In the 2010 the US treasury announced the introduction of the Foreign Account Tax Compliance Act (FATCA). This is a measure designed to eliminate perceived tax evasion by US citizens through the use of offshore accounts and came into force in July 2014.
Should you be concerned?
The fact is FATCA has turned out to be a watershed moment for international information exchange policy. Many jurisdictions have entered into agreements with the US and announced their intentions to develop their own FATCA style agreements. In May 2013 the UK released a draft model agreement for the exchange of information with the Crown Dependencies and Overseas Territories. The agreement enables HMRC to gather information on UK persons investing through those jurisdictions and in addition the G8 countries announced they would commit to establish an automatic exchange of information between tax authorities as a new global standard and that it would help develop a multilateral model which will make it easier for governments to find and punch tax evaders.
There is a whole new emphasis now by governments around the world on preventing tax evasion and on punishing evaders. The idea that someone can hold their assets undisclosed in an offshore company or trust without paying appropriate taxes has become an anthema. Banks and other financial institutions are falling over themselves to ensure that there is total transparency within the accounts or allowed them to remain open only on condition that all information is passed on to the relevant tax authorities.
What about the past? Is there a solution? Clearly it is impossible to change the past but moving forward in this new era of tax transparency the answer has got to be that tax mitigation is the name of the game, evasion and avoidance have had their day and many have unfortunately already suffered the consequences of the former. After all there is no point in putting in place expensive and opaque offshore arrangements when there is no chance of these being able to provide anonymity.
There is a new world order to consider. Whether it is Switzerland, Channel islands, Singapore, Cayman or Gibraltar there is no chance of being able to hide investments whether these are held in your personal name or within a trust arrangement or offshore company. Disclosure is going to happen and taxes will have to be paid so why not invest some time in discussing a proper mitigation strategy with an expert financial partner. We can demonstrate proven cost effective strategies using mainstream products that are available now and can help shelter your pension and investment assets and minimise your tax liabilities moving forward.
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