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Monthly Archives: August 2017

New US E Business Visa Route for Frustrated Central American, Chineese & Indian Investors

Citizenship applications for the Caribbean island of Grenada have boomed in the last three years.

Reports have emerged that Grenada’s citizenship by investment program, introduced in 2014, is being used to fast-track US E2 visa applications.

Grenada is the only Caribbean country with a fast-track citizenship program, which signed a Commerce and Navigation Treaty with the USA. As a result, Grenada’s citizens are eligible for the US E2 non-immigrant visa. This means Grenadians can secure and US E2 visa with a substantial investment in a US-based business and employing some US citizen or US resident staff.

The rise in Grenadian citizenship applications is partly attributed to the ever-increasing backlog of immigration applications in the US. Citizens of China, El Salvador, Guatemala and India in particular are facing severe delays, with some facing a 10-year wait.

As a result, wealthy foreign investors are applying for citizenship in Grenada and then filing an application for an E2 visa for the US.  The E2 visa category is a non-immigrant visa category which can continue to be extended as long as the business continues in the US.  This may be preferable for some wealthy investors who wish to avoid the possible tax consequences of a green card.

The Grenada citizenship program as a route to gaining an E2 visa may be worth considering for some. However, requires  a significant investment. In some cases you can gain an E2 visa as an investor after investing say tens of thousands of dollars. Much less than the minimum cost of $200,000 for the Grenada Citizenship by investment program.  

The Grenada citizenship program may be worth considering for nationals of Countries not on the E2 Treaty Investor or E1 Treaty Trader country List. It should be noted that Grenada is on the E2 Treaty Investor list.  Not on the E1 Treaty Trader list.  In most cases this probably does not make much difference.

Requirements for Grenada Citizenship 

According to a report published by Forbes, a minimum investment of $200,000 (US) will secure Grenadian citizenship within 12 weeks. Once citizenship is obtained an investor, along with his or her family, can submit an application for an E2 visa in the US. The Forbes report claims that an investor’s entire family could be in the US within 8 weeks.

Overall, obtaining Grenadian citizenship and then applying for a US E2 visa could take less than six months. Once in the US, an investor can acquire an Employment Authorization Document for a spouse, enabling them to work anywhere in the country.

Investors can also send their children to US schools, qualifying for in-state tuition rates and they can travel back and forth freely to their country of origin to take care of business operations back home.
Aside from meeting the requirements for citizenship in Grenada, applying for a US E2 visa would involve incorporating a US company, establishing an office with a legitimate phone number and possibly a website. An investor would need to register with the Inland Revenue Service (IRS), open a bank account and deposit a large sum of money (>$100,000).

Additionally, a viable business plan will be required to establish a company in the US, potentially via a franchise purchase. Meanwhile, any investor would need to speak a basic level of English and have managerial or executive experience, or at the very least, have an idea of how to run their business.

With the possibility of having to wait 10 years and with President Trump ‘attacking’ the H1B and L1 visas, those who can afford to are opting for citizenship in Grenada followed by an application for an E2 visa. So far, the E2 Treaty Investor visa has not made it on to Trump’s radar.

Not Qualify for an E Visa?
Need to Quickly Acquire Citizenship in Grenada?

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Read more at: Tax Times blog

All That You Wanted to Know About Form 706NA – Part I

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50% Owner Liable for Trust Fund Penalty Despite Not Having Primary Responsibility For Taxes.

A district court has determined on summary judgment that a 50% owner of a member-managed company, who was required to sign off on all significant decisions and actions relating to the company, was liable for the trust fund recovery penalty under Code Sec. 6672.

The court found that his role in the company established that he was a responsible person, regardless of whether the other owner had primary responsibility for the company's taxes; and he was found to have acted willfully where he knew (or should have known) that the taxes were unpaid but continued to pay other creditors instead.

U.S. v.Commander, (DC NJ 4/3/2017) 119 AFTR 2d ¶2017-620

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Ireland Disagrees with EU's Decission That it Needs To Collect €13 Billion in Tax From Apple

On October 18, 2013 we posted Ireland to Close Highly Criticized Loophole, but Create an Even Bigger One where we discussed that Ireland said it planned to shut down a much-criticized tax arrangement used by Apple Inc to shelter over $40 billion from taxation, but will leave open an even bigger loophole that means the computer giant is unlikely to pay any more tax. The highly criticized arrangement has become known in the tax avoidance industry as the "double Irish". this arrangement has been used by Google, Microsoft & Apple, just to name a few. 

Now according to Law360, Ireland’s new finance minister rejected demands from the European Union’s competition watchdog to collect €13 billion ($15.3 billion) in back taxes from Apple Inc., saying in an interview published August 16, 2017 that the technology giant did not receive any special tax benefits compared to other businesses.

Paschal Donohoe, who has been serving as Ireland’s minister for finance and public expenditure and reform, told the German newspaper Frankfurter Allgemeine that he disagrees with the European Commission’s August 2016 ruling, which concluded that Apple had entered into a sweetheart tax deal with the Irish government to “substantially and artificially” lower its taxes.

Donohoe said that Ireland is Not Blocking the Global Fight Against TaxEvasion, but there is only so much
the EU can Achieve on its Own in this area.

“We are not the Global Tax Collector for Everyone Else,”
he said.

Both Ireland and Apple have appealed the commission’s decision, which found that two tax rulings Ireland had issued to Apple in 1991 and 2007, allowing the software giant to allocate almost all of its sales profits to “head offices” that existed only on paper, were in violation of the EU’s state aid rules.

Under the EU's unique state aid system, national tax authorities are barred from giving benefits to some companies that are not available to others, and member states cannot treat multinational companies more favorably than standalone companies.

The commission said that the allocation of profits to head offices, with no employees or physical locations, allowed Apple’s effective corporate tax rate to go down from 1 percent in 2003 to 0.005 percent in 2014 on the profits of the Irish-incorporated subsidiary Apple Sales International.

The commission’s investigations into Apple’s tax arrangements, as well as those of Starbucks Corp., had previously drawn the ire of the Obama administration, which complained that the commission appeared to be unfairly targeting U.S. businesses and that American taxpayers may end up having to foot the bill for foreign tax credits that the companies may be able to claim following a retroactive imposition of taxes.

A U.S. government has filed an application to intervene in Apple’s suit so that it can have its say on the retroactive application of state aid rules to the company.

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