According to a press release from earlier this month, Eritreans in the United Kingdom have filed a criminal complaint with police against Asmara’s ambassador in London over the ongoing efforts to force them to pay the diaspora tax:
Members of the Eritrean community in the UK have laid criminal charges against the Eritrean Ambassador to London. This is in line with the written instructions given by the Foreign and Commonwealth Office [see below]. These required members of the Eritrean community to “report any use of coercion of other illicit means to collect the tax to the police.”
Acting on this advice, members of the Eritrean community went to the West End central police station last night and filed a criminal complaint. This illegal tax collection is a clear violation of the assurance given by the Ambassador to the Foreign Office on 25th October 2013 that the tax collection had ended.
The UK supported to a resolution in the UN Security Council in 2011, which outlawed the tax collection. Despite this the illicit collection has continued and this incident is no isolated case. In February 2014 we provided the government with secretly filmed video evidence of the tax being extracted in the London embassy.
This follows similar action three years ago by Eritreans in Stockholm, which led to suggestions in the Riksdag to pass laws banning the collection of the diaspora tax in Sweden. Two years ago, Ottawa also expelled the Eritrean Consul-General in Toronto for similar reasons.
However, in a newly-released document on the handling of asylum applications by Eritrean illegal emigrants, the Home Office did its best to downplay the persecution, following the example of the U.S. State Department before them:
1.3.6 Although use of the money raised through the Diaspora tax is subject to United Nations Security Resolutions (see UNSCRs in the country information section), for states to levy a tax on its citizens overseas is not in itself persecutory, providing it is not at a punitive level or levied in a discriminatory way.
1.3.7 Therefore, provided the request is made without threats of violence, fraud and other illicit means, payment of the levy is not considered to be persecutory.
1.3.8 Consequently, the guidance outlined in MO above should no longer be followed and failure of a person to comply with a reasonable request to pay Diaspora tax would not, in itself, give rise to a well-founded fear of persecution or serious harm.
1.3.9 Those who are unable or unwilling to pay the tax would not be issued with a travel document. However, this would not place them at risk of mistreatment or harm that amounts to persecution.
Update, 26 March: The Home Office, in claiming that Eritreans no longer faced persecution, relied heavily on the Danish Immigration Service’ 2014 Fact-Finding Mission Report:
The Danish FFM Report also indicates that a person is able to return to Eritrea legally provided they pay the Diaspora tax and sign a “letter of apology” at an Eritrean embassy. This includes those who evaded or deserted National Service. Once this has been done, a passport application can be made (see Penalties for Leaving Illegally and Treatment on Return and Diaspora Tax in the country information section).
However, two Danish officials who participated in that fact-finding mission disagreed so strongly with the contents of the report that they resigned in protest, according to a report last week by Caperi:
The report triggered an internal rift within Denmark’s Immigration Service, because the two key officials disagreed with the head of the fact finding mission, Jakob Dam Glynstrup over the report’s findings and conclusion.
According to Danish daily newspaper Berlingske, senior consultant Jens Weise Olsen and special consultant Jan Olsen have been released from their jobs, in what is formally being called a voluntary resignation.
They are resigning from the Danish Immigration Service after a long negotiation between the service and the trade union Dansk Magisterforening, which is representing the officials.
It would appear that someone in the Home Office wants to toe the line and not take a position against CBT by the USA and FATCA. Looks suspicious since only the US and Eritera tax based on CBT.
Even though this looks a bit suspicious, why not sue the US Ambassador in the UK? There is no lack of US persons in GB I would imagine. If you don’t try you never win. Republicans Abroad could take the lead in this move.
It does seem to me that FAQs 4 and 5 in the OVDP show both the unreasonableness of the US’s “request” to pay US tax and that the US tax is levied at a “punitive” level.
It could actually be about Eritrea. The current UK government will do anything to get the immigration figures down and if it says that the Eritreans are not being persecuted, then it doesn’t have to admit them as asylum seekers.
