Monthly Archives: October 2013

12 Years a Slave Movie – Interesting Canadian #Offshore Connection

 

If you haven’t seen the movie 12 years a slave I suggest you do so. In particular the last 45 minutes is extremely thought provoking. Incredibly the story takes place about 160 years ago. During this time period Canada was at the forefront of helping U.S. slaves escape tyranny. The good news is that the world as come a long way. That said, it is a reminder that “freedom” is a delicate thing. As Ronald Reagan would say:

Freedom is never more than one generation away from extinction.

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Peter Dunn proves #americansabroad renouncing

U.S. Treasury Spokesman Robert Stack AKA “Stack of lies” claims it’s a my that Americans abroad are renouncing  U.S. citizenship because of FATCA. Peter Dunn and We are not a myth prove him wrong.

 

 

As #Americansabroad know – “Not all passports are the same”

The above tweet references an interesting post from Simon Black.

As the great Frederic Bastiat wrote, “When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.”

A Plea To Congress — Adopt Residence Based Taxation!

Excellent post – problems well documented.

Café Moi

I am an American expat holding both American and Canadian citizenships. I live in Canada where I pay federal and provincial income taxes. America also requires me to file federal income taxes with them, the only country in the world with this requirement on its citizens, other than Eritrea, which America actually has condemned for this practice.

What does this mean? We need to consider a few other features, but for most of us, it simply means double the paperwork. It does for me, for now.

I get a FEIE (foreign earned income exclusion) of $97,000. I make less than that, so I get to write off all of my salary on my American tax return. Wow, you think. I wish I could do that. Remember, I live abroad and I pay taxes to Canada and New Brunswick. Your American rates are far lower. Don’t be happy for me.

Canada…

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U.S. corporate mergers end “US personhood” and #IRS discount – increase value

Updated April 28, 2014 – with comment from the Isaac Brock Society:

 

Not quite on topic but I thought it would be interesting to note nonetheless.

Pfizer announced this morning that they had made an indicative proposal to AstraZeneca in January to combine the two businesses. The proposal was rejected by AstraZeneca but Pfizer is seeking to reengage. As part of the proposal, Pfizer was going to become a UK domiciled company.

The US has amongst the highest corporate tax rates in the world and taxes the difference between the local tax rate and the US tax rate if profits are repatriated from overseas. Pfizer’s annual report says they hold 10-30% of their cash and cash equivalents and short-term investments in US tax jurisdictions. This means that 70-90% of the $32 billion in cash and cash equivalents and short-term investments as at 31 December 2013 are held outside the US. If the business combination with AstraZenaca is successful (or a different combination with another overseas business), that’s $21-27 billion that will never be repatriated to the US.

The process of redomiciling overseas is referred to as a corporate inversion and used to be very rare. However, increasingly, US companies are doing so to get access to profits that are otherwise “trapped” overseas. Predictably, the US government enacted legislation to “punish” the executives of companies that pursued a corporate inversion. Their stock options would be subject to an additional tax upon vesting. Equally predictably, this legislation was buried in a jobs creation act.

It seems, however, that the additional tax on vested options hasn’t proven to be a disincentive. In fact, it might be an incentive. In the case of Actavis, the board allowed certain executives’ options to vest early and then reloaded them with new options. As the Bloomberg article points out, the executives of Actavis got the best of both worlds (http://www.bloomberg.com/news/2013-12-19/actavis-managers-reap-115-million-after-buying-warner-chilcott.html).

While corporate and individual taxation are not entwined, perhaps the news that one of the US’ largest pharma companies is seeking to redomicile will prompt much needed action on both fronts.

 

 

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The #FATCA IGA aka #OVDP for countries

 

The above tweet references a comment at the Isaac Brock Society:

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