The Organization for Economic Co-Operation and Development or OECD is comprised of 35 member nations including the United States, almost all of Europe, Canada and Mexico, Australia, Turkey, Korea and Japan have ordered banks to implement new procedures. Letters are going out around the world from global banks warning customers of new international tax compliance procedures beginning in 2017. The purpose of these measures is to establish beneficial ownership interest (who, specifically and personally controls the account) as well as the account owner’s national residence for tax purposes. World governments are making it much more difficult or individuals and entities to avoid paying taxes through international business, trust and banking strategies.
A prominent bank in the United Arab Emirates or UAE, HSBC, sent a letter to clients last week explaining the OECD regulations and concluding:
“Therefore, from the beginning of 2017 onwards, we will be contacting some of our customers to collect information related to their tax status.”
The UAE is important from a banking perspective as many of the world’s wealthiest individuals have accounts in the UAE as well as Switzerland, Hong Kong and the US. The UAE is one of the leading banking destinations for private wealth in the Middle East.
Many US Expatriates have found it difficult to open or maintain an offshore bank account due to new regulations. For most US Expats, the tax laws provide a significant income that is free of taxation. While an expatriate is still required to file a tax return with the IRS, most are not affected by taxation. However, many are exposed to the FBAR compliance and reporting requirements and the failure to simply disclose these accounts can generate substantial financial liabilities with the IRS. US Expats must come into compliance with FBAR reporting and disclose all offshore accounts going forward to avoid penalties and the potential for criminal prosecution.
The world is cracking down on those who attempt to avoid paying taxes. If you have offshore investment or bank accounts you have probably received letters from those banks warning customers of new international tax compliance procedures and information disclosures. Allen Barron is uniquely positioned to advise those with undisclosed offshore income, assets and accounts. We invite you to contact us for a free consultation at 866-631-3470. Ask about the important protections of the attorney-client privilege as well as our comprehensive tax and accounting services.