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JPA Tax Club Dublin 16.06.2016 The role of the U.S. as a tax haven

JPA Tax Club Dublin 16.06.2016 The role of the U.S. as a tax haven. Mag. iur. Natascha Branz bn@fiebich.com Tel.: +43 316 324453-16. Contents. Global transparency initiatives Actions of the European Union U.S. as a major financial centre U.S. as a tax haven? Evaluation reports

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JPA Tax Club Dublin 16.06.2016 The role of the U.S. as a tax haven

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  1. JPA Tax Club Dublin 16.06.2016 The role of the U.S. as a tax haven Mag. iur. Natascha Branzbn@fiebich.comTel.: +43 316 324453-16

  2. Contents • Global transparency initiatives • Actions of the European Union • U.S. as a major financial centre • U.S. as a tax haven? • Evaluation reports • Investigations • Main issues of U.S. • Anonymous companies • No automatic exchange of bank account information • U.S. Announcement of new measures to improve financial transparency • Recommendations to support global transparency

  3. Global transparency initiatives • Combating financial crimes • Tax evasion • Money laundering • Corruption • Registration of beneficial ownership for companies • Automatic exchange of bank account information between administrations

  4. Action of the EU • 4th anti-money laundering Directive 2015/849 • OECD´s common reporting standard (CRS) for automatic exchange of financial account information (AEOI) • EU is participating • Annual exchange about all residents • Not included: ownership of fix assets (houses, yachts, gold, art) • Identification of beneficial owners • U.S. no participation in the CRS

  5. U.S. as a major financial centre picture: www.economist.com / James Fryer 20% of the global market share of financial service for non-residents USD appr. 17 billion foreign assets (2013) USD 2.900 billion foreign direct investment (2014)

  6. U.S. as a tax haven? • Investigation 2012 (Findley, Nielson and Sharman, www.griffith.edu.au) “…obtaining an anonymous shell company is therefore easier in the U.S. than in the rest of the world…” “Wyoming, Delaware and Nevada are among the worst in being he most likely to supply untraceable shell companies […] to foreign clients.” • Tax Justice Network´s Financial Secrecy Index 2015 • U.S. 3rd top jurisdiction • IMF Analysis 2015 as follow up of the FATF report 2006 • U.S. authorities cannot obtain beneficial ownership information of corporations and trusts in an adequate, accurate, timely fashion

  7. Main issues of U.S. • Availability of anonymous companies • Company registration is regulated by 50 states´ law • In 14 states companies may be created identifying neither shareholders nor managers • Federal level: Employer Identification Number (EIN) • Neither Global nor reciprocal automatic exchange of bank account information • Refused to join the trend for multilateral automatic exchange of information • U.S. domestic law: Foreign Account Tax Compliance Act (FATCA) • 30% withholding tax in case of noncompliance

  8. U.S. new measures On May 5th, 2016 the U.S. announced 3 new measures to improve its financial transparency: • Customer Due Diligence Final Rule • Adding new requirements on financial institutions to collect and verify beneficial owners information • Legislative proposal on beneficial ownership • Foreign-owned, single-member liability companies (LLCs) should obtain EIN • But these measures “(…) are not ambitious enough (…) to close the current gaps in US laws, which allow bad actors to deliberately use U.S. companies to hide money laundering, tax evasion and other illicit financial activities (…).” 

  9. Recommendations I According a study commissioned by the Greens/EFA Group in the European Parliament, the EU should promote that all countries: • Establish central public registries of beneficial ownership for all types of legal persons and legal arrangements • Commit to global automatic exchange of information pursuant to the OECD´s CRS • Publish aggregate information on the financial assets held by non-residents

  10. Recommendations II In order to encourage the level playing field in terms of automatic exchange of information, the EU could: • Include the U.S. on their upcoming European blacklist of tax havens (expected for summer) • Establish a withholding tax scheme, on all EU-sourced payments against non-compliant financial institutions

  11. Sources • Study „The roleofthe U.S. as a taxhaven – Implicationsfor Europe“ commissionedbythe Greens/EFA Group in the European Parliament: http://www.greens-efa.eu/fileadmin/dam/Documents/TAXE_committee/ The_US_as_a_tax_haven_Implications_for_Europe_11_May_FINAL.pdf • Online sources: http://www.greens-efa.eu/de/the-role-of-the-united-states-as-a-tax-haven-15525.html http://www.bloomberg.com/news/articles/2016-01-27/the-world-s-favorite-new-tax-haven-is-the-united-states http://www.economist.com/news/international/21693219-having-launched-and-led-battle-against-offshore-tax-evasion-america-now-part

  12. Thank you for your attention!

  13. This presentation was created solely for training purposes. We take no responsibility for any action done or missed out of this presentation.The explanations given are naturally of a general kind and can only give a survey over the legal situation and knowledge at that point of time.This is not meant to replace a professional consulting.

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