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Cayman Islands Says They Will Not Show Theirs Until the US Shows Theirs 1st

May 31, 2016

We previously posted UK lists 40 Countries That Agree to Automatically Exchange of Beneficial Ownership Information where we discussed that the UK government has released a list of jurisdictions it says have committed to its initiative for automatic exchange of beneficial ownership information. The list includes the Cayman Islands, Bermuda and Jersey, but not Guernsey or the British Virgin Islands, though Afghanistan and Nigeria are on the list.

However subsequent to this meeting, The Cayman Islands has indicated that it will not adopt a mechanism for the exchange of beneficial ownership data that is not implemented by the United States. Speaking at a press conference on May 17, 2016, Premier Alden McLaughlin called for a level playing field in terms of financial transparency and stated that a standard without U.S. participation “is not a global standard.”

While acknowledging that the Cayman’s participated in the summit which was predicated on it joining an initiative for the automatic exchange of beneficial ownership data; this initiative of 40 countries aims to develop a global standard for the automatic exchange of beneficial ownership data between law enforcement agencies and tax authorities of the partner countries; however he insisted that it must be done on a 'level playing field', and that Cayman has merely agreed to 'participate in the global discussion that will lead to the development of such a mechanism'.

 A Standard Without US Participation, he said,
'Is Not a Global Standard'.

Even when implemented, it is far from certain that all OECD and G-20 countries are going to adopt it. Although represented at the summit by secretary of state John Kerry, the US advised that it was not in a position to even sign the summit communique, which outlined the steps needed to combat corruption as agreed by attendees.

Cayman Islands’ financial services minister Wayne Panton criticized the hypocritical stance of the US in singling out overseas territories for a lack of transparency.

Referring to a 2008 comment by president Barrack Obama that a single address in the Cayman Islands “supposedly houses 12,000 corporations”, Panton pointed to the US state of Delaware where one address alone reportedly has 285,000 companies registered there.  

The Cayman Islands also announced that it will repeal its Confidential Relationships (Preservation) Law, commonly known as the ‘secrecy law’, by September 2016. In addition, the government has passed legislation that completely abolishes the use of bearer shares, which can be used to conceal the identities of beneficial owners. Bearer shares were immobilized in 2000.

Do You Have Undeclared Offshore Income?
 
 
All These Information Exchange Agreements
Making You Uncomfortable?
 
Want to Know if the OVDP Program is Right for You?
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
 
for a FREE Tax Consultation
at: www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888) 882-9243

Sources:
Cayman Compass
Cayman Islands Government

 

Read more at: Tax Times blog

UK lists 40 Countries That Agree to Automatically Exchange of Beneficial Ownership Information

May 31, 2016

The UK government has released a list of jurisdictions it says have committed to its initiative for automatic exchange of beneficial ownership information. The list includes the Cayman Islands, Bermuda and Jersey, but not Guernsey or the British Virgin Islands, though Afghanistan and Nigeria are on the list.
 
Since the unveiling of the new agreement at the IMF meeting in April 2016, more countries have committed to the initiative to share detailed data on beneficial ownership.

The following countries have committed to the initiative to automatically exchange information on beneficial ownership:
 

1 Afghanistan
2 Anguilla
3 Austria
4 Belgium
5 Bermuda
6 Bulgaria
7 Cayman Islands
8 Croatia
9 Cyprus
10 Czech Republic
11 Denmark
12 Estonia
13 Finland
14 France
15 Gibraltar
16 Germany
17 Greece
18 Hungary
19 Iceland
20 Ireland
21 Isle of Man
22 Italy
23 Jersey
24 Latvia
25 Lithuania
26 Luxembourg
27 Malta
28 Mexico
29 Montserrat
30 Netherlands
31 Nigeria
32 Poland
33 Portugal
34 Romania
35 Slovakia
36 Slovenia
37 Spain
38 Sweden
39 United Arab Emirates
40 United Kingdom

 
The U.S. is not one of the 40 countries on this list?

