Comments on: Common ground for Obama and Putin is offshore http://blogs.reuters.com/great-debate/2013/09/02/common-ground-for-obama-and-putin-is-offshore/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: SteveKlaus http://blogs.reuters.com/great-debate/2013/09/02/common-ground-for-obama-and-putin-is-offshore/#comment-75429 Tue, 03 Sep 2013 06:01:32 +0000 http://blogs.reuters.com/great-debate/?p=23603#comment-75429 On close inspection what appears to be potential common ground is, unfortunately, comparing apples with oranges.

Russian is interested in having disclosure of overseas accounts for Russian citizens LIVING in Russia, but as it is (like the rest of the world) a resident based tax system, it has no tax interest in learning of accounts of Russians living OUTSIDE Russia on money earned outside of Russia, invested outside of Russia and spent outside of Russia.

What is so problematic with FATCA is that it applies to US Citizens (more broadly US Persons) living in Russia who have local accounts in Russia, as the US wants not only disclosure but to tax that money (not earned in, invested in or spent in the USA). This requires that all Russian banks prove effectively and certify that Russian account holders are not owned (directly or beneficially) by a US Person living in RUSSIA! – not just a US Citizen living in the USA who has a Russian (i.e. foreign account). FATCA can only work and be consistent with the rest of the world IF the US moves from its current citizenship based taxation model to the norm of residency based taxation.

IF I were to advise Putin, I would not agree with FATCA unless it is limited to identifying account holders of a Russian bank account who are living in the USA (where such person, as in Russia presumably would be required to disclose such ‘overseas’ account). FATCA in its current form is over broad, infringes the sovereign rights of other countries and requires the affirmative discrimination of lawful dual citizens and residents living in other countries who happen to fall into the definition of US Person.

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