Only one week after ushering-in FATCA on Canada Day, Canada’s government is warning the Eritrean consulate to stop harassing Eritrean-Canadians or risk closure of its consulate. Foreign Affairs Minister John Baird made the announcement today in Ottawa (be sure to watch the video as well):
John Baird warns Eritrean consulate over ‘diaspora tax’
Foreign Affairs Minister John Baird says he has sent a message to the Eritrean consulate to stop collecting a “diaspora tax” from Eritrean-Canadians here or he will order the African nation’s consulate closed.
In response to a question from a reporter in Toronto, Baird said the practice of requiring Eritrean-Canadians to pay a tax at the consulate is “unacceptable.”
“We share the deep concern that Eritrean-Canadians, and others, have for the work that has gone on at the consulate. We’ve repeatedly sent out strong signals that is unacceptable, it’s wrong and will not be tolerated,” Baird said.
“I gave instructions to my deputy minister several days ago to very clearly and unequivocally deliver a strong message that this activity must cease and desist, and if it doesn’t we will close the consulate,” Baird said.
Baird said the messages were sent in “recent days” but did not specify when a shutdown of the consulate might occur.
This is just the most recent action Baird has taken against Eritrean officials in Canada over the practice of requiring expatriates to pay what the UN has condemned as a worldwide “diaspora tax” on its nationals, valued at two per cent of their income. Last year, Baird expelled consul general Semere Ghebremariam O. Micael.
Eritreans here have complained that if they don’t pay the tax, their families back home will suffer consequences.
Fair enough to say that this is certainly one of the most egregiously hypocritical moves the Conservative government has ever made – and there have been far too many to count over the years. I would love to hear Mr. Baird explain to Canadians how it is acceptable for the United States to impose its infinitely more invasive extraterritorial tax laws in Canada but Eritrea’s paltry amateur-hour 2% shakedown warrants impending closure of its consulate? Could it be that Mr. Baird is in fact preparing a subsequent announcement that he will be ordering the immediate closure of the US Embassy as well? Should we give him the benefit of the doubt?
Unfortunately, it does not appear that commenting is possible with this article. No doubt this story will soon be reported in other outlets so we should all be ready to dig-in.
UPDATE: Just to be clear, in light of recent comments, whatever the relative differences in scope, scale or sophistication between the Eritrean and U.S. versions of citizenship-based taxation; both are repugnant, immoral and indefensible practices. Both countries should hang their heads in shame for even pretending that CBT can ever be justified. The diasporas of both countries should find plenty of common ground here, despite the taunting and ignorance we both have to put up with from so many of our “homelander” cousins.
@Petros, Seriously many “deemed US Persons” would be pleased if they had a choice of having a return professionally prepared and likely owing zero or doing a one sheet Eritrea 2% Style return that is truly DIY.
I think many would also be thrilled that getting or renewing a US Passport would be contingent on three years compliance history.
Otherwise what we have is a foreign country (USA) demanding people pay them or compliance jackals a healthy percentage of their income for a passport they likely do not need nor want.
Again, this is like the ex-spouse/friend that keeps insisting you love them and that you can not live without them.
Benjamin Fulford- July 7, 2014:
Some kind of major show-down is looming this month as new BRICS bank set to launch.
http://galacticconnection.com/benjamin-fulford-july-7-2014-kind-major-show-looming-month-new-brics-bank-set-launch/
@Anne Frank: I think the decision you refer to is United States of America v Harden in 1963.
http://uniset.ca/other/cs5/1963SCR366.html
it stated:
A foreign State cannot escape the application of the rule that in no circumstances will the courts directly or indirectly enforce the revenue laws of another country…”
The decision does not say if Harden was a Canadian citizen. However, it did state:
“This is not a troublesome or delicate inquiry when the question arises between private persons, but it takes on quite another face when it concerns the relations between the foreign State and its own citizens..”
I don’t know what the effective of the Tax Treaty is on that.
