More and more American tax payers are choosing to lose their citizenship or residency status. Indeed, by the middle of this year there were record numbers and the most so far for this century.
Surprisingly, the US does not require a reason or explanation when people choose to no longer be an American citizen but there is no doubt that one of the major reasons is the new, tough taxation laws that are now being enforced by the Inland Revenue Service (IRS) and the way they get supposed tax friendly countries to co-operate. Many taxpayers regard the Foreign Account Tax Compliance Act (FATCA) as an invasion of privacy that has gone too far.
The FATCA basically forces non-American banks, and the likes of, to let the IRS know about any accounts held by Americans. This also applies to any company, etc., where Americans are the major shareholders. The US Congress reckons this will bring in around nine billion US dollars over the next decade.
This has meant that many countries just refuse Americans when they apply for a bank account or anything else financially related.
Out of all the countries that are members of the Organisation for Economic Co-operation and Development (OECD) only America taxes its citizens irrelevant of where they live in the world. There are over six million Americans residing or working offshore at the moment and I will bet more than a few are thinking of the pros and cons of American citizenship. This is not exactly surprising when FATCA can demand that banks withhold 30% (yes, thirty percent!) from Americans who are thought not to be declaring everything they should.
For the last couple of years, US citizens who have been honest and informed the authorities of non-American holdings have had to fill in much more detailed forms such as the 8938 which demands that all information be given to the IRS. If it is not then fines of up to USD50,000 can be imposed as well as up to fifty percent of any money in an undisclosed foreign bank account.
This is not the only problem for people who wish to live and work offshore. Even those who want to obey the new laws can be victimised. Certain US tax lawyers allege that companies which employ Americans may have to pay up to USD5,000 to ensure their US employees are filing the correct information.
It is not exactly surprising that so many Americans want to pack in being US citizens. But the American government does not make it easy for them. People have to prove they have paid all the correct taxes over the previous five years (you’d think they’d have their own records!). Not only that but for those people who had an average tax liability of around USD150,000 per annum and has assets in excess of USD2 million has to pay an exit tax. No wonder Americans are thinking of becoming ‘Un-Americans’. It would seem that in the Land of the Free and Home of the Brave there is no longer right to “life, liberty and the pursuit of happiness” anywhere in the world.
|The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on [email protected]|