Vatican agrees to enforce tax evasion legislation

Financial Times
June 10, 2015

The Vatican has agreed to implement US legislation designed to curb offshore tax evasion, offering further evidence of the desire of Pope Francis to clean up the finances of the Catholic Church and stamp out the Holy See's reputation as a haven for illicit activity.

In what was dubbed a "historic event" by Archbishop Richard Gallagher, the equivalent of the Vatican's foreign minister, the Holy See signed a deal to apply within its walls the Foreign Account Tax Compliance Act (Fatca), enacted by president Barack Obama in 2010.

James Politi reports that the agreement – the first intergovernmental deal between the US and the Vatican – will force the Institute for Religious Works (IoR), also known as the Vatican Bank, to transmit information on accounts held by American taxpayers in the city-state back to US authorities.

In implementing Fatca, the Vatican joins just 62 other countries that have such deals with the US – while many others have resisted the pressure to comply.

In a statement, the Archbishop said:

As Pope Francis frequently reminds us, evading just taxes is stealing both from the State and from the poor.

Every person has in fact the duty to contribute, in charity and justice, to the common good, according to his own abilities and the needs of others, by promoting and assisting the public institutions dedicated to bettering the conditions of human life.

Meanwhile, Kenneth Hackett, US ambassador to the Holy See, said the deal would help forge a "stronger, more stable, and more accountable global financial system".

Earlier this year, the Vatican also agreed to a tax information sharing agreement with Italy, with whom it has the most extensive financial relationships.



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