 

Do You Have Undeclared Income
From One of These Countries?
 
 
Is Your Name Being Handed Over to the IRS?
 
Want to Know if the OVDP Program is Right for You?
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
 
for a FREE Tax Consultation
at: www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888) 882-9243
 

 


Read more at: Tax Times blog

U.S. Citizen's Capital Gains Taxable Under U.S.-Israel Treaty According to US Tax Court

May 24, 2016

The Tax Court has concluded that a "pro se" taxpayer who was a U.S. citizen and permanent Israel resident was taxable on his capital gains.

Although the taxpayer argued that such gain was excluded from U.S. tax under one provision of the U.S.-Israel income tax treaty, it was nonetheless taxable under the treaty's “saving clause.” Cole, TC Summary Opinion 2016-22.

Article 15, paragraph 1, of the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on Income, U.S.-Israel, Nov. 20, 1975 provides that “[a] resident of one of the Contracting States shall be exempt from tax by the other Contracting State on gains from the sale, exchange, or other disposition of capital assets.”

The U.S.-Israel income tax treaty includes a “saving clause” Article 6, paragraph 3, of the treaty provides that “[n]otwithstanding any provisions of this Convention except paragraph (4), a Contracting State may tax its residents and its citizens as if this Convention had not come into effect.”

After moving to Israel in 2009, Elazar Cole, a U.S. citizen, became a permanent resident of Israel in 2010. As a result of moving to Israel, he qualified for a 10-year Israeli “tax holiday,” which exempted him from Israeli tax on non-Israeli-source capital gain income.

Mr. Cole purchased 3,000 shares of stock in Neogen Corporation (Neogen), a Michigan incorporated entity. In 2010, he sold this stock and realized $114,947 of long-term capital gain.

On his 2010 Form 1040, U.S. Individual Income Tax Return, Mr. Cole reported the $157,012 of proceeds from the sale of Neogen stock on Schedule D, Capital Gains and Losses. However, he did not include any of the proceeds in his taxable income. On audit, IRS determined a $13,212 deficiency and a $2,642 accuracy-related penalty under Code Sec. 6662(a).

The Tax Court held that Mr. Cole had to recognize the $114,947 long-term capital gain of attributable to his sale of Neogen stock. He wasn't entitled to exclude the proceeds from his sale of this stock from U.S. taxation under Article 15, paragraph 1, of the U.S.–Israel income tax treaty. The Court found that the proceeds were subject to U.S. federal income tax under the U.S.-Israel income tax treaty's saving clause.

The Court stated that the saving clause did not nullify the treaty; it only nullified the benefits provided by certain provisions to current citizens and certain former residents and citizens. The U.S.–Israel income tax treaty provided that certain of its Articles took precedence over the saving clause—but Article 15 wasn't among them.

In addition, the saving clause applied only to current citizens and certain former residents and citizens of a Contracting State who currently resided in the Other Contracting State.

Have a Tax Problem?  




 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 


 

Read more at: Tax Times blog

European Group Discloses The Role Of The US As A “Tax Haven” & The Implications For Europe

May 24, 2016

On February 23, 2016, we posted US The New Tax Haven? where we discussed that some international families are moving their assets out of traditional offshore jurisdictions and into trusts in certain states of the US.

We also discussed that some level of secrecy is still available in the US because Washington has not signed up to the OECD Common Reporting Standard (CRS) for international information exchange, preferring instead its own Foreign Account Tax Compliance Act (FATCA).

By resisting new Global Disclosure Standards,
the U.S. is creating a Hot New Market,
becoming the Go-To Place to
Stash Foreign Wealth.

 

Everyone from London lawyers to Swiss trust companies are getting in on the act, helping the world's rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.
 
Some advisors discuss what type of trust can avoid both FATCA and GATCA reporting, including
GATCA reporting if the US is treated as a Participating Jurisdiction and the assets do not even have to be located in the US. Since this structure requires a US-resident trustee, the trust could also be structured to avoid US taxation.

