The U.S.'s crackdown on global tax evaders is leading to a record number of people renouncing their citizenship, and its effects are being felt keenly in Asia -- now the world's wealthiest region by household assets.
A growing number of wealthy Americans in Asia -- and others with green cards -- are exploring whether to renounce their U.S. citizenship or give up their green cards to avoid onerous tax obligations.
Globally, more U.S. citizens have renounced their citizenship in the first and second quarters than all of 2012 combined, and 2013 is already on track to becoming a record year for renunciations. A total of 1,130 names appeared on the latest list of renunciations from the Internal Revenue Service, according to Andrew Mitchel, a tax lawyer who tracks the data. That is far above the previous high of 679, set in the first quarter, and more than were reported in all of 2012.
While those numbers are still a fraction of the estimated six million Americans living abroad, lawyers say the main trigger for cutting ties with U.S. recently is the Foreign Account Tax Compliance Act, or Fatca, which requires foreign institutions to disclose the overseas assets of U.S. green-card holders and citizens to the U.S. government.
The U.S. Congress estimates that tax evasion by U.S. citizens results in losses of up to $100 billion a year. The main objective of Fatca is to identify people who may be evading taxes through offshore investment vehicles.
"When I became an immigration lawyer 30 years ago, people really were excited about going to America. Now, more than half of my clients are people thinking of other alternatives rather than people seeking to immigrate to America," said Eugene Chow, the principal of Chow King & Associates.