Praetorian Trust

Crisis Countries Need Anti-Tax Evasion Measures

Last week it was reported that Eduardo Saverin, co-founder of Facebook, was renouncing his U.S. citizenship ahead of the company’s IPO.

But Jim Rogers, chairman of Rogers Holdings, who is a U.S. citizen and moved to Singapore in 2007, said Saverin renounced his citizenship a few months ago:

“The press seemed to say he did it to avoid [taxes], he has to pay taxes. He had to pay huge taxes, hundreds of millions of dollars to give up his citizenship and if it [Facebook] hadn’t gone public or if something had gone wrong with the IPO, he would have been in a real bind.

When you give up your American citizenship, it’s not fair as far as i’m concerned, but the rules are that you have to pay everything, you have to pay taxes on everything you own and then you can leave. I mean no other country in the world does that, we’ve got our own Berlin Wall, it’s very expensive to leave, to give up your citizenship. Iran, North Korea and Cuba, and some countries it’s impossible, very expensive to give up your citizenship.”

Source, Read more: http://www.businessinsider.com/jim-rogers-eduardo-saverin-renounces-us-citizenship-2012-5#ixzz1uvqjIe00

An interesting story came out on Saturday in the LA Times about savvy frequent flyers who purchased American Airlines’ storied unlimited lifetime first-class AAirpasses back when they were first launched in the 80?s. Not only did these AAirpasses, which started at about $250,000 (you could add a companion for another cool $150,000) and eventually went up to $3 million, include airfare on any route in first classwhere there was an available seat, but they even included taxes and fees, and you would rack up AAdvantage miles. Well, that was during the airline’s heyday. Since it’s been in financial straits in recent years, American has formed a crack team of investigators hoping to uncover AAirpass fraud and revoke these privileges since they cost the airline millions of dollars a year. This morning I talked about it with MSNBC host Craig Melvin, which you can view here.

The abridged version is that two men named Jacques Vroom (seriously, the name could only be better if we were talking about a high speed auto chase) and Steve Rothstein took aadvantage (ha) of their passes to the extreme for years- they were known to get off to Europe several times a week…with companions (sometimes just strangers they happened to meet). Initially this wasn’t a big deal because they did not ostensibly violate any of the terms of the AAirpass. AA employees even helped them take maximum advantage by allowing them to book fake passengers so they’d have open seats next to them. However, once American realized they were losing millions of dollars, they encouraged their investigators to uncover instances where the men sold their companion tickets, and to revoke the AAirpasses, though details are still murky. Meanwhile, the men have not only flown around the world, but also accrued over 30-40 million miles each, and are currently banned from the airline pending court trials–though who knows when that will happen because of the bankruptcy.

Read the full story from THE POINTS GUY here

Go away, American millionaires.

That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts.

Renato de Guzman, chief executive officer of Bank of Singapore Ltd., said in industry meetings of private bankers he attends in Singapore, not accepting U.S. clients is “quite a prevailing sentiment”.

“I don’t open U.S. accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian.”

The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which could affect their ability to generate returns.

“In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage,” Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.

Read full article from Bloomberg here

Eduardo Saverin, the billionaire co- founder of Facebook Inc. (FB), renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may reduce his tax bill.

Facebook plans to raise as much as $11.8 billion through the IPO, the biggest in history.

Saverin’s stake is about 4 percent, according to the website whoownsfacebook.com. At the high end of the proposed IPO market capitalization, that would be worth about $3.84 billion. His holdings aren’t listed in Facebook’s regulatory filings.

Saverin, 30, joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore is one of several people who helped Mark Zuckerberg start Facebook in a Harvard University dormitory and stand to reap billions of dollars after the world’s largest social network holds its IPO.

Read the rest of the article from BLOOMBERG here

According to FATF working papers

The Organization for Economic Cooperation and Development may declare tax offenses as predicative offenses to money laundering, Handelszeitung reported, citing a working paper from the Financial Action Task Force.

This may mean that banks will have to inform the authorities in the future if they suspect undeclared money, the newspaper said.

The Financial Action Task Force Plenary meeting will be held on 16th February in Paris. To step up the international fight against money-laundering and terrorist financing, FATF has revised its 40 Recommendations - the global standard to combat these crimes.

The revisions include stronger tools to act against criminals and address new threats to the international financial system, including the financing of proliferation of weapons of mass destruction.

www.bloomberg.net

Tax evasion is endemic in Greece and its international lenders, the EU and the IMF, have insisted Athens improve tax collection if they are to continue bankrolling the debt-laden country

The list of 4,000 top tax dodgers released late on Sunday includes a host of convicted tax frauds and failed businessmen, a prominent singer, the husband of a former government minister as well as a retired basketball star who was recently released from a two-year jail term for illegally owning an arms cache.

Athens has been threatening to publish the list for months and had to change privacy laws to follow through on the threat. It had been kept in a safe in parliament, where lawmakers were allowed to read it without taking notes.

Topping the list with arrears of 952 million euros is a convicted tax fraud who is already serving a 504-year prison sentence for issuing fake receipts to companies that wanted to lower their tax bill.

Greece has about 60 billion euros ($77.52 billion) in unpaid taxes, a figure equivalent to about a quarter of its economy, according to an EU report published in November.

Just 8 billion euros of that amount can be quickly recovered, the EU said, though even that is a sum big enough to cut the country’s budget deficit by half.

www.reuters.com