Showing posts from February, 2014

Looming Threat to LNG Exporters like Trinidad

Stumbled across an interesting chart in the McKinsey Quarterly. Liquefied natural gas (LNG) exports from North America are now among the world’s low-cost gas producers, thanks to recent advances in recovering shale gas. They now compete mostly with projects in Africa, Australia, and Russia. The article didn't mention Trinidad (given it's a relatively small player now) but I'm sure that it competes with Trinidad's LNG exports too. Fatca Banks Singapore

Anyway, the exhibit below shows how the required breakeven costs of global LNG projects could shift in three North American export scenarios. The Canadian and US governments have so far permitted the building of six LNG export terminals, with capacity equivalent to 25 percent of current global LNG demand (moderate scenario). An additional 20 terminals, which could process the equivalent of some 75 percent of global demand, have also been proposed. Up to 70 percent of them could actually be built (high scenario).


Sociopaths and Suicides

Two weekends ago I was in London and had the opportunity to catchup with a very good friend of mine.  He works with a well-known American internet company and inevitably the conversation got around to office politics.  As anyone who works in large listed companies knows, the office politics could be soul destroying.
It’s hard to ignore the recent spate of banker suicides.  Counting New York, London and Hong Kong, I think the most recent count is about 12.  Ignoring the suspicious circumstances behind one or two of the suicides in particular, they have spurred discussions on stress in the workplace.  I watched Wall Street 1 and 2 on the flight back to Singapore and it made me think that it’s not about the money.  Money is simply a way of keeping score.  It’s about power.  Positions of power are attractive to sociopaths.  Martha Stout, psychologist and clinical instructor in psychiatry at Harvard Medical School, tells us in her book The Sociopath Next Door that one out of every 25 huma…

Avoiding the sting of PFIC classification

For most, a PFIC is not necessarily a good thing.  
PFICs are subject to complicated and strict tax guidelines by the Internal Revenue Service (IRS), which covers treatment of these investments in Sections 1291 through 1297 of the income tax code. Both the PFIC and the shareholder must keep accurate records of all transactions, including share basis, dividends and any undistributed income earned by the company.  The strict guidelines are set up to discourage ownership of PFICs by U.S. investors. 
For some US persons with passive overseas investments, there are other structures to consider.  One option is establishing a controlled foreign corporation (CFC), using form 5471 as usual and treating earnings as subpart F income.  Now by treating CFC's earnings as subpart F, they may not be subject to the PFIC regime pursuant to the overlap rule.

For more details, have a look at the private letter ruling (PLR) which I quote from below - Index Number: 1297.00-00, 957.00-00…

“Singapore has already taken its first steps towards tax transparency, but it needs to do more,”

Interesting reading on Singapore from the Swissinfo website.  I guess the Swiss are looking for company and are seeking to pull Singapore into their spotlight.

Having taken over the mantle of the world’s fastest growing wealth management magnet from Switzerland, Singapore should now take centre stage in bringing the industry out of the shadows, according to an Asian private banking expert.
Philip Marcovici, who has advised governments such as Liechtenstein on addressing the crackdown on tax evasion, spoke to after recent revelations from the International Consortium of Investigative Journalists. The ICIJ has accused Swiss banks of helping relatives of Chinese leaders set up opaque financial structures in far flung tax havens.

The ICIJ claims, using data obtained from entities based in Singapore and the British Virgin Islands, do not prove criminal activities. But the findings cannot…

Americans are giving up their Passports and Green Cards

In 2012 Facebook cofounder Eduardo Saverin gave up his US citizenship (known as Expatriation)  and now resides here in Singapore.  Since then, more attention has been paid to the Federal Register of Americans who give up their citizenship.  In 2013, about 3,000 Americans handed back their U.S. passports or green cards to end their citizenship or long-term residency.  This is well in excess of the previous high of 1,781 in 2011. Fatca Tax Singapore

The media tells us that the main reason for the spike in Expatriation is the increasing burden of tax compliance and the fear of large penalties for non-compliance.  Added to this, we now have FATCA or the Foreign Account TaxCompliance Act, which forces financial institutions worldwide to report the bank accounts and certain financial interests of U.S. tax payers to the Internal Revenue Service.

Seems like all Americans living abroad need to find a good tax accountant.  I am told that there are many charlatans about so caveat emptor...

Thinking About Scotland

I love Scotland.  It is one of the most beautiful countries on Earth as far as I am concerned.  The time I spent at the University of Aberdeen in the North East of Scotland is among the most memorable times of my life thus far.

Later this year, Scots have a tough choice to make.  I think they have a marvellous opportunity before them.  When I think of the wealthiest (in terms of per capita wealth) nations on earth, they fall into one of three categories -

1. They have oil.  Think Qatar.
2. They have a small population. Think Switzerland
3. They have a great regulatory framework.  Think Singapore.

Scotland potentially has all three.  So maybe they should ditch the Pound Sterling and go it alone?  All they need is to establish a great regulatory framework like Singapore.

But then, as I think more deeply, I remember other countries which have the elements for being great but have failed by any measure.  Think of small, oil-rich Trinidad and Tobago.  A potential wonder cursed by incompet…

Renouncing US Citizenship if the Individual is a Minor

“Jus soli” (the law of the soil) is a rule of common law followed by the United States, under which the place of a person’s birth determines his citizenship. In addition to common law, this principle is embodied in the 14th Amendment to the US Constitution which states, in part, that: “All persons born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” Citizenship is also determined under various US citizenship and nationality statutes, such as the Immigration and Nationality Act (INA). The renunciation of one’s citizenship is regarded as a personal elective right that cannot be exercised by another person. Parents or guardians cannot renounce or relinquish the US citizenship of a child who acquired his US citizenship at birth. This means that only the individual child himself can renounce his US citizenship, but this is not so easy to do in the case of children. The US Consular offices and Embassies…

I. R. S. loses again...

In summary...."three independent tax-return preparers contend that the IRS’s new regulations exceed the agency’s authority under the statute. 

