A lion dance in New York's Chinatown. (File photo/Xinhua)
An increasing number of wealthy Chinese said they regret emigrating to the United States as the US government plans to implement a new law requiring US citizens to pay taxes on their overseas income.
The law, expected to be passed by the end of this year, requires US nationals or passport holders wherever they live to pay taxes on their overseas assets and income. It is expected to increase America's tax revenues over the next decade by US$9 billion, according to the South China Morning Post in Hong Kong.
Tax issues are often not a consideration for people seeking to become US citizens but the new law will likely change that. The law applies to a wide range of people and even includes the properties of the deceased. US nationals and passport holders will have to go through complicated tax-filing processes and encounter difficulties in opening an account overseas. They will also face tremendous difficulties establishing a business abroad since their foreign business partners will not want their data appearing on the radar of the US authorities.
The number of people who have decided to abandon their US citizenship increased from 280 in 2006 to 1,780 last year. The figure does not include people who gave up their right to permanent residence. The new tax regulations burden will prompt more US citizens to abandon their citizenship, said Anthony Tong, partner of PwC Hong Kong.
The thought of the IRS examining their income earned around the globe to see if they have evaded taxes will be off-putting to many wealthy US citizens of Chinese origin, according to an immigration lawyer in Hong Kong. It is very difficult to find a Chinese entrepreneur with a perfectly clean tax record, the lawyer said, according to People's Daily.
Giving up US citizenship can also be a costly process, however, and take one to two years. To avoid the person who gives up their citizenship becoming stateless, the US government requires the individual to adopt citizenship of another country. The person also faces hefty taxes and fees for the process, including lawyer's fees of US$30,000. The amount charged differs according to the method of calculation and the date the person hands over their US passport, according to People's Daily.