The Economist adds that America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money.
 
The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong. No one knows how much undeclared money is stashed offshore. Estimates range from a couple of trillion dollars to $30 trillion. What is clear is that America’s share is growing.  
  

Now The Greens-European Free Alliance (EFA) group, a small political group in the European Parliament, has commissioned a new report The Role of the US as a Tax Haven and the Implications for Europe which also describes why the U.S. is “becoming the biggest tax haven on the planet.”

The report claims that U.S. loopholes allow anonymous companies in certain states and that the U.S. has not joined the trend to implement the multilateral automatic exchange of information under the Common Reporting Standard (CRS), but instead, has implemented the Foreign Account Tax Compliance Act (FATCA).
 
The report the claims that: 
  1. The U.S. is becoming one of the biggest tax havens, precisely because its legislation has loopholes when it comes to knowing who owns and control companies. The U.S. is a major financial centre but the transparency of its legal framework is not consistent with the responsibility involved in being a major financial hub.
    • Indeed, an investigation in 2012 found that creating an anonymous shell company is easier in the U.S. than in the rest of the world and states like Wyoming, Delaware and Nevada are among the most likely to supply untraceable shell companies to foreign clients.
    • Incorporation of companies in the U.S. is governed by state law and requires the filing of a corporate governance document.

      • However, many states promoting the creation of corporations by non-residents do not require filing even basic ownership information.
      • Arkansas, Mississippi, Colorado, Missouri, Delaware, New York, Indiana, Ohio, Iowa, Oklahoma, Maryland, Pennsylvania, Michigan, and Virginia do not require to identify either shareholders or managers.
    • New measures announced by President Obama last week to increase financial transparency are not ambitious enough (and will – for some – require Congress’ approval) to close the current gaps in US laws, which allow bad actors to deliberately use U.S. companies to hide money laundering, tax evasion and other illicit financial activities. 
  2. In addition to these loopholes, the U.S. hasn’t fully committed to automatic exchange of tax information with other countries, according to the new international standards developed by the Organisation for Economic Cooperation and Development (OECD).
    •  Instead, the U.S. decided to sign a series of bilateral agreements with namely European countries but the exchange of tax information is not done through an equal partnership.
    • EU countries have to provide more tax information to the U.S. than this country is sending to Member States. This can create a strong incentive for those trying to hide from tax authorities to move their assets to the U.S., with less chance to be reported to EU authorities. 
  3. In 2015, the U.S. was ranked the third top jurisdiction of the Tax Justice Network's Financial Secrecy Index, which analyses the legal framework of jurisdictions in terms of banking secrecy, ownership registration of companies, trusts, foundations and partnerships, compliance with international anti-money laundering recommendations, etc.
    • According to the Index, the U.S. holds almost 20% of the global market share of financial services for non-residents. Foreign assets in the U.S. amounted to $16,745 billion in 2013, almost double than the U.K. (second highest). In 2014 foreign direct investment in the U.S. reached $2.900 billion with almost 60% coming from the European Union (EU) ($325 billion of these EU-originating investments corresponded to depositary institutions, finance and insurance).
  4. The U.S. will receive the maximum scope of information from the EU and from many other countries (pursuant to IGAs), but will only send limited information to most EU countries, and no information whatsoever to Austria, Bulgaria, Switzerland and many other countries that either signed a Model 2 IGA, Model 1 B or that did not manage to sign a IGA 1 A at all (like Argentina, which did sign the MCAA).
    • Even though the U.S. signed more than 100 IGAs, U.S. experts disagree on the validity of IGAs pursuant to U.S. domestic laws.
Need International Legal Advise? 

 

Contact the Tax Lawyers at
Marini & Associates, P.A.

for a FREE Consultation
at: www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888 882-9243).
 

 

    Read more at: Tax Times blog

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