22nd June 2023
Maintaining your compliance status when contracting overseas
Managing your tax and compliance status when working internationally on top of doing your day-to-day job (while also potentially operating in a foreign country) is a major ask for anyone, however contractors working around the world can’t afford to neglect their compliance status. As we’ve seen, numerous countries are not afraid to hand out major fines and even prison sentences to those they suspect of breaking the law and it’s simply not worth taking the risk. We’ve highlighted some of the latest examples that prove that seniority, wealth and status make no difference to tax authorities and that they will close the net on anyone they think may have breached tax regulations.
Taxing crypto would be the quickest way to regulate the industry
We’ve spoken extensively in recent months about the multiple proposed changes to the global cryptocurrency arena, with many commentators suggesting that the industry requires regulation in order to reduce levels of criminal activity. Dean Baker, a senior economist and co-founder of the Centre for Economic and Policy Research, is the latest to comment and has suggested that the quickest way to regulate the industry would be to introduce taxation. In an article for Bloomberg, Baker highlighted that the worldwide crypto trading volume is now over $10tn per annum and that taxing it would not only provide a better degree of scrutiny, but would also enable governments to more effectively balance their finances.
Factoring in a potential fall in volume of trades by 50% in response to the introduction of the new regulations, even a tax of 0.5% would generate $2.5bn in revenue, which would make a significant difference to economies around the world, particularly smaller ones. Baker’s comments are not the first time this idea has been proposed and almost certainly won’t be the last, but they do highlight that the spotlight is certainly shining on the entire crypto arena and that regulatory changes surely aren’t far away. More and more contract specialists are now working in fields tied to cryptocurrency, with some individuals even accepting crypto as a form of payment and introducing new forms of taxes would add to the already heavy workload that many international professionals have to deal with. While no changes have been made so far, it’s definitely worth watching this space in the coming months if you want to remain on the right side of the law when working with cryptocurrencies.
Netflix murderer Alex Murdaugh faces federal money laundering and fraud charges
Convicted murderer Alex Murdaugh, whose crimes were the main focus of a leading Netflix series earlier this year, is now facing federal charges for the first time after being indicted on 22 financial fraud counts over allegations that he plotted to steal settlement money from clients. Murdaugh is also awaiting trial on an additional 100 state charges including insurance fraud, tax evasion and theft, with each carrying a maximum sentence of at least 20 years in prison. Murdaugh is in protective custody at an undisclosed state prison after being convicted in March of this year of the shooting deaths of his 22-year-old son, Paul, and 52-year-old wife, Maggie, at their home.
What’s particularly notable about this case, aside from the high levels of publicity that it has garnered, is that Murdaugh was previously one of the most respected figures in the North Carolinian legal sector and held positions of high power that led many to assume that he was ‘untouchable’. However, the case highlights that nobody is safe from the clutches of the tax authorities and Murdaugh now faces numerous other charges that could condemn him even further.
Why Will Smith was forced to pay half of his fortune to the IRS
Will Smith is one of the most famous actors in the world, and while he’s not always made the headlines in recent years for positive reasons (particularly the 2022 Oscars), he has highlighted the extent to which tax authorities will go to in order to claim the money that they are owed. Smith recently revealed that, in the 1990s, he received a tax bill to the sum of nearly half of his entire fortune. The Fresh Prince of Bel Air actor was forced into paying nearly $3m to the IRS following years of overspending and poor financial management which led to him selling off his cars, motorcycles and even his California home, according to revelations in his autobiography. At the time, Smith was one of the most famous actors on the planet however paying his tax bill led to him being ‘broke’, in his own words. He certainly wasn’t the first, and won’t be the last, superstar to be chased by the Internal Revenue Service, however, the story shows that no one is safe from the tax authorities if there is any suggestion whatsoever of noncompliance.
Swedish author regrets Maltese tax mix-up
And finally, while perhaps not on the same level of fame as Will Smith, Swedish mystery and thriller writer, Hakan Nesser, has expressed his regret following the culmination of a tax trial in his home country that alleged that he withdrew money from companies he had registered in Malta without reporting to the tax authorities. Nesser and another individual were charged with aggravated tax evasion after it was alleged that they withdrew over €1.3m from companies he had set up in Malta without following due process. The company was revealed as part of the Panama Papers leak and investigations showed that large amounts of money were transferred when Nesser moved back to Sweden following stints in the US and UK. He was ultimately acquitted of the initial charges but was warned that the money from Malta should have been declared and ordered to repay the remaining amount owed. Nesser expressed regret that he didn’t have a proper understanding of his tax responsibilities and that he had worked with a firm without proper accreditation which led to the oversight regarding his finances.
Most contractors are unlikely to be able to call on the types of resources that Will Smith or Hakan Nesser have been able to in order to pay their tax bills, meaning that ensuring you are properly compliant should be a priority when operating overseas. If you are in doubt regarding your taxation status and are looking for guidance then speak to our expert team for advice and management that can help to keep you on the right side of the law.
6CATS International is part of WorkwellTM Group
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