Wealthy Americans Relinquish U.S. Citizenship to Avoid High Taxes


By Stacey Bumpus

Image courtesy of Arvind Balaraman / FreeDigitalPhotos.net

In 2012, a Bloomberg report found a growing number wealthy Americans were choosing to give up their U.S. citizenship rather than pay high taxes when living outside of the country.

Now, in light of the expiration of the payroll tax cut, 2013 could be the biggest year for expatriation due to high taxes to date.

Some of the more notable Americans who have recently given up citizenship include actor Jet Li, Facebook co-founder Eduardo Saverin and socialite Denise Rich.

U.S. Zeroes-In on Tax Evasion

Four years ago, whistle-blower Bradley Birkenfeld triggered a crackdown on tax evasion, which was meant to stop wealthy Americans who stored money in offshore accounts to avoid paying high taxes.

Though this was intended to stop Americans living in the country who stored money in other places, it also applies to individuals living outside of the U.S. who store money in the banks of countries they reside.

The U.S. is the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside. In facing taxes within foreign countries they live in as well as paying American taxes due to their U.S. citizenship, many wealthy Americans are weighing whether remaining a U.S. citizen is worth it.

Americans Giving Up their U.S. Citizenship

Andy Sundberg, secretary of Geneva’s Overseas American Academy, shared that 1,780 expatriates gave up nationality at U.S. embassies last year, which is an increase from 235 in 2008. The number has increased so quickly that the embassy redeployed staff to clear the backlog of Americans queued to relinquish their passports.

Another reason Americans are ready to give up their passports is that many non-U.S. banks feel it’s too risky to deal with Americans abroad after the Birkenfeld and the U.S. probed USB and 11 other Swiss financial firms for aiding offshore tax evasion.

Due to difficulties acquiring accounts in some countries and facing taxes from the United States, Americans are deciding  that giving up their U.S. passports and relinquishing their citizenship is the right choice to make.

Cited from: http://www.gobankingrates.com/tax/wealthy-americans-relinquish-us-citizenship-avoid-high-taxes/#ixzz2LnGqxfk5

 

About Richard

Richard Oon Hock Chye has more than 25 years of experience in taxation and business advice, with particular expertise in Malaysian property law. He began his taxation career with Deloitte Touche Tohmatsu, a ‛Big Four’ accounting firm, before starting his own practice, ConsulNet Tax Services Sdn. Bhd., in 1996. He is currently the National Tax Director of TY Teoh International, one of the leading consulting service providers in Malaysia. It is a member of the MSI Global Alliance, a global network of more than 250 independent legal and accounting firms, in over 100 countries. Richard sits on the board of two companies listed on the Main Board of Bursa Malaysia, as an independent non-executive director. He is also a regular contributor to several magazines and publications, and has shared his tax expertise on numerous occasions with organisations and property developers. As well as being a member of the Malaysian Institute of Accountants (MIA), Richard is a fellow member of both the Association of Chartered Certified Accountants (ACCA) and the Chartered Tax Institute of Malaysia (CTIM). He is a Certified Financial Planner (CFP) and holds a tax agent licence issued by the Ministry of Finance. Richard is also the author of the book, ‘Every Property Investor’s Guide To How To Pay Less Tax Legally’.

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