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Specifically, the United States of America is imposing worldwide taxation, according to the rules of the US Internal Revenue Code, on individuals who are “tax residents” of other countries who don’t live or earn income in the United States.
For example, did you know that certain French citizens and residents, with no economic connection to the United States are required to pay US taxes on their French income? As long as that French citizen/resident is also a US citizen (usually because she was born in the United States) is required to comply with all the requirements of the US Internal Revenue Code.
No, this is NOT a new law. The United States has always had extraterritorial laws. But, what is new, is a law called FATCA (“Foreign Account Tax Compliance Act”). FATCA is a law that acts as the enforcement tool for US citizenship-based taxation.
The enforcement of US tax laws in your country affects:
- individuals who may be subjected to double taxation and will almost certainly be denied the retirement and financial planning opportunities available to their friends and neighbours
- the tax base of the country. In many cases the United States attempts to impose US taxation before there is a taxable event in the other country. This effectively steals revenue from the tax base of other countries
- the sovereignty of other countries. All countries have their own tax and retirement planning systems. In general …
Our wiki collects facts and figures about the US practice of Citizenship-based Taxation. Check it out here.