This post appeared on the RenounceUScitizenship blog.
Uncle Sam & #FATCA! http://t.co/viiXssNtod – Everybody and everything is now subject to US tax – Make the world pay for "Homelanders"
— U.S. Citizen Abroad (@USCitizenAbroad) October 8, 2013
Cat is coming out of bag, the can of worms is open, and all sorts of people are waking up when they get FATCAed. http://t.co/1TyYrsdtfS
— U.S. Citizen Abroad (@USCitizenAbroad) October 9, 2013
I came across the article referenced in the above tweet. It is a truly incredible story. You are strongly encouraged to read this article. This guy is just trying to “mind his own business” (no pun intended). All of a sudden he learns that he might somehow be subject to U.S. jurisdiction. He has no idea why or how and he can’t get good answers. It’s obvious that his only solution is to sever every possible tie to the U.S. and to any U.S. person.
What does he do? He says:
I am proud to be a large corporation operating all over the world and having subsidiaries worldwide and having my functions spread across the globe. Uncle Sam calls me a multi-National Enterprise (MNE). I am based out of India and have central functions here and in Panama, Gibraltar, Mauritius, Luxembourg, Singapore and Dubai. My products are sold in the present day global village including Europe, the Americas, Middle East and Africa.
I have really worked hard over several decades to establish myself with a global footprint and my products serves the need of old and young irrespective of nationalities and ethnicities and people from every background and every facets of life. Uncle Sam calls me a global giant with a local approach.
I must admit that even giants get scared at times and things escaped unnoticed when it comes to keeping every jurisdictional legislation compliant either voluntarily or statutorily. I have zero tolerance zone for legislative non-compliance. Uncle Sam very well knows that and he took the liberty to come over last night and tell me that US legislators (Internal Revenue Services “IRS”) have already given a time bomb in my hands and the clock is ticking and bringing me close to their time schedule to be compliant with what they call Foreign Account Tax Compliance Act “FATCA”. I laughed at Uncle Sam and asked him why am I covered under it, I have minimal operations in the US and my group entity in the US shall take care of the requirements in the Americas. I am a smart MNE and I know that the IRS is primarily interested in the information about the US persons who are liable to US taxes based on their US source of Income or proceeds which could be from the sale of equity or debt instruments issued by US persons. I educated Uncle SAM and told him that according to my research this legislation is enacted to seek information primarily from a foreign financial institution (FFI) outside of the US about the US account holders and members. I knew that if this information is not provided to the IRS then the FFI are required to withhold tax at the rate of 30% on those withhold able payments that are from the sources in the United States.
What does the U.S. believe he is?
Uncle SAM acknowledged my intellect and re-named me as a NFEE (Non-Financial Foreign Institution) for FATCA purposes which is applicable 1 July 2014 onwards. He told that it’s not only the non US financial institutions but non US NFEE as well who may be subject to FATCA compliance. I recalled my conversation with Paresh & Ashish who are FATCA consultants and good friends of mine and they mentioned that publicly listed companies like me are excepted from the FATCA regime. I quickly rang Paresh to confirm what Uncle SAM just told me.
First and foremost how I am affected? Peter told me that I should not be deceived with the commonly used meaning of Financial Institutions in our daily usage. Being an MNE my business operations were diverse enough that some of the group entities may be covered under the definition of FFI under FATCA.
Peter you are confusing me now, am I a MNE, NFEE or FFI? I myself looked into regulation 1.1471-5(e) of FATCA and learnt that a holding company or a treasury centre that is part of the same expanded affiliated group that includes a depository institution, custodial, insurance or investment entity or is formed in connection with or availed of by a collective investment vehicle like private equity fund, exchange traded fund or similar investment vehicle established with an investment strategy of investing, reinvesting or trading in financial assets may be covered. FATCA classifies entities based on their activities and business purposes and their treatment depends accordingly.
Peter, I know what you mean now and I want you to undertake this due diligence for me to analyse my legal entity group structure and classify these entities for FATCA, based on their activity and operations. Identify for me if my central functions would be classified as pension funds, investment vehicles, treasury centres and other obliged FATCA defined financial services. Each entity that has potential of being classified as FFI needs to be assessed in detail. Once you are done with this primary classification then we shall further sub- classify each entities obligation under the rules and define the gap between the current state of affairs and future compliance state.
Peter sent out a questionnaire to me which he told me to roll out to my group entities and based on the responses he would then compile a list of non-US legal entities or vehicles differentiating between the operating and non-operating entities. For each non-operating entity we would then determine if they have any US source investments or activity either directly or indirectly through intermediary. Each operating entity needs to be classified as NFEEs or FFIs. Based on this entity classification we would be in a better position to apply the appropriate set of rules of FATCA for NFEE and FFIs.
What should he do?
Obviously he should cut ties with any U.S. person/entity/customer or anything else. The article ends with a reminder to “Green Card Holders” in India:
Thanks for the heads up Uncle SAM! An exercise for you as well. I know that you are a US Green card holder and recently moved back to India. The interest income you are earning on your half a million dollars deposits in India sourced from an insurance company post your accident in the US is subject to US taxes .To become tax compliant with the IRS, it would require you to make appropriate declarations. Good luck with your due diligence!
What does it all mean? It means that every person and entity in the world should sever any and all ties with any U.S. entity. This whole thing is getting more and more hilarious. Let’s get real. We have a situation where the world’s biggest debtor is attempting to dictate how the rest of the world behaves.
The time has come …
For the world to create an alternative financial system. Leave the U.S. to play with its FBARs.
FATCA puts the US in an adversarial position with the entire world. Add on the threat of global economic collapse at the hands of Congress, the seed of mistrust has been planted.
I figure that this has become the national song for the US of A homelanders as of now.
https://www.youtube.com/watch?v=aXKisDZvB0Y
“All We Like Sheep” <— Handel hit it absolutely right.
Check out this article from China ……. especially the 3rd paragraph from the bottom …..
Commentary: U.S. fiscal failure warrants a de-Americanized world
English.news.cn 2013-10-13 09:57:25 [[www.xinhuanet.com] RSS] [[www.xinhuanet.com] Feedback] [[www.xinhuanet.com] Print] [[www.xinhuanet.com] Copy URL] [[www.xinhuanet.com] More] [[www.xinhuanet.com]] [[www.xinhuanet.com]]
By Xinhua writer Liu Chang
BEIJING, Oct. 13 (Xinhua) — As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.
Emerging from the bloodshed of the Second World War as the world’s most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.
With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.
Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.
Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.
Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.
As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.
Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations’ tremendous dollar assets in jeopardy and the international community highly agonized.
Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.
To that end, several corner stones should be laid to underpin a de-Americanized world.
For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.
Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.
Apart from that, the world’s financial system also has to embrace some substantial reforms.
The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that they could better reflect the transformations of the global economic and political landscape.
What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.
Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.
And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse.
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