The changing global tax environment concerns many expat tax exiles who are feeling decidedly less secure now many former offshore havens are opening their financial records to prying eyes.
Many wealthy expats have holdings in more than one country, while living in another for tax reasons.
Now, a new generation of tax laws is raising the curtain on previously hidden income and assets.
The US Foreign Account Tax Compliance Act (FATCA) has triggered this brave new world of compliance and tax transparency.
Former offshore financial centres that for years have resisted calls to reveal all about their wealthy customers are now bundling up information and sending the packages to tax authorities in the USA, UK and Europe.
FATCA triggers visa action
FATCA requires US citizens to come clean about any offshore holdings and earnings they may have that amount to more than $50,000.
If they don’t, their former offshore haven allies will blow the whistle and reveal all anyway.
Now, Britain has opened consultation on a tax information sharing agreement similar to FATCA that covers a dozen former havens – from the Cayman Islands and Bermuda to the less exotic Isle of Man and Channel Islands, like Jersey and Guernsey.
In the Cayman Islands, the government and expats are re-examining immigration laws that offered unrestricted visas to expats working in the territory’s burgeoning finance industry, dominated by hedge funds.
Special arrangements allowing expats to stay on the islands runs out in October and many will have to return to their home country or seek out another expat destination.
Caymans reviews 2,000 expat visas
For some, this is a financial headache because they may not have fully declared their financial holdings to tax authorities as the Caymans financial system was shrouded in secrecy.
Now, the Cayman Islands is sharing tax information with the UK, which is sharing with the Internal Revenue Service in the USA.
The Cayman government estimates 2,000 expats will find their residence and visas under review.
Many locals are cheering the move as a restoration of balance to the economy. They claim too many expats work in finance, the legal sector and in hotels taking jobs from locals.
Cayman Chief Immigration Officer Eric Bush said: “We need to balance the need to import foreign labour with local needs. As a small nation, we cannot have too many people coming to the island that may burden rather than improve the economy.”