Boris Johnson has renounced his US citizenship, ending years of ambiguous loyalties and probably ridding himself of a hefty tax bill. The foreign secretary had previously protested against ‘absolutely outrageous’ US tax obligations after the sale of his north London home.
A list released by the US Treasury department showed the UK foreign secretary was one of 5,411 individuals to renounce his American citizenship in 2016.
Johnson was born in New York when his parents worked there but has not lived there since he was five years old. His decision does not appear to be an attempt to distance himself from the politics of Donald Trump, but may instead be a move to ensure he is out of reach of America’s Internal Revenue Service (IRS).
In 2014 he publicly said that the US was trying to hit him for tax on the sale of his home in Islington, north London, something he said he regarded as “absolutely outrageous”, although he later reportedly paid the demand. The US tax authorities have been mounting a campaign to crack down on the earnings of dual nationals.
A record number of dual nationals renounced US citizenship in 2016, 26% higher than the next highest annual total that followed the enacting of a disclosure law in the 1990s.
Andrew Mitchel, an international tax lawyer, tallies the names on the lists, and identified Alexander Boris Johnson renouncing his citizenship. The foreign secretary’s full name is Alexander Boris de Pfeffel Johnson.
On a visit to New York in 2014 in an interview with National Public Radio – partly promoting his biography of Winston Churchill – Johnson, then mayor of London, said he was being chased to pay the capital gains tax by the American tax authorities. A dual citizen can be liable for tax in both countries.It was revealed in 2014 that Johnson might owe more than $50,000 in US tax on the income from the sale of his home.
Johnson told NPR it would be hard to renounce his citizenship. He said: “I have to confess to you, that you’re right… it is very hard, but I will say this, the great United States of America does have some pretty tough rules, you know. You may not believe this but if you’re an American citizen, America exercises this incredible doctrine of global taxation, so that even though tax rates in the UK are far higher and I’m mayor of London, I pay all my tax in the UK and so I pay a much higher proportion of my income in tax than I would if I lived in America.
“The United States comes after me, would you believe it … for capital gains tax on the sale of your first residence which is not taxable in Britain, but they’re trying to hit me with some bill, can you believe it?”
Pressed to say if he would pay the tax he said: “Why should I? I haven’t lived in the United States for, you know, well, since I was five years old”.
Unlike most nations, the US taxes non-resident citizens on their worldwide income. A strong tax-enforcement campaign by US authorities and lawmakers has been mounted in the wake of admissions by banks in Switzerland and elsewhere that they encouraged US taxpayers to hide assets abroad.
To prompt compliance, a 2010 provision known as Fatca requires foreign financial institutions, including the UK’s Inland Revenue, to report information about holdings by all US taxpayers to the IRS.
Source: The Guardian
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