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Cyprus Tax Amnesty Extended | FATCA Lawyer & Attorney

For the second time now, the Cyprus Tax Amnesty has been extended. Let’s discuss in more detail the new deadline and the terms of the Cyprus Tax Amnesty.

Cyprus Tax Amnesty: Deadline Extensions

The original deadline for the Scheme for the Settlement of Overdue Taxes (the official name of the Cyprus Tax Amnesty) was October 3, 2017. The deadline, however, was extended for the first time to January 3, 2018. In early January of 2018, the deadline was further extended to the current deadline of July 3, 2018. Thus, the more recent extension gives Cyprus taxpayers another six months to bring their tax affairs in full compliance with Cyprus tax law.

Main Terms of the Cyprus Tax Amnesty

The Cyprus Tax Amnesty allows “qualifying applicants” to pay off their tax liabilities for prior years with up to 95% reduction in the interest and penalties that otherwise would have been or have already been imposed by the Cyprus tax authorities. The precise percentage of the reduction of interest and penalties depends on the number of monthly installment payments chosen by the taxpayer (i.e. if you pay off everything in full immediately, you get the full benefit of the 95% reduction in interest and penalties).

The Cyprus Tax Amnesty encompasses all outstanding tax liabilities that were incurred in the tax years up to and including 2015. The Amnesty also covers a great variety of taxes: income tax, capital gains tax, VAT, property tax, stamp duties, inheritance tax and certain special fees.

Cyprus Tax Amnesty: Qualifying Taxpayers

Since the main purpose of the Amnesty is to bring Cyprus taxpayers into full and ongoing compliance with Cyprus tax law, the emphasis is placed on assuring current compliance. This is done through the definition of “qualifying taxpayers” who are the only taxpayers eligible to participate in the Cyprus Tax Amnesty.

Qualifying taxpayers are defined as taxpayers who have been in full tax compliance from the tax year 2016 onwards – i.e. these taxpayers must have filed all of their Cyprus tax returns and paid all of their Cyprus tax liabilities for the tax year 2016 and all of the following tax years.

Cyprus Tax Amnesty is Part of a Trend Amplified by the IRS Offshore Voluntary Disclosure Program

The Cyprus Tax Amnesty is just one more example of the tax amnesty programs which have proliferated around the world in the recent years. This trend was greatly strengthened and really amplified to its current status by the establishment of the 2009 IRS Offshore Voluntary Disclosure Program (“2009 OVDP”). The 2009 OVDP, 2011 OVDI and 2012/2014 OVDPs together with enactment of FATCA have drawn the attention around the world and many countries began to imitate the successes of these US initiatives.

Sherayzen Law Office has helped clients deal with each of these major IRS voluntary disclosure programs as well as other voluntary disclosure options (like the Streamlined Domestic Offshore Procedures and the Reasonable Cause Disclosures). A voluntary disclosure program presents wonderful opportunities to taxpayers to settle their past tax noncompliance. This is why we sympathize with the Cyprus Tax Amnesty and see it as a positive development in the international tax law.

Argentinian Tax Information Exchange Agreement Signed | FATCA Lawyer

On December 23, 2016, Argentina and the United States signed a Tax Informational Exchange Agreement (“Argentinian Tax Information Exchange Agreement” or “Argentinian TIEA”) in Buenos Aires. Let’s explore the main points of the Argentinian Tax Information Exchange Agreement.

Argentinian Tax Information Exchange Agreement: Information to Be Exchanged

The information to be exchanged under the Argentinian Tax Information Exchange Agreement is described in its very first article. Article 1 states that the parties will provide information to each other that is “foreseeably relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement”.

Article 1 then specifies that such information includes everything “foreseeably relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters”.

Argentinian Tax Information Exchange Agreement: Taxes

What are these “taxes” mentioned in Article 1? Article 3 of the Argentinian TIEA explains that the focus is on information related to US federal taxes and all national taxes administered by the Federal Administration of Public Revenue. Obviously, the Argentinian TIEA will apply to any identical or substantially similar taxes that are imposed after the Agreement is signed in addition to, or in place of, the existing taxes. Both parties, Argentina and the United States, agreed to notify each other of any significant changes that have been made in their taxation laws or other laws that relate to the application of the Argentinian TIEA.

Argentinian Tax Information Exchange Agreement: Automatic Exchange, Spontaneous Exchange and Exchange Upon Request

The Argentinian Tax Information Exchange Agreement prescribes three modes of exchange of information. First, Article 6 of the Argentinian TIEA provides for automatic exchange of certain information.