In Van denMark v Toronto Dominion, the IRS was attempting to seize assets of a Canadian citizen through his bank.
http://uniset.ca/other/cs6/68OR2d379.html
In that case, the High Court of Justice stated:
“One must sympathize with the position of the bank but that position is the result of its election to carry on business in more than one country and that cannot influence the application of Canadian law.”
The Charter was not in effect in 1963. It was in 1989, but it was not an issue in that case. However, in Ministry of National Revenue v Chua in 2000, the MNR was attempting to collect for IRS for a tax debt for a period in which she was not a Canadian citizen.
http://recueil.fja-cmf.gc.ca/eng/2001/2001fc27325.html
In that case, a judicial review found:
“First…Convention citizens have less rights than all other Canadian citizens. Second, Convention citizens are deprived of fundamental justice…The impugned law has a discriminatory purpose or effect.”
it also stated:
“This [Chua] case concerns discrimination between one group of Canadian citizens in the position of the applicant (Convention citizens) and all other “Canadian citizens…First, her human dignity is affected since Convention citizens have less rights than all other Canadian citizens. Second, Convention citizens are deprived of fundamental justice…Third, her property in Canada was put at risk through seizure by a foreign state…The effect of the provision on the applicant and Convention citizens is unjust. Section 15 of the Charter was infringed in that the applicant is a member of a disadvantaged group because of her previous status as a non-citizen. The impugned law has a discriminatory purpose or effect.
I don’t pretend to know how any of that will be viewed by the courts in our legal challenge, but I very much appreciate Tim sharing that information two years ago.
@George: I often feel like I am being stalked by an ex-spouse I hought I had an amicable divorce from four decades ago. Now, just as I have retired, the ex pops up and says “I lied to you. That divorce decree wasn’t final.I have unilaterally declared it to be invalid. I now demand you pay me support. I demand you tell me all about your finances since that divorce. I intend to stalk you for life.”
Making the situation worse is the fact my new spouse (whom I thought I was happily remarried to since the divorce) has sided with the ex-spouse. My new spouse has said my ex-spouse still owns me. My new spouse has said “I will let the ex-spouse rape you financially and rob you of your financial privacy because you were once married to him and he has bullied me to get you back.”
My new spouse has said the vows he made to me when I pledged my fidelity and allegiance to him meant nothing. He has simply rewritten them.
So far, I have not been able to get a restraining order to stop the harassment and stalking of the ex-spouse or to insist my 41 year spouse respect those vows. I’m working on it with the court challenge.
@Bereket
Considering your “insulting” remarks of your last post “I don’t want to diminish the complaints you have with the US Government but in practicality with the $97,600 FEIE (Foreign Earned Income Exclusion) majority of the people who oppose it are rich folks who just want to avoid paying taxes.”; I should comment. My wife has an income of $24,000 part of that funded by student loan (taxable because it is not considered income) – perhaps you consider her rich by YOUR standards, Considering that we have to pay bills, rent, feed and clothe our family, where do you think that we have the money to pay for someone to “do her taxes”. She pays Canadian taxes (as she should) but why the hell should she pay the United States ONE DIME of her money as you shouldn’t have to pay the Eritrean government one dime of your money.
Just because the Eritrean government chooses to resort to confirmed brutality (which is the only difference between the two situations) does not make this situation a “apples and oranges” situation. Both countries are applying their taxation laws extra-territorially. Both are committing extortion.
Let me give you a word of advice – calling IBS’rs idiots and fools (contained in your quotes) will not endear YOUR cause to us.
@Bereket and other commenters from Eritra
I think there may be a misunderstanding here. None of the comments by Isaac Brock posters are suggesting that:
1. The United States is a worse country than Eritrea
2. There are no problems in Eritrea
3. That the 2% Eritrea disapora tax is okay.
What the Isaac Brock posters ARE SAYING (and I completely agree) is:
On the narrow issue comparing how Eritrea taxes its disapora and how the United States taxes its disapora that the United States is far far worse.
Here are some (of many) of the reasons why the United States is worse than Eritrea in this narrow respect:
A. The Eritrea tax is limited to 2%. In fact the U.S. tax is often much higher.
B. The Eritrea 2% tax is simple to understand. Almost nobody can understand the complexity of U.S. tax rules applied to Americans abroad.
