Jeremy Cape on CNBC on the crackdown on tax secrecy
16 June 2009
Jeremy Cape was interviewed on
CNBC on the US / UK crackdown on tax secrecy. When
asked whether the net was closing in on tax avoidance with Obama
tightening the rules on US citizens living abroad, he replied:
"Yes, in the context of Obama's changes it is important to note
that US citizens get taxed on their worldwide income, wherever they
are resident, which is unique as very few other countries do
this. At Denton Wilde Sapte we have a huge
network in the Middle East and if we send UK citizens to our Dubai
office, they do not pay UK income tax, whereas if we send US
citizens to our Dubai office, they pay US income tax. There are
intermediaries in the UK who act for US citizens, and they can
either be qualified or non-qualified intermediaries. Qualified
intermediaries enter into a deal with the IRS to provide some
information to them, but non-qualified intermediaries do not. Obama
is changing this, non-qualified intermediaries are being told, and
I quote directly from the White House press release, "the
assumption will be that these institutions are facilitating tax
evasion - not facilitating tax avoidance but facilitating tax
evasion, and this could just be an intermediary in the UK
as a US citizen to whom they are paying US source income."
When asked whether US citizens pay a lot of tax as US citizens
in London, Jeremy replied: "Yes, US citizens working in London have
been struck badly in in recent years, although they have been
helped by the strong dollar. We are now seeing this across the
world, the UK is clamping down on tax avoidance and tax evasion.
The changes will probably make it difficult for US citizens in the
UK because intermediaries may see it as too much hassle to have
them as clients. We may see other countries moving towards the US
model and taxing citizens on their worldwide income, but I think it
would be bad news for the international movement of labour. When
asked about US citizens with dual nationality, Jeremy replied: "In
light of the recent changes, the US government has recently imposed
exit charges on its citizens with dual nationality who don't want
to pay US tax, but it comes at a price."
To see Jeremy's section of the show on CNBC
please click here.