Showing posts from March, 2014

Rogue Traders

Monday night I attended the launch of the Singaporean branch of the International Business Structuring Association.  I decided to join as the opportunity to learn and network seems very attractive.  In the networking session after the formal presentation, I was chatting with 2 guys who strongly recommended that I watch Rogue Trader.

Fortunately I managed to watch the movie on Tuesday night.  Rogue Trader is a great movie not just because it is set in 1990's Singapore but because it reveals how a culture of greed causes otherwise smart people to naively succumb to the promise of quick wealth made in dishonest ways.  I firmly believe that there is no honest way to quick wealth.  There is no honest way for American persons in particular, to not pay any taxes.  Anytime someone comes my way with a "get rich quick" scheme I run away as quickly as I can.

Unfortunately, yet another "offshore" investment scheme was exposed this week.  It caught my attention for 2 reasons.…

The UK "Recovery"

So the much anticipated budget has come and gone. For me, the only bit that stood out was pension reform. A politically astute move - but we expect nothing less from the present Chancellor. The real billion pound question however, is whether this makes economic sense?

Perusing the Money Marketing site, they reported that Insurers’ share prices dropped sharply on the news with specialist providers Just Retirement and Partnership falling by around 50 per cent in value in just two hours.  The Guardian reports Institute of Fiscal Studies director Paul Johnson said there are some genuine uncertainties about the effect of the policy.

He said: ”Most importantly it will likely make annuities even more expensive for those who do want to buy them. The market will become much thinner and there will be greater levels of adverse selection – only those expecting to live a long time will want to buy an annuity thereby driving up the price. There is a market failure here. There will be losers fro…

Stand off in the Ukraine

In the thick of U.S. / Singaporean tax season, Accountants like myself can be forgiven for not paying attention to the daily news. The only story that I cannot seem to ignore is the situation in Ukraine. On the surface, I can understand the concern about the potentially disastrous economic consequences -

1. The EU is dependant on Russian gas supplies. The map below says it all.

2. Russia holds an incredible amount of US paper. In fact yesterday, it was reported that over US$100 billion in Treasurys had been sold or simply reallocated (which for political reasons is the same thing) from the Fed's custody accounts. US Tax Singapore

3. China has come out in support of Russia and we know how much US debt they hold.

So is this a case of MADness?  As in Mutually Assured (Economic?) Destruction!  Some observers seem pretty sure that it is but I have my doubts.  After doing undergraduate and then post graduate economics courses, I quickly realized that theory is quite different from…

The United States and Eritrea

Eritrea? Where is that? Eritrea is a small, former Italian colony in North East Africa that emerged from its long war of independence in 1993 only to plunge once again into military conflict, first with Yemen and then, more devastatingly, with its old adversary, Ethiopia.

Today, a fragile peace prevails and Eritrea faces the gigantic tasks of rebuilding its infrastructure and of developing its economy after more than 30 years of fighting. USA Tax Singapore

Interestingly, Eritrea has something in common with the United States. These are the only 2 countries that tax the overseas income of its non resident citizens regardless of how long they stay away.

In 2013, the Government of Canada deported the head of the Eritrean Consulate, Semere Ghebremariam O. Micael, for using the consulate as a base for the collection of a 2% Diaspora tax.  Today some Canadians with US passports are calling on their government to offer the same resistance to the US.

Good luck with that idea....

The Scariest U.S. Tax Form EVER!!!!

I don't think I can count the number of times an American expat has explained their situation and then asked the question - "what's the chance of the IRS finding out?" Everyone wants to know the chance of getting audited.

There's a great article in Forbes dated March 3rd. called "Scariest Tax Form? Skip It, And IRS Can Audit Forever". The author makes 3 points -

Firstly, the IRS normally gets three years to audit.

Secondly, if you mess up with offshore account reporting, the IRS gets six years to audit.

Thirdly, is that having a company that holds a foreign account is even more sensitive. We’re talking about controlled foreign corporations, also called CFCs. When a U.S. shareholder holds more than 50 percent of the vote or value of a foreign corporation, the company is a controlled foreign corporation or CFC. A U.S. shareholder is a U.S. person who owns 10 percent or more of the foreign corporation’s total voting power.

Having a foreign corporation,…

Don't Forget those FBARs (aka FinCEN 114)

FBAR stands for Foreign Bank Account Report. It must be filed by "U.S. persons" if the person has an interest in, or signatory authority over a foreign financial account, and the aggregate value of those accounts exceeds $10,000 at any time during the calendar year. An FBAR is authorized pursuant to Title 31 of the Bank Secrecy Act, which is not part of the Internal Revenue Code. The FBAR is due on June 30th. Since it is not filed under the Internal Revenue Code it must be RECEIVED by the IRS on or before June 30th.

There are both civil and criminal penalties for failure to file. The criminal tax penalties can result in a fine of not more than $ 250,000, or five years in prison, or both. 31 U.S.C. 5322(a).   In addition to criminal penalties there are civil penalties - particularly a three tier system for these civil FBAR penalties. For willful violations occurring after October 22, 2004, the maximum civil penalty is the greater of $100,000, or 50 percent of the ba…