C. Any Eritrea can calculate the Eritrea tax without the aid of expensive professional help. Almost no American abroad can complete his or her own tax return without the aid of a professional (which is expensive).
D. The 2% Eritrea tax does not discourage certain kinds of investments and does NOT punish the whole universe of Canadian retirement planning products. The only things that Americans can invest in “risk free” are individual shares of stocks and interest. There are no investment restrictions on Eritreans in Canada.
D. The 2% Eritrean tax does not punish Eritreans who marry people who are not citizens of Eritrea. The U.S. tax rules impose (indirectly) significant tax penalties on Americans who do NOT marry American citizens.
E. The 2% Eritrean tax does not make “divorce” between an Eritirea and a non-Eritirean more more difficult. U.S. tax rules make it much harder to transfer property to a spouse whether incident to a marriage or a divorce.
F. The 2% Eritrean tax dose not punish Eritreans who use Canadian Controlled Private Corporations. The U.S. tax rules punish Americans who do use Canadian Controlled Private Coporations.
G. The 2% Eritrean tax does not punish Eritreans who invest in certain insurance policies with cash value. The U.S. tax rules punish Americans who buy any kind of life insurance that is NOT term.
H. The 2% Eritrean tax does not make the sale of a principal residence taxable. The U.S. rules are such that there are fewer incentives for Americans abroad to buy a house.
I. The 2% Eritrean tax does NOT require that Eritreans report financial information about spouses and business partners to the Eritran Government. The U.S. does require these things.
G. The 2% Eritrean tax dose not impose taxes on gifts make to family members. The U.S. tax rules do just that.
H. There is some evidence that Eritrea terrorizes some of its citizens abroad. The U.S. also terrorizes its citizens abroad.
And so on …
Conclusion: Nobody is saying that the United States is a better or worse country than Eritrea. But when it comes to the narrow issue of the comparison between how Eritrea taxes it disapora and how the United States taxes its disapora, the U.S. is far more inhumane and abusive.
On the narrow issue of the taxation of citizens abroad, as I have read and believe:
To compare Eritrea to the U.S. is gross gross insult to Eritrea. The U.S. is far more abusive. It’s a simple fact.
@USCitizenAbroad
Great points.
The Eritrean living in Canada also has the opportunity of reducing his tax by earning less in Canada. Does the Eritrean government want a piece of disability, unemployment or welfare benefits? A flat tax per head would be more equitable, but I don’t think Eritrea cares too much about that.
Something an *Eritrean* needs to comment on and verify:
1) Eritrean tax collection methods- are they ethical, legal, or worse… criminal?
2) Eritrean military conscription and human rights – is this above board and legitimate?
The US may have LESS system logic than Eritrea (damning in itself) but this shouldn’t give a free pass to the methods Eritrea employs if they aren’t ethical.
@USCitizenAbroad,
>G. The 2% Eritrean tax does not punish Eritreans who invest in certain insurance policies with cash value. The U.S. tax rules punish Americans who buy any kind of life insurance that is NOT term.
Can you explain this? I don’t know much about insurance. My wife has a policy in the UK that was to pay off a mortgage. It has a cash value, matures in 2018 and pays out on death. We had a professional opinion on this policy and it qualifies for tax deferral in the US. What kinds of policies are problematic?
@USCitizenAbroad,
I guess I should mention I know about the excise tax on foreign insurance premiums.
http://www.cba.ca/en/consumer-information/40-banking-basics/597-fatca-and-the-canada-us-intergovernmental-agreement-iga-information-for-clients-
http://www.fsitaxposts.com/2013/04/11/impact-fatca-non-u-s-insurance-companies/
@ Petros having a complicated Tax code is a separate issue.
That person you know might need a new accountant. I would love to see that tax return because it must be very complicated [Their Canadian taxes must have also cost a ton?]