There are a number of issues with bringing up a U.K. case. First, they have just said regarding Eritrea that CBT is fine by them unless the tax is discriminatory, setting a bad precedent: U.S. laws are all carefully lawyered so that they look neutral on the surface but whack Americans abroad hard due to their very different circumstances). The Eritrean example would only be an argument for a U.K. lawsuit against FATCA if the Eritreans won.
Second, there is an election coming up, so everything is up in the air right now.
Third, although there are Americans abroad in the U.K. with deep pockets, many of them are going to be extremely complacent. It is often financially advantageous for wealthier Americans to claim that the U.S. is their tax home and where they plan to return, making them a “non-dom” . Every non-dom who has lived in the U.K. for less than part of 17 out of the past 20 tax years can set up a U.S. trust, a very handy mechanism for getting around British inheritance tax laws. I went to a meeting for HNWis late in 2013 and they all seemed to be non-doms and extremely complacent. Another big group of Americans in the U.K. is soldiers and defense contractors and they don’t pay U.K. tax either under the SOFA agreement. As such, a U.K. lawsuit would involve launching a challenge funded by a much smaller group of mainly middle-class U.S. persons abroad than exists in Canada.
@Publius: What exasperates me about your comment–and I believe and appreciate every word of it–is the great lengths people go to, and the amount of time and energy they expend, into maximizing their financial advantages instead of living life. I’m talking about the Non-domicile 17-year issue (which I wasn’t aware of though I’d lived in UK), among the numerous dancing acts people go through to retain the advantages of various tax loopholes in different jurisdictions. This also includes expats I know who hop, skip and jump around the world so that they don’t spend 183 days in any jurisdiction and thus avoid taxes. And the amount of work I could be doing–but refuse to waste my precious time on earth with–to tuck my money into various specialized investments and accounts to take advantage of this and that annuity or deferred this-or-that classification, all to take advantage of complex US tax provisions. Is that what life is about? Planning every move one makes based on taxes? Hell, I never even took the tuition deduction for my kids because it meant filing two more forms each year!
My whole, entire, single-minded purpose in opposing CBT and FATCA is to make my life easier, to make my life simpler. It isn’t about money! And so it infuriates me to think that there are asses like those you describe in UK, for whom CBT can be put to advantage, who would either undermine, or sit idly by, while the rest of us try to end the suffering.
Barbara: Agreed!! But really, pity those people, wealthy yet obsessed with their money. That’s not freedom, is it? I too dream of a world where rules are simple, understandable, reasonable and followed by most.
The infuriating thing is that the people that FATCA was aimed at have long since moved on to other mechanisms of fiscal optimization. The HNWIs that Publius and you mention have been warned by their advisers of FATCA from day 1, and took all necessary measures (I spoke to a private banker who told me he had been talking to his clients for the past 4 years — I myself only learned of FATCA when a bank threw me out in June 2014). Who’s left to be hit? Little people.
On a somewhat-related note, another thing coming out of the UK that I’m worried about:
https://www.supremecourt.uk/decided-cases/docs/UKSC_2013_0150_Judgment.pdf
Bassically, the appellant was born in another country, emigrated from it & became a UK citizen, and had no further contact with his birth country. The court decided that since he’d never “checked in” with his birth country to confirm what had happened to his nationality or whether he wanted to keep it or not (at the time he became a UK citizen, his birth country would usually strip citizenship from people who naturalised elsewhere, even though that wasn’t strictly what their statute said they should do), then the UK could treat him as continuing to be a citizen of that country.
@Publius: The current UK government will do anything to get the immigration figures down and if it says that the Eritreans are not being persecuted, then it doesn’t have to admit them as asylum seekers. — yeah, seems like the right guess. Over in Denmark, after they tightened up their own rules, the number of Eritrean asylum applicants dropped from 500 in July 2014 to three in January 2015
http://www.thelocal.dk/20150304/danish-asylum-applications-plunge-after-rule-changes
@Barbara, Fred,
Lower income people don’t seem to understand some basic facts about tax. They file their taxes and may well have tax bills that are negative or very small. Higher income people have to fork over hundreds of thousands of dollars to the IRS. They will likely be in their peak earning years trying to save as much as they can to do the things they want to do later in life. They may have busted their butt to deliver that stuff the boss wanted. Working long hours, damaged their health and neglected their families. They get a big bonus for a job well done but it can be taxed at 40% at the margin. Think about that? 40% of your work week going to the government? You work Mon and Tues for Obama?
