A recent article in the New York Times suggested that the rise in the number of investors in the real estate market is being fuelled by a desire to save money on their property taxes, with the intention of investing it in an offshore tax haven.
The article, titled ‘Why Are Investors Seeking an Alternative Tax Haven?’, stated that “the financial services industry is now a major source of wealth for wealthy individuals in the US”.
“These wealthy individuals are turning to an alternative tax haven in order to avoid paying US taxes and their taxes are likely to be higher,” the article said.
It went on to say that the financial services sector is currently “a large driver of tax evasion and avoidance in the United States, as well as other jurisdictions around the world”.
“In the coming years, the tax havens of the US, UK and the Cayman Islands will be the primary destination for wealthy Americans seeking to hide their money from the IRS, and those in the finance industry may be seeking to move to the tax haven as well.”
It was also said that investors are “pouring billions of dollars into the real-estate market, despite the fact that this wealth is taxed at a much lower rate than the wealth that is currently being generated by the financial sector”.
In response to the article, a spokesperson for the US Office of the Comptroller of the Currency, who is responsible for investigating tax fraud, said the agency was investigating the issue.
“As the US Government continues to assess the scope and impact of recent tax reform efforts, the Comptrollers Office is currently conducting a comprehensive review of the current tax treatment of wealth in the financial industry,” they said.
“We will provide updates as we receive them.”
More stories from New Zealand