@The_Animal Those “idiots” quotes were pertaining to those who deem me a member of the “Eritrean Opposition” and were just making personal attacks rather than addressing the issue at hand. Had nothing do with IBS’rs I already apologized beforehand to the regular readers.
On one hand you have a have set rules to follow with the IRS. The other is made up by a military dictatorship which abuses its power to torture, have arbitrary detentions, and places severe restrictions on freedom of expression.
If that plus confirmed brutality does not make it apples to oranges I don’t know what does?
@USCitizenAbroad
Having a more complicated Tax code does not make it “far far worse”.
The Eritrean tax code is a mystery even to Eritreans. Nothing is written down and no set of rules exist that we can follow. We don’t even have a constitution. The rules change from individual to individual and likely from year to year.
Just because they piggy back off Canadian Tax rules to calculate our taxes doesn’t make it appropriate to term them “amateur hour”.
I do not know how they deal with the following items and similar tax intricacies around the world:
– Gains on the sale of your principal residence
– Gains on the sale of a small business [Lifetime Capital Gain Expense of $800k?]
– Gains in a Canadian mutual fund held
– Scholarship funds
– RESP/ TFSA/ RRSP/- RDSP
– Lottery winnings
– Net Investment Income Tax
There is no DIY system in place. For them to calculate how much tax you owe as an individual we are required to send the embassy a copy of the notice of assessment and all supporting documents. No way of confirming how it is calculated at the Australian Embassy, US Embassy, and Swedish Embassy etc.
Note that the Eritrean government has never published a budget. Never released information over where funds we provide as citizens are spent. There is no accountability which is why this is Apples and Oranges.
Your statement that the US system is far more abusive is erroneous.
One key factor is if you decide to renounce your US citizenship [assumption you are also Canadian] you will still able to visit the US. You can still own land/business/etc.
Eritrean Canadians don’t have that option. If you don’t pay the Eritrean government you practically forfeit all belongings in Eritrea including land/business/inheritances etc. Forget about visiting the country, I don’t even think they will let your family members bury you in your motherland.
Anyway I have gone off topic. I primarily had issue with the terminology that Eritrea has an amateur-hour 2% shakedown and still think it should be corrected.
I don’t know if this has been posted by anyone else, but this post was published as an article in Tesfa News.
http://www.tesfanews.net/stunning-hypocrisy-canada-threatens-closure-of-eritrean-consulate-over-diaspora-tax/
Thanks, Blaze. Tesfa News is described as “a Premier Eritrean News and Views Website”.
@Bereket
In response to your detailed explanation of the true nature of Eritrea’s extraterritorial taxation system I have made a slight change to the text.
@Blaze
Thanks for the tip. Interesting how the Conservative government’s hypocrisy may be interpreted any number of ways, by any number of aggrieved parties. In the end, though, it’s still the same Conservative hypocrisy – there’s plenty of it to go around.
@Calgary411: The Eritrean Ambassador to the UN is Tesfay. Does anyone know if the similar name has any relationship t Tesfa News?
http://www.un.org/News/Press/docs/2014/bio4580.doc.htm
Mr. Tesfay was previously Eritrean Ambassador to Canada and to the United States.
Perhaps Mr. Tesfay should bring forward a resolution at the United Nations to condemn the United States for their practices. Both are deplorable. However, a retired Eritrean-Canadians retired professional couple living in my condo building have had no issues from Eritrea.
They certainly are at no risk of having their bank records turned over to a foreign government.
@Bereket
Thanks for your response. Again, I am simply comparing the tax systems and not the countries themselves. Obviously a country is more than it’s tax system. One point you make is:
Okay, that is frustrating. But Americans abroad are forced to calculate taxes in a system that you don’t understand either, where penalties can be arbitrarily assessed, and live in fear of making mistakes in a system that they don’t understand. I expect many American abroad would be happy to just let the IRS calculate their taxes.
You say further down:
U.S. Senators Reed and Schumer (the dynamic duo) are attempting to pass the ExPatriot Act which would prohibit certain former Americans from entering the U.S.
Furthermore, many Americans are subject to confiscatory Exit taxes if they renounce.
