Connect with us

Business

Americans renouncing tax liabilities

Legacy Phuket Gazette

Published

 on 

PHUKET: The number of US taxpayers renouncing their citizenship or permanent-resident status reached a new high in Q2 of 2013. The figure of 1,130 people who the IRS listed as renouncing their status is two-thirds higher than the previous recent high, set in Q1 of 2013 and six times higher than Q2 of 2012. It is also the largest number since 1997.

There is a definite trend and while renunciation of citizenship requires no explanation, experts suggest that it is down to tougher tax laws and the manner of their enforcement by the American tax authorities – the IRS.

The US is the only nation in the 34-member OECD* which taxes its citizens no matter where they reside. With the implementation of the Foreign Account Tax Compliance Act (FATCA) on 1st July, 2014, Swiss and German banks in particular are turning away clients who are US citizens. In turn, many of the estimated six million Americans living overseas are weighing up the cost of keeping their US passport.

FATCA requires foreign financial institutions to report information to the IRS about financial accounts held by US taxpayers or held by non-US entities, in which US taxpayers hold a substantial ownership interest. The US Congress’s Joint Committee on Taxation has estimated that this regime will bring in USD 8.7 billion over ten years.

For those citizens suspected not to be disclosing enough information, the law requires banks to withhold 30% from certain US-connected payments. FATCA’s implementation date has recently been put back a second time, to give foreign banks time to comply.

Since 2011, Americans, who disclose their non-U.S. bank accounts to the IRS, have had to file the more expansive 8938 form that asks for all foreign financial assets, including insurance contracts, loans and shareholdings in non-U.S. companies. Failure to comply can result in a fine of up to USD 50,000. Clients can also be penalized half the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970.

Compliance with the requirements also has its price. According to tax lawyers, costs for companies to ensure their American workers are filing the correct US tax returns and asset-declaration forms are at least USD 5,000 per employee.

The extra reporting required also means that personal US accounting costs for each citizen residing abroad are estimated by tax lawyers to be USD 2,000.

It is no surprise then that so many US nationals are handing their passports in to their local embassy. However, this does not come without its costs, either. Former citizens are still required to prove that they have properly paid tax over the five previous years. Furthermore, anyone whose average US tax liability over the last five years was around USD 150,000 (the equivalent of roughly $500,000 in taxable income in 2012 dollars), and/or has a net worth of at least USD2 million on the date of expatriation, is liable to pay an exit tax. However, it appears that this net worth figure does not adjust with inflation.

All this seems contradictory to the Congressional Act of July 27, 1868 which declares “the right of expatriation is a natural and inherent right of all people, indispensable to the enjoyment of the rights of life, liberty, and the pursuit of happiness.” Still, the US government is doggedly pursuing its windfall.

* OECD members include 21 EU countries, Australia, Canada and Switzerland.

Keep checking the Phuket Gazette’s business pages for the latest local and national business news updates affecting Phuket and Thailand. Alternatively, join our Facebook fan page or follow us on Twitter.

MBMG Group is a multi-award-winning professional advisory practice that provides sound and impartial advice to assist private, corporate and institutional clients in protecting and building their hard-earned wealth. For further information, visit www.mbmg-group.com.

— MBMG Group

 

Get more from The Thaiger

📱 Download our app on Android or iOS
👋 Have your say on our Thailand forums
🔔 Subscribe to our daily email newsletter
📺 Subscribe / Join YouTube for daily shows
👍 Like/Follow us on Facebook
🐦 FOLLOW us on Twitter
📷 FOLLOW us on Instagram

image

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Coronavirus (Covid-19)38 mins ago

Chulalongkorn University progressing on domestic mRNA vaccine

Koh Samui5 hours ago

Black Club Covid-19 outbreak on Koh Samui widens

Thailand6 hours ago

Possible earthquake in Nonthaburi this morning

Sponsored9 hours ago

Experience Phuket’s Islands with 5 Star Marine

Welcome back to Thailand!

Thaiger is getting behind local businesses for the restart of tourism in Thailand - up to 50% discounts across all advertising packages!

Best of6 hours ago

Chiang Mai’s 8 most indulgent spa hotels

Coronavirus (Covid-19)6 hours ago

Bangkok Bang Sue scam under investigation, 7 volunteers and counting to be questioned

Thailand7 hours ago

Thailand News Today | ‘Crowding’ due to camera angles, train hospitals | July 29

image
Join the conversation on the Thaiger Talk forums today!
Thailand7 hours ago

Spray guns ineffective and dangerous, says TFDA

Drugs8 hours ago

Methamphetamine pills hidden in instant noodle packets delivered for Covid patient

Coronavirus (Covid-19)8 hours ago

Anonymous “Dr Sandy” says pray the Covid situation gets better

Coronavirus (Covid-19)9 hours ago

Thursday Covid Update: Record high of 17,669 new cases; provincial totals

Phuket9 hours ago

Phuket governor eyes construction camps for stricter Covid measures

Best of11 hours ago

Top 5 spas in Chiang Mai

Coronavirus (Covid-19)11 hours ago

Health Minister says Bang Sue not crowded, blames “camera angles”

Cambodia12 hours ago

Cambodia plans lockdown with 8 provinces that border Thailand

Bangkok12 hours ago

Sleeper trains in Bangkok to become isolation facilities for Covid-19 patients

Thailand5 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism5 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket5 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism5 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand5 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism5 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand6 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand6 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand6 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand7 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand7 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand7 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand7 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand7 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand7 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Trending