US expats defying Fatca face passport revocation
American expats could have their passports revoked next month if they fail to comply with their tax and financial obligations.
American expats could have their passports revoked next month if they fail to comply with their tax and financial obligations under the Foreign Account Tax Compliance Act, or Fatca, a top official of a US financial firm said in Dubai.
The act, which comes into force on January 1, stipulates that Americans – whether they are resident in the US or not – must report their worldwide income as well as their foreign bank accounts to pay taxes in the United States if they opt to retain their passports.
“The US law says that American citizens living around the world with a balance of $10,000 [Dh36,700] at any given day per year in their bank accounts are required to submit FBAR,” explained Jim O’Niell, vice-president of US Financial Advisory & Audit Firm.
The Fatca also mandates financial institutions around the world to submit annual reports on their customers who are required to comply,” said O’Niell.
It is estimated that nearly eight million US citizens who live overseas will be affected if they fail to comply with the Act. Around 20 per cent of the total 250,000 US nationals in the GCC are based in the UAE.
Earlier this year, the UAE and India had signed the agreements for implementation of the Fatca to check offshore tax evasion.
“The country was keen to sign this agreement to protect UAE financial institutions,” Younis Haji Al Khoori, Undersecretary of the UAE Ministry of Finance, had said after signing the agreement on June 20.
In case of non-compliance with the requirements of the Fatca, any non-US financial organisation could face a 30 per cent penalty on certain financial returns of its operations in the US market.
O’Niell said that the US’ Internal Revenue Service, or IRS, will compile a list of Americans who violate the new rule from early next year. However, a citizen would not be at risk of losing their passport if they are already in the process of resolving a tax debt issue with the IRS, he added.
The IRS has collected $8 billion in taxes and penalties under its offshore account programmers during the past few months.
