US expats are piling the pressure on in Washington to persuade politicians to vote to reject a tax on backing small businesses abroad.
In a rare demonstration of co-operation, The Republicans Overseas and Democrats Abroad have linked with other expat groups to push home the protest.
The tax they want to abolish was introduced in January as a ‘transition tax’ within President Donald Trump’s Tax Cuts & Jobs Act 2017.
The measure taxes certain profits made by Americans holding a stake of 10% or more in a business abroad at 17.5%.
Double taxation for expats
The Republicans Overseas handed out 2,750 petitionsto senators and congressmen demanding a stay on collecting the transition tax, as well as changes in how American expats are taxed.
Expat groups want a ‘territorial’ tax system in America that does not raise money from non-residents to stop expats paying tax in the country where they live and the US as well.
The Republicans want a delay in enforcing the transition tax while lawmakers draft another bill to switch to territorial taxation and repeal the current measures.
“The argument is particularly compelling for delaying the implementation of the transition tax, due to the extreme burden, cost and difficulty for American expatriates who are now expected to comply with it, since it currently obliges them to pay the first of eight instalments of the tax they owe by April 15,” said a spokesman for The Republicans Overseas.
President Trump’s flagship bill
“This ignores the fact to comply, expats will be expected to provide financial statements and retained earnings for their overseas businesses back to 1986 according to US accounting standards, which are different from those applied worldwide.”
Besides the Republicans Overseas and Democrats Abroad, other expat group supporting the campaign to scrap the transition tax include the Association of Americans Resident Overseas, the American Citizens Abroad, Accidental Americans, Americans for Tax Reform.
The Tax Cuts & Jobs Actis one of President Trump’s flagship bills aimed at simplifying the tax code and cutting red tape and tax bills for businesses. The clause catching expat investors was designed to catch multinational corporations moving their money offshore to avoid tax.