Now you guys might see a big number like somebody earning $300k, $400k etc but the people earning this didn’t get it for free. They likely did some pretty hard stuff. If it was easy the workers could have been replaced by somebody who you could pay a lot less. They could have been studying for decades to understand complex things earning much less to get into the position they are in now.
They have to be obsessed about the money because if they don’t the government as a load of ways to try and take a bunch of it from you.
Add to this the current climate were if you are successful you are evil coming from the very top.
The US is keeping some really great company here.
@Eric
So if Gwen and Ginny were launching their lawsuit in the UK, their case would be undermined by legislation that basically states that they should have cleared their obligations to the US at some point after their arrival in UK? That warning is generally made by the country a person’s leaving and doesn’t require another country to do their dirty work for them. I see problems when one country’s laws conflict with another’s, or when there are human rights abuses. Is the UK that willing to give up its sovereignty through its citizens?
@Neil: I get you. Very well. I am an MD in the EU. I am in the 53% bracket of income tax, and about 40% of my total income. I studied for a long time then worked hard a long time (residency) for not much. I make enough now. I pay my share, I’m absolutely fine (well, almost, I do think I pay too much) with that, I get a lot back too, including peace of mind. FATCA is a big pain because I’m minding my own business, paying high taxes elsewhere, and here I have to file US taxes (not owing any), worry about my banking, and give private financial information to the Financial Crimes Enforcement Network. I hate it. I hate CBT. It makes me nauseous.
I was thinking of really high net worth individuals; not those who earn “only” $400K a year. They are, I am convinced, a step ahead of FATCA. Good for them. FATCA is now hitting me. Tough for me. I have nothing against rich people. I am amused, though, by the fact that the wealthier you get, the more obsessed with money you are likely to be. This holds for me too, by the way, and the reason, as you stated, is that one has more to loose, and is taxed much more. It is as if money did not bring the freedom, the relief, that one imagines it would. But we digress.
@Neill: You imply that my comment is about class envy. It isn’t at all. I don’t want to get into a class argument, as though wealthy people somehow “busted their butts” more than anyone else and thus have more to lose. I chose to bust my butt as an illustrator and weaver, working long hours and risking my health breathing in unhealthy paint and dye fumes for much of my life and knowingly reaped less money than a banker. My choice. No regret nor envy. Yet the tax stakes for me are greater than for the guy who’s going to lose 40% of his so-called “bonus” to the tax man. The US FBAR rules can wipe me out entirely.
Anyway, it isn’t all wealthy people I was referring to. I know some very successful people here who live a good and generous life. I was simply talking about those people who–beyond working for a living–see money as the be-all-and-end-all of existence, whether banker or weaver (but it’s almost always bankers). I fork over a larger percentage of my income to the taxmen in two countries than your hypothetical “high earner”, and prefer not to waste precious moments of my life to save a few bucks. Whereas your hypothetical “high earner” (at least some I’ve met) will stay up all hours and abandon his home to discover new ways to trick the taxman out of a few thousand bucks…because that’s all he seems to live for. To consider leaving one’s home at 17 years minus a day because of a tax loophole is, in my mind, either sick or sad, depending on my mood.
At the same time it is a huge joke on the US Treasury. The whole purpose of FATCA is to catch clever tax dodgers…yet they will always find a way with clever advisors and creative accounting to keep dodging, and even have a head start, the way Publius put it, leaving the rest of us to lie down for the FATCA bulldozer.
Barbara: brilliant, as always.
