Financial management firms are advising their wealthiest clients to invest their money outside of America as a result of the country’s burdensome regulations and high taxes, according to a report by Bloomberg.
Wealth managers are sounding alarms as Congress gets set to pass the Foreign Account Tax Compliance Act, FATCA, which will require foreign-based financial institutions to report income and interest acquired by its American investors. The regulations are widely expected to stifle off-shore investments.
Bloomberg reports:
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which could affect their ability to generate returns.
"In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage," Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.
The almost 400 pages of proposed rules issued by the U.S. Internal Revenue Service in February create "unnecessary burdens and costs," the Institute of International Bankers and the European Banking Federation said in an April 30 letter to the IRS, one of more than 200 submitted to the agency. The IRS plans to hold a hearing May 15 and could amend how and when some aspects of the rules are implemented. It can’t rescind the law.