The precise question is whether the IRS’s statutory authority to “regulate the practice of representatives of persons before the Department of the Treasury” encompasses authority to regulate tax-return preparers. 

The District Court ruled against the IRS, relying on the text, history, structure, and context of the statute. 

We agree with the District Court that the IRS’s statutory authority under Section 330 cannot be stretched so broadly as to encompass authority to regulate tax-return preparers. 

We therefore affirm the judgment of the District Court. "

The full judgement is below....


United States Court of Appeals
Argued September 24, 2013 Decided February 11, 2014
No. 13-50…

Annoying the US Government

In May 2010, a new government was voted in by the people of Trinidad and Tobago.

Almost immediately, the government set about overturning the foreign policy stance of the previous administration.  Most visibly, they have time and time again, turned their back on a traditional ally - the United States.

The previous administration was such a close ally of the US, that President Obama himself visited.  This time around, the government has -
1. Repeatedly denied extradition requests from the US for wanted financial criminals hiding in Trinidad (who happen to be financiers of the ruling political party).
2. Strengthened their relationship with China.
3. Strengthened their relationship with Venezuela.
4. Dismantled the national security apparatus of the twin island republic leading to an apparent increase in drug trafficking.

All eyes on national elections due in 2015.

Venezuela, Trinidad & Tobago to join for naval exer…

“It is my impression that lots of the money that left Switzerland went to Singapore”

Seeking Bank Secrecy in Asia By LYNNLEY BROWNING
Published: September 22, 2010For centuries, Switzerland has been the sanctuary of choice for wealthy people seeking to hide their fortunes and evade taxes. Now, amid a growing crackdown on Swiss private banking, the rich are flocking to Singapore and Hong Kong, which still offer some of the world’s most secret accounts.

But there is a twist in this shift to the East: Many of the banks growing in these low-tax oases have Swiss pedigrees. And their clients are not only Asia’s growing number of millionaires but also wealthy Americans and Europeans who, lawyers say, have been spooked by mounting scrutiny from the tax authorities in their own countries.  From UBS, which operates a training center in Singapore, to smaller private banks like Julius Baer, Swiss banks and those with Swiss-based operations are tripping over themselves to expand in the region. US Expat Singapore “We have seen a massive uptick in hiring hundreds of private bankers” in…

Emerging Market Volatility and Fed Tapering

Tyler Durden calls it yet again...

In the years since the Financial Crisis, major Central Banks have been engaged in incredible easing programs that included the injection of massive amounts of liquidity into the financial system. That liquidity had to go somewhere, and in a search for yield, much of it went indiscriminately into Local Markets.
The inexorable conclusion is that Emerging Market growth rates are a function of Developed Market central bank liquidity measures and monetary policy, and that all Emerging Markets are, to one degree or another, Greece-like in their creation of unsustainable growth rates on the back of 20 years of The Great Moderation (as Bernanke referred to the decline in macroeconomic volatility from accommodative monetary policy) and the last 4 years of ZIRP.
Today, though, this new Narrative is everywhere. It pervades both the popular media and the academic "media", such as the prominent Jackson Hole paper by Helene Rey of the London Business Sch…

Top Ten Tips to Help You Choose a Tax Preparer

Many people hire a professional when it’s time to file their tax return. If you pay someone to prepare your federal income tax return, the IRS urges you to choose that person wisely. Even if you don’t prepare your own return, you’re still legally responsible for what is on it.

Here are ten tips to keep in mind when choosing a tax preparer:

1. Check the preparer’s qualifications.  All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. In addition to making sure they have a PTIN, ask the preparer if they belong to a professional organization and attend continuing education classes. 

2. Check the preparer’s history.  Check with the Better Business Bureau to see if the preparer has a questionable history. Check for disciplinary actions and for the status of their licenses. For certified public accountants, check with the state board of accountancy. For attorneys, check with the state bar association. For enrolled agents, check with the IRS Office of Enrol…

The Importance of Critical Thinking

Met up with a Financial Planner last night.  A good guy and we had a great conversation.  He spoke quite confidently about the ongoing 'economic recovery'.  As I listened, my mind couldn't help but think of US stocks being hammered on Monday, with benchmark indicators falling...heightening concerns about the economy before Friday's monthly jobs report.

I know the economy is such a fragile, intangible entity and although we tend to look down on China and Argentina for playing with their government numbers, we should remember that Western nations do it too.  Just ask shadowstats.

I think all the way back to my time in High school in the 1980s and being introduced to Economics for the first time.  Now I look at how Economics PhD's dominate the Fed.  The Federal Reserve is full of PhDs.  An article in the Harvard Business Review noted that the Federal Reserve System is almost certainly the nation’s largest employer of PhD economists, with more than 200 at the Federal…

Investigation of Caribbean Property Investment Scheme...a cautionary tale

I first mentioned this scheme in 2013 -

But the truth is that I was aware of it since 2011 when I did some contract work for a UK based Tour Operator.  The rumours were brought to my attention in 2011 but I dismissed them as unsubstantiated gossip put online by someone (who has since been revealed to be a disgruntled former accountant) who worked for the project.  Then in 2012, I had the opportunity to visit the resort for a few days.  Then I saw the operation for myself and spoke with people "in the know" in St Vincent, Barbados and St Lucia. 

I was warned that I should keep what I was being told to myself.  So I sat back and relaxed, knowing that it …