Second, Article 7 allows Argentina and the United States to spontaneously transmit to each other’s respective tax authorities any relevant information that has come to the attention of the either Party’s tax authorities. For example, if Argentinian tax authorities obtain information that points to US tax noncompliance of a dual citizen of Argentina and the United States, Argentina can provide this information to the IRS.

Finally, Article 5 allows Argentina and the United States to request relevant information from each other. There is an interesting clause in Article 5 that removes potential limitations on the exchange of information upon request: “such information shall be exchanged without regard to whether the requested Party needs such information for its own tax purposes or whether the conduct being investigated would constitute a crime under the laws of the requested Party if such conduct occurred in the requested Party.”

Article 5 of the Argentinian Tax Information Exchange Agreement is remarkable in another aspect. It states that, if the information possessed by the “requested Party (i.e. the country that received the request from another country) is insufficient to enable it to comply with the request for information, the requested Party needs to engage in information gathering measures in order to provide the other Party will the requested information. The requested Party needs to do these investigations even if it does not regularly collect this information or need it.

Under Article 5(3), the requested Party, if specially requested so by the applicant Party, has to provide the information in the form of depositions of witnesses and authenticated copies of original records.

Argentinian Tax Information Exchange Agreement: Foreign Bank and Beneficial Ownership Information in Focus

Article 5(4) also clarifies what is at the heart of the exchange of information upon request. First, information “held by banks, other financial institutions, and any person acting in an agency or fiduciary capacity including nominees and trustees.”

Second, the beneficial ownership information of “companies, partnerships, trusts, foundations, “Anstalten” and other persons”. This information should also include all persons in the ownership chain. In the case of trust, “information on settlors, trustees and beneficiaries”. In the case of foundations, “information on founders, members of the foundation council and beneficiaries”. Publicly-traded companies and public collective investment funds are excluded (unless the information can be obtained without giving rise to “disproportionate difficulties” to the requested Party).

Argentinian Tax Information Exchange Agreement: Tax Examinations Abroad

Article 8 of the Argentinian Tax Information Exchange Agreement grants each Party the right to conduct tax examinations abroad. Obviously, the written consent of the persons to be interviewed has to be secured first. However, once both Parties agree to the examination, “all decisions with respect to the conduct of the tax examination shall be made by the Party conducting the examination.”

Argentinian Tax Information Exchange Agreement: Entry Into Force

According to Article 14, the Argentinian Tax Information Exchange Agreement shall enter into force “one month from the date of receipt of Argentina’s written notification to the United States that Argentina has completed its necessary internal procedures for entry into force of this Agreement.”

Once the Argentinian TIEA is in force, its provisions will apply for requests “made on or after the date of entry into force, concerning information for taxes relating to taxable periods beginning on or after January 1 of the calendar year next following the year in which this Agreement enters into force or, where there is no taxable period, for all charges to tax arising on or after January 1 of the calendar year next following the year in which this Agreement enters into force.”

Argentinian Tax Information Exchange Agreement: Impact on US Taxpayers

The Argentinian Tax Information Exchange Agreement will have a profound impact on US taxpayers with undisclosed Argentinian income and Argentinian assets. First, the combination of three different disclosure modes – automatic, spontaneous and upon request – greatly increases the risk of the IRS detection of undisclosed Argentinian assets and unreported Argentinian income. The spontaneous exchange of information may be especially dangerous because it increases the probability of indirect (and unpredictable) detection. For example, if information about US tax noncompliance is obtain through an audit of an Argentinian tax return, such information may be turned over to the IRS.

Second, the Argentinian Tax Information Exchange Agreement allows the IRS to obtain witness depositions and other evidence against noncompliant US taxpayers at a relatively low cost. Furthermore, the Argentinian TIEA grants the IRS the ability to conduct examinations in Argentina, greatly enhancing the IRS reach in that country. In other words, the chances of successful imposition of civil penalties and even criminal prosecution by the IRS of noncompliant US taxpayers is substantially increased by the Argentinian TIEA.

Contact Sherayzen Law Office if You Have Undisclosed Foreign Assets and Foreign Income in Argentina

If you have undisclosed Argentinian assets and income, you should contact Sherayzen Law Office as soon as possible. Once the IRS detects your noncompliance or even just commences an investigation to verify whether you were not tax compliant, then you may lose all of your voluntary disclosure options.

Sherayzen Law Office is an international tax law firm that specializes in offshore voluntary disclosures of undisclosed foreign assets and foreign income. We have helped hundreds of US taxpayers to bring their US tax affairs into full compliance with US tax laws while reducing their penalties and, in many cases, even their tax liabilities. We Can Help You!

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