'Panama Papers' may not affect expats – yet
While few UK expats have been caught up in the Panama Papers scandal which revealed how the powerful and rich use tax havens to hide their wealth, they may be affected if there is a clampdown on offshore financial centres.
The fears come after a leak from Mossack Fonseca, a Panamanian law firm, which revealed how they helped clients from around the world store money in tax havens.Among the financial centres which could be affected if there is a global clampdown include the Isle of Man and the Channel Islands, which offer banking facilities to expats as well as insurance and investment services.
Now the Sovereign Group chairman, Howard Bilton, says banks in these offshore centres are becoming nervous of taking on clients who do not live in their jurisdiction, which will make it harder for expats to find offshore banking services.
He explained: “There are a number of legitimate reasons why expats do not want to hold money where they live and why they prefer banking somewhere else which includes familiarity, the range of products and services and stability.”
He said that because an expat is using an offshore bank account does not mean they are trying to evade tax and nor is what they are doing ‘morally or legally wrong’.
The latest setback comes after the number of banks offering savings accounts has fallen in recent years because of increased regulatory costs as well as low interest rates.
In addition, by 2018 it will be even harder to hide money offshore because of the Common Reporting Standard being implemented for most countries. This will require them to exchange information about clients who do not reside in their own jurisdiction.
Expats in Kuwait face higher water and power prices
Expats living in Kuwait are facing higher power and water bills after the country’s parliament passed a bill enabling the government to raise prices.
The Gulf state’s own citizens will be exempted from the new charges, which could see three million expats paying five cents per kilowatt of electricity compared with the current 0.7 cent charge. Businesses will see their price rise to nearly eight cents and water prices could also be doubled. This could be the first time that power prices have risen in 50 years.
One reason for the rise is that the drop in crude oil prices has affected Kuwait’s income – the state posted a $20 billion budget deficit for the last financial year – and the annual $9 billion subsidy for water and power production is coming under threat.
MPs in the Parliament were told that if they failed to take action then energy consumption would rise threefold by 2035 and Kuwait’s subsidy would grow to $25 billion.
Instead, Kuwait now wants to reduce power consumption by 50% in the coming years.
The most expensive EU country for expats
A comprehensive survey of 40,000 expats around the world has revealed which is the most expensive the country to live in.
Of the 64 countries assessed, Ireland was ranked in first place for expats who are struggling financially; they point to rising healthcare and rent costs for being excessive.
The cheapest countries for expats, according to global network InterNations, are Ecuador, Poland and the Czech Republic.
The three countries with the highest cost of living according to expats in the same survey are Mozambique, Nigeria and Brazil.
A spokeswoman for the organisation said their index was put together based on the subjective rating of respondents to the cost of living in host countries rather than comparing like-for-like prices.
She added: “The results do not reflect necessarily the average cost of the country but are influenced by perceptions of respondents and their lifestyle.”
Expats and danger money – the most dangerous cities
A survey has ranked 230 cities based on the crime levels, internal stability, law enforcement performance and the county’s relationship with other countries to help expats avoid the most dangerous places.
According to Mercer’s Quality of Living Index, the safest places for expats are European countries such as Switzerland, Luxembourg and Austria. However, expats should be considering ‘danger money’, that is compensation they should expect for working in dangerous or feared locations, if they are asked to relocate to Baghdad, Karachi, Damascus or Nairobi.
Employers should also appreciate that there are other costs for sending employees abroad to dangerous locations, says the recruitment consultancy.
Mercer’s senior researcher, Slagin Parakatil, said: “Other safety costs include finding well-secured and suitable accommodation, having a comprehensive in-house expat security programme and providing access to a reputable evacuation service.”
He added that employers should also consider medical support as well as providing security training and ensuring the office is well guarded.
Regular readers of expat forums will appreciate that other countries are also listed as being hazardous, including Somalia, Afghanistan and Iraq. One expat website also lists the South African city of Cape Town as being a place where workers should be cautious.
The Mercer’s survey details several European cities dropping down their ranking due to social unrest and terrorist attacks with Paris in 71st, London in 72nd and Madrid picking up 84th place.