This is not related to this thread but I wanted to get it out in open ASAP.
http://www.jubileeusa.org/get-active/get-involved/act-now-to-stop-tax-evasion.html
On March 26, 2015, the U.S. Senate will vote on an amendment to repeal key U.S. anti-corruption policy. The Foreign Account Tax Compliance Act (FATCA) is an important U.S. initiative to prevent corruption, a root cause of global poverty. Call your senators TODAY and urge them to vote NO on any amendment that repeals FATCA. – See more at: http://www.jubileeusa.org/get-active/get-involved/act-now-to-stop-tax-evasion.html#sthash.qu0nZRbj.dpuf
Just fired off emails to my senators, Tim (one D, one R). What time are they expected to vote on this, do you know?
That’s of course urging them to vote “YES” to FATCA repeal!
Don’t know. Sometime after 12 Noon Eastern.
For those who are wondering, here’s the text of the amendment:
https://www.congress.gov/congressional-record/2015/03/25/senate-section/article/s1901-1/
@ Barbara
“My whole, entire, single-minded purpose in opposing CBT and FATCA is to make my life easier, to make my life simpler. It isn’t about money!”
Exactly how I feel. I’ve got a chequing account (to pay the bills) and a savings account (which is quickly approaching zero interest) and that’s it. I don’t want to have to use algorithms to figure out what I’ve got, where it is and how much its yielding. (I don’t know how to do algorithms anyway). I want to be able to keep doing my own Canadian taxes until the severe dwindles set in and after that I want it to be easy for whoever has to do them. The last time I was at the bank they tried to talk me into putting my savings into something with “higher yield”. I said, “No thanks. All I want is for you to keep my savings safe.” And I said that with the full knowledge of what it means to be “Cyprused” and understanding that the Canadian government has everything in place to allow “bail-ins”.
So for me it is about making my life as simple as possible but there’s also one more very important thing — PRIVACY. That means a whole lot to me too. I don’t want my government and most definitely not a foreign government watching over every detail of my finances. How can a person live a normal life when they have to worry if an innocent transfer or withdrawal might look suspicious to someone being paid to watch for something illicit or worse it might set off blinking lights on a computer all loaded up with algorithms?
My apologies for my outbursts. I didn’t mean to turn this into an argument about class. Just having a tantrum about the fact that these laws–not just FATCA but many laws–often miss the intended targets and hit the little guy hardest. We all share a common cause here, and I don’t want any animosity with Neill or anyone else. I need a drink.
Barbara: We all disagree here from time to time and we all have our frustration levels that sometimes are exceeded. I so appreciate your exceptionally well-expressed thoughts. Please keep ’em coming!
@Barbara,
>hit the little guy hardest
This is the basic assumption that the little guy is by the very nature of being little, good. The guy with wealth is by definition evil.
I paid something like a $40k balance penalty in OVDP. I paid something like $20k in PFIC taxation. I didn’t want to pay this money. I think every penny of it was wrong. All of this from multiple ISA not protected by the tax treaty.
I could just write a cheque but my wife worked hard for that money.
Sweden’s response:
“Det kommer att bli en naturlig ordning I världen framover.”
“It will come about to be a natural order in the world from here on out”
Leif Jakobsson, tax committee leader, Social Democrats, Sweden
https://translate.google.se/translate?sl=sv&tl=en&js=y&prev=_t&hl=sv&ie=UTF-8&u=http%3A%2F%2Fwww.svt.se%2Fnyheter%2Fregionalt%2Fsverige-blir-en-avdelning-at-irs&edit-text=
German ARD television is broadcasting a Weltspiegel program on the Eritrea diaspora tax dated 29 March 2015. It is described at this link:
http://www.daserste.de/information/politik-weltgeschehen/weltspiegel/sendung/swr/eritrea-fluechtlinge-100.html
It should be available at this link in the coming hours:
http://www.daserste.de/information/politik-weltgeschehen/weltspiegel/videos/index.html
https://translate.google.se/translate?sl=de&tl=en&js=y&prev=_t&hl=sv&ie=UTF-8&u=http%3A%2F%2Fwww.daserste.de%2Finformation%2Fpolitik-weltgeschehen%2Fweltspiegel%2Fsendung%2Fswr%2Feritrea-fluechtlinge-100.html&edit-text=
Looks like they don\t get a passport if they don\t pay. Sounds familiar.