The USA fights with the investors, which avoid the taxes

September 2008

According to the investigation data, made by the commission of the USA senate, huge investment banks has been producing and applying the schemes, which allow the foreign taxpayers, including the offshore hedge funds, to avoid the dividends taxation of the American shares for the millions of dollars.

Under the law the foreign investors in the USA have numerous tax privileges. In the case of investments into the USA company, which pays the dividends to the share holders, the USA legislation requires the foreign investors to pay taxes from the received dividends. The dividend tax rate, payable abroad makes 30% and for the states, the agreement of double taxation avoidance is signed with, the tax rate makes 15%.

The biggest international financial institutions have been helping their clients to avoid the taxes paying, by elaborating the complicated financial schemes and structures, making exchange and borrowing operations with shares.

Under the investigations the case files were compounded. There were mentioned such investments banks as: Citigroup Inc., Deutsche Bank, Lehman Brothers, Merrill Lynch & Co. Inc., Morgan Stanley and UBS. The investigation agency stated that many of the foreign investors never paid the required dividend tax, and the bank staff and investment managers helped to avoid the taxpaying.