One in three US expats will file tax return late
The deadline for US expats to file a tax return has now passed (it was 18 April for those who missed it) and one in three will file late or make a mistake with their return.
However, failing to report could lead to a US expat facing severe penalties, including the potential for the State Department to limit, deny or revoke a passport for someone who has been identified by the IRS as having ‘delinquent tax issues’.
The American Action Forum (AAF) has also calculated that this year’s tax return filing will create a new record for the amount of resources and time US citizens spend submitting their tax returns.
They say that the paperwork burden has increased to 8.9 billion hours – which costs US taxpayers the equivalent of nearly $1.8 trillion.
In a statement, the AAF said: “That would take 4.4 million Americans to work 2,000 hours every year to complete the IRS is paperwork. That is, roughly, Kentucky’s population.”
The organisation is now calling for fundamental tax reform to make compliance and submission easier and for a reduction in the number of forms that taxpayers must fill in.
Expats list best Chinese cities
According to expats living in China, Shanghai is the best city for work and living.
International Talent Magazine surveyed more than 40,000 expats in the country and questioned them about the working and living environments, as well as policies for foreign professionals.
Shanghai has topped the poll four times in six years, with Beijing coming in second place this year; Hangzhou is third with Shenzhen in fourth place. The remaining top 10 cities include Tianjin and Qingdao, followed by Suzhou and Guangzhou and then Xiamen and Jinan.
One reason for Shanghai’s success in the survey might be the fact that around one in six of all expats in China reside in Shanghai, which is now home to more than 88,000 foreigners.
China to launch talent database
The Chinese government has announced plans to create an expat talent database which would match foreign experts with potential Chinese employers.
In addition, there will also be a simplified visa system as part of the country’s push to create a ‘friendly climate’ to attract talented expats.
The move comes as growing numbers of firms and government departments in China want to hire more foreign employees but struggle to do so. There’s also an acknowledgement that Chinese firms struggle to attract foreign experts for their critical projects and have to compete in the global marketplace for talent.
There has been a 30% growth in expat work between 2006 and 2010, with the new database recording all nationalities living in China along with their areas of industry and expertise, as well as their employer and which city they live in.
The expat database is set to be the country’s first big data project, with work starting imminently.
British expats get more buy to let mortgages
Skipton International has announced it will accept buy to let mortgage requests from British expats who are living in a greater number of foreign countries.
The mortgage lender, which is one of the few that will cater to expats, says that those living in Costa Rica, Colombia and Northern Cyprus as well as Sri Lanka, Senegal and Turkey are among the new accepted homeowners.
However, Skipton will not accept mortgage applications from British expats living in 92 countries, including Australia and South Africa.
Buy to let mortgages are popular with expats who want to keep a property in the UK, where prices are rising faster than anywhere else in the world.
According to Skipton, the highest demand – with around one in four of all applications for mortgages – has come from expats living in the United Arab Emirates.
The average value for an expat wanting a buy to let mortgage is £200,000, and Skipton’s minimum criteria is for a minimum income or pension of £40,000, or £50,000 if paid in local currency.
Skipton International’s managing director, Jim Coupe, said: “We launched our mortgages as a response to the difficulties that expats face when securing mortgages on UK properties. Buy to let mortgage demand from British expats is strong and by widening our mortgages to more countries, more British nationals have the opportunity to invest in UK property.”
In other expat news…
Kuwait plans to axe 60% of expats: At least 60% of expats are facing redundancy from the Kuwait Municipality as part of a growing bid to cut the number of foreigners living in the country. Those who fail to carry out their duties, do not show up for work or hold fake degrees are facing the axe and the municipality’s financial and administrative department says all expat contracts, qualifications and positions will be reviewed. Most of these positions will disappear by the year end.
Bahrain proposal to ban expats aged over 50 causes a stir: Last week’s round-up highlighted that Bahrain plans to ban expats over the age of 50 from working because they are ‘less efficient’. However, the proposal has sparked widespread criticism with critics on social media saying the plan is ‘discriminatory’ and ‘unfair’. The country’s Chamber of Commerce and Industry has also criticised the proposal.