Everybody hates FATCA and all its siblings — UK FATCA and
the multilateral pilot for automatic exchange of information.
Everybody, that is, except the US politicians who have convinced
under-informed voters it is the solution to their budget woes, and
professional services firms experiencing a significant increase in
US citizens living abroad have loudly expressed their discomfort
as many are being kicked out from their banks or handed significant
bills and additional fees to pay for the additional compliance they
Most other Governments don't like it either, as the
additional resources required to comply are likely to exceed any
potential benefits – even under a reciprocal agreement under
which the US would provide similar information to them.
Financial institutions are also unhappy. To comply, they
have to undertake significant investment in systems for its
implementation in a timeframe that looks incredibly short, even
after the repeated delays that have occurred (as not even the IRS
has been able to have their systems ready), and they continue to
see their sales and front office departments reduced while
compliance departments are the only ones that continue to
consistently grow across the industry.
I have not found one person in the financial industry who
believes the tax to be recuperated by the IRS will be anywhere
close to the much larger cost of compliance.
So not being a lawyer, accountant, or tax advisor, what do I
like about FATCA?
FATCA and its siblings will be the most powerful public
relations weapons Cayman has ever had. FATCA will cut through
corporations and other entities, and the financial institutions
will report the balance and income of the accounts per beneficial
owner. The myth that Cayman is still a place where the
wealthy hide their money from the tax authorities will fall apart
in a demonstrable way like it never had before.
Those who have predicted over and over again the end of Cayman
as secrecy falls and refused to recognize there is no secrecy and
the immense majority of business in Cayman is not dependent at all
on any ability to hide the beneficial owners, will have to face
reality when Cayman continues to flourish with FATCA fully
FATCA has the potential to be the turning point in our long
fight against the outdated Hollywood-based picture that has annoyed
us for so long.
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Maltese tax law provides for rules which grant beneficiaries referred to as ‘Highly Qualified Persons' to be taxed at a reduced rate of tax of 15% on their employment income, provided certain conditions are satisfied.
Non-U.S. individuals making direct investments in the United States face a bewildering U.S. tax regime.
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