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Showing posts from November, 2015

Finance Monthly - November 2015 edition

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Are the days of banker-client secrecy over?

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Willfulness

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So much of the discussion around the IRS amnesty initiatives lies in the concept of "Willfulness". While nothing here should be construed as legal advice, here are some key points to consider -


31 U.S.C. § 5321 (a)(5)(C)imposes upon any person who "willfully violat[es]" or "willfully caus[es] any violation of ... section 5314," a penalty equal to the greater of $100,000 or 50% of the balance in the account(s) at the time of the violation. 31 U.S.C. §§ 5321 (a)(5)(C) and (D).
Willfulness is “a voluntary, intentional violation of a known legal duty.” United States v. Sturman,951 F.2d 1466 (6th Cir. 1991), quoting Cheek v. United States, 111 S. Ct. 604, 610 (1991); IRM 4.26. 16.4.5.3(1) 
A finding of willfulness under the Bank Secrecy Act must be supported by evidence of willfulness. IRM 4.26.16.4.5.3(2)
Willfulness is shown by the person's knowledge of the reporting requirements and the person's conscious choice not to comply with the requirements. In …

After Switzerland, is Singapore next?

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The Clock is Ticking for CRS (AEOI) Implementation

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There is so much buzz about CRS and BEPs now that the rest of the world has adapted and adopted the United States' much maligned FATCA initiative.  I'm enjoying going to seminar after seminar as I come to terms with how this impacts our firm and our clients.




CRS is essentially FATCA on steroids - which is why the U.S. has not signed up to it.



So far, nearly 100 countries have signed up and the first group of early adopters (mainly the Europeans) go live in 2017.  So in 2017 they will report 2016 accounts.


This essentially  means that CRS goes live in January 2016.  While some jurisdictions continue to be in denial (I'm not naming names), others like the Cayman Islands are staying ahead of the curve. It recently (October 2015) updated regulations to exclude certain Cayman incorporated entities from the CRS net.  Have a look at the language on page 25 - http://www.gov.ky/portal/pls/portal/docs/1/12254315.PDF

I suspect that other jurisdictions will soon follow.  Practition…

Nonresident Aliens Can Be Subject to the U.S. Estate Tax - But Usually Ignore It

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Here's an article from CNBC's website dated Nov 4th 2015 - 


Aleksandar Stojanov | Getty Images

They say the only certain things in life are death and taxes, but a large number of non-U.S. citizens may have found a way to avoid at least one of those.

Under U.S. tax law, the estates of foreign holders of U.S. assets, such as stocks, real estate, or valuables, are required to pay estate taxes on those assets after the death of the owner. There's even a handy piece of IRS paperwork — form 706-NA — to help calculate the tax.

But one veteran Swiss banker tells CNBC that this rule is widely ignored around the world, and the U.S. government has no way to know how much money it is owed under its own laws.

The result, the banker said, is that the U.S. Treasury is likely being deprived of billions of dollars each year.

The banker, who is wary of the controversy over American tax cheats in Switzerland and asked not to be identified publicly, said the battle over the potentially vast …

Structuring using St Vincent entities

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Among the up and coming offshore jurisdictions is St. Vincent and the Grenadines (SVG). At this point in time, the SVG IBC is not required to make public filings or disclosures of its directors, shareholders/members or beneficial owners. The SVG IBC is useful for asset protection, tax planning, or succession planning. SVG also offers international trusts, hybrid companies (limited by guarantee but also having a share capital), and mutual companies (limited solely by guarantee without a share capital).

In the international tax space, it is not unusual to hear buzzwords such as transparency and information exchange. Buzz words aside, the days of “hidden” or “secret” accounts are now over. Having said that, tax planning is still, and always will be, a useful exercise.

Below is an extract from SVG legislation -

EXEMPTIONS FROM TAXES AND DUTIES – International Business Companies Act 2007
Section 180.

(1) Notwithstanding any provisions of the Income Tax Act an international business comp…