion by citizens using foreign accounts could cost large multinational banks as much as $100 million apiece to implement in one-off systems costs, a top asset manager and a tax lawyer told a conference on Friday.
The overall costs of implementing the Foreign Account Tax Compliance Act (FATCA), could approach the more than $8 billion FATCA is due to raise over 10 years, he said.
FATCA was introduced after high profile tax evasion cases.
With FATCA there is a cost on us in Europe but benefits in the U.S.. The benefit is $8.5 bln over 10 years ... for multinational banks I have seen estimates of $100 million (each, in one-off costs), said James Broderick, head of Europe, Middle East and Africa for JP Morgan Asset Management.
It would be easier to just write a cheque to the IRS (U.S. tax authority), he added.
The $100 million figure is with regard to the costs of implementation for the banking systems of large, multi-jurisdictional banks, and not for an asset manager, he said.
Speaking at the same conference, organized by Italy's asset management association Assogestioni, tax expert Keith Lawson said he had also heard the $100 mln figure.
Lawson, Senior Counsel Tax Law at ICI, the U.S. national association of U.S. investment companies, said aspects of FATCA were draconian but a repeal would be very difficult given the amount it would raise.
Broderick said banks and wealth managers had to accept that FATCA, which starts coming into force in June 2013, would be implemented and they may have to change their business models.
FATCA has drawn wide criticism from abroad, with banks and business people saying the new law turns them into agents of the IRS.