What you are saying is that Eritrea as a country/government is worse than America as a country/government. Possibly true.
But, the U.S. tax system is far more abusive to its disapora than is the Eritrea system.
I don’t understand why you can’t separate the tax system from the country as a whole.
http://www.cbc.ca/asithappens/episode/2014/07/11/john-baird-probably-misinformed-says-eritrean-official-after-canadian-foreign-minister-threatens-to/
@Sid
The plot thickens. Maybe the Eritrean and Canadian governments can have a public lying contest and their respective diasporas get to jointly pick the winner.
I have also added this update to the post:
UPDATE: Just to be clear, in light of recent comments, whatever the relative differences in scope, scale or sophistication between the Eritrean and U.S. versions of citizenship-based taxation; both are repugnant, immoral and indefensible practices. Both countries should hang their heads in shame for even pretending that CBT can ever be justified. The diasporas of both countries should find plenty of common ground here, despite the taunting and ignorance we both have to put up with from so many of our “homelander” cousins.
Bereket. Let me ask you one thing. Set rules does not make the diaspora tax morally right. When should we protest the injustice whether it be your country’s 2% tax or whether it be the USA’s draconian FATCA? Injustice in either case should be resisted. All this is in both cases is EXTORTION; plain and simple.
Whereas my wife has been here for 14 years, has not set foot in her country of birth in that time and hasn’t used her passport in any way shape or form (she is actually applying for Canadian citizenship and wants nothing to do with her former country of birth). Our children were born here, raised here and educated here. What exactly is our share to the United States government. As far as I know we have not used any US resources in her being educated (she has pursued further education through the Canadian education system correcting a woeful education system that due to poverty when she was down in the States only allowed her to get her GED. She is pursuing university through Canadian education and taxes. Any attempt by the United States to tax her is erroneous no matter how many laws they put in place. My wife is Canadian in heart and mind and no matter what – that is what I will consider her as. Anybody who attempts to take “her money” that she has rightfully earned in Canada without any influence on the United States infrastructure will be resisted by any and all means possible.
You, sir, seem to think that your situation is exceptional and everyone else “has rules to follow”. It just so happens that those rules cross international borders and the only rational response to that kind of sovereignty violation is a prompt and decisive “F-YOU!”
Amazing:
This is a real and serious discussion comparing the “Land of the Free” with the nation of Eritrea. Furthermore, there are strong arguments that the U.S. is more tyrannical (at least on the tax side).
What would the Homelanders think?
How did you like your freedom now?
I agree with The Animal regarding how he likes the freedom for his *US Person* wife, resident in Canada for fourteen years, having never stepped into the US in that time and for their children born, raised, educated only in Canada:
Bereket,
How does your “homeland” Eritrea view citizenship of and citizenship-based taxation compliance for Eritrean-Canadian children born in Canada to just one or to two Eritrean citizenship parent(s)?
Leaving aside the real significance of any terror tactics to Eritreans abroad or to their families behind in Eritrea that must be condemned by all, why do you believe that extra-territorial US citizenship-based taxation law is any more just for *US Person* Canadians than Eritrean citizenship-based taxation law for *Eritrean Person* Canadians?
Did you come to Canada fully knowing that you were to always be subject to Eritrean citizenship-based taxation laws? Most *US Person* Canadians honestly did NOT know that they were subject to US citizenship-based taxation law. Both situations are extra-territorial.
Many here believe that ALL Canadians (so-called *Eritrean Person* and *US Person* included) should have the same rights under the Canadian Charter of Rights and Freedoms.
Is the way you would want to be described having taken citizenship in Canada “an Eritrean citizen who happens to reside in Canada”? That is how the Harper government describes any *US Person* Canadian citizen or permanent resident of Canada.
Where to put this — here where Baird and hypocrisy are (or should that be “is” as ‘Baird/the Harper government and hypocrisy’ come in one package) being discussed…
Anything the US can do, I can do better — I can do anything better than them — no you can’t; yes I can; no you can’t; yes I can…