The American Business Council Q1 Newsletter
A Night to Remember with His Highness Sheikh Hamdan bin Mohammed Al Maktoum, Crown Prince of Dubai On February 23 the Rededication of the Rings of Friendship took place at Creek Park, at the site where the rings were originally installed in 1997. H. H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, received the American Business Award and accepted the re-dedication on behalf of all people of the United Arab Emirates at a ceremony that commemorated 25 years of felicitous relations between the UAE and the United States. The Rings of Friendship were initially received on behalf of the people of the UAE by H.H. Mohammed bin Rashid Al Maktoum when he was Crown Prince of Dubai. During the ceremony John Podgore, ABC Board President remarked, “Many things have changed in the last 14 years. Anyone who knew Dubai back then knows that things have changed to an almost unimaginable degree, but one thing that hasn’t changed is the strength of the relationship between the UAE and the United States.”
WELCOME TO NEW AND RETURNING MEMBERS 1ST QUARTER WRAP-UP TAX NEWS FROM VIRGINA LA TORRE JEKER, J.D. SAVE THE DATE 20TH ANNUAL GOLF DAY AT THE MONTGOMERIE CORPORATE MEMBER HIGHLIGHTS
T HE A ME R I C A N B U S I NE S S C O U N C I L
A Night to Remember continues The iconic Rings, which symbolize the close ties between the American and Emirati people, are mounted on a pedestal of 11 tons of granite; each ring is five meters in diameter and weighs 6 tons. They are illuminated by seven lights to represent the seven emirates. “A solid, yet elegant embodiment of the enduring bonds that unite our two people,” said Justin Siberell, US Consul General, Dubai. H.H. Sheikh Hamdan was joined by his brother, H.H. Sheikh Majid bin Mohammed bin Rashid Al Maktoum, who heads the Dubai Culture and Arts Authority and many members of the Emirati community. The jazz band and choir from the American School of Dubai performed. Thanks to generous sponsorships, the event was open to all members. The evening was concluded with celebratory display of American-style fireworks. Special thanks go to our sponsors for the event: American Hospital Dubai, American University in Dubai, the American Women’s Association of Dubai, Boeing, Deloitte, PepsiCo and Sidhwa Holding Limited (Seven Seas Services Group) Excerpts from the remarks of Consul General Justin Siberell on presenting the American Business Award to H.H. Sheikh Hamdan bin Mohammed al Maktoum, Crown Prince of Dubai “Your Highness, your presence with us tonight to rededicate these Rings of Friendship gives us tremendous honor and pride. Your commitment to fostering the entrepreneurial spirit and dynamism within the Dubai economy are well-known and deeply appreciated.” “Dubai’s role in the global economy is clear for all to see. We certainly see it in our own American business community, the largest and most dynamic American business grouping in the region.” “The UAE was once again in 2010 our largest export market in the Middle East, over $11.5 billion, surpassing U.S. export volumes to other countries in the region with much larger populations such including Saudi Arabia and Egypt. Looking back even further, bilateral trade between the U.S. and UAE has grown six-fold in the last decade.”
T HE A ME R I C A N B U S I NE S S C O U N C I L
Welcome to New and Returning Members The year opened with the new board members in place, membership renewals under way and new members‟ applications flooding in. As you all know from the many emails back and forth, the push was on in Q1 to get your renewing membership information completed and for new members to get their applications confirmed in order to be included in the 2011 Membership Directory. We can now happily proclaim “Mission Accomplished”. The directory is due to ship to you in mid April. Please be on the lookout for your directory to arrive.
THANK YOU! 2011 Presidents Club
American University in Dubai ExxonMobil
We extend a sincere thank you to all returning members and a welcome to new members.
The 2011 Board of Directors: President – John Podgore, Executive Vice
Fulbright & Jaworski
President – Jack Montgomery, Vice President Programs – Bilal Sabouni, Vice President Membership – Katie Shaver, Vice President Financial Affairs and Treasurer – Katherine D‟Arcy, Vice President Legal Affairs and Secretary – Ramsey Jurdi, Attorney, and general board members – Stephanie Fisher, John Lancia, Jimmy Larsen and John N. Stadwick.
General Electric General Motors Green Crescent Insurance Hewlett Packard
CORPORATE MEMBER HIGHLIGHT
3M Opens Innovation Center
3M has opened its Innovation Center in Media City. When you are in
the area, stop in and take a look. As member Irfan Malik, Vice President, 3M Middle East and Africa said on the 3M website, “The Dubai center will draw upon 3M‟s global R&D strength and 45 technology
platforms to provide solutions for local customers to experience all
around the region. In 3M we have an expression that says „3M is always within reach.‟ This new center, in addition to our Saif Zone Manufactur-
ing Facility, demonstrates that we are continuously investing in the local market while consistently producing innovative customer centric products.” Customer Technical & Innovation Centers are unique to 3M around the world and serve as a mechanism for customer inspired innovation. The
2011 Vice Presidents Club
first of its kind in the Middle East region, the Dubai center will now offer potential customers, business partners, and research and development experts the exciting opportunity to test a host of 3M‟s often groundbreaking innovations. “Innovation is a common language ex-
pressed in many tongues. Creating innovative products and services
that respond to customer needs in the region has always been a way of life at 3M Gulf and that is a goal that our new center aims to take even
further,” said Malik.
RAK Free Trade Zone
THE AMERICAN BUSINESS COUNCIL
NAVIGATING THE NEWEST US TAX MAZE FOREIGN SOURCED INCOME & US TAXPAYERS 29 January 2011 By: Virginia La Torre Jeker, J.D. © Virginia La Torre Jeker, J.D. is based in Dubai and specializes in US taxation and international taxation planning. She can be reached at firstname.lastname@example.org The information provided does not constitute tax or legal advice and is of a general nature only.
The US tax authorities (IRS) are using every possible means to detect tax avoidance by Americans overseas. The Obama administration has phenomenally expanded the IRS‟ arsenal of weaponry to combat tax cheats. We have seen a surge in the hiring of international revenue agents, new tax laws mandating increased reporting by foreign financial institutions about their US clients, expanded reporting rules imposed on taxpayers holding foreign assets and steep increases in penalties for noncompliance. In addition to these gargantuan efforts, we‟ve seen an increase in stolen bank data being handed over to revenue authorities (rewards usually given) and now, WikiLeaks‟ Julian Assange was given two CDs reputedly containing the details of up to 2,000 tax evaders from various countries, including the US.
need to learn much more if they want “a small family trust” can be so cateto avoid harsh consequences. gorized. Many FFIs have taken an active decision not to invest in the US THE HIRE ACT market in order to avoid FATCA; but many will continue such investments The so-called HIRE Act of 2010, and will be reporting to the IRS which contains the Foreign Account Tax Compliance Act of 2009 (FATCA) about their US clients. Reporting will include the name, address and made dramatic changes to the tax taxpayer identification number of landscape for Americans overseas; each US account holder; the account some being generally described in this article. Overall, the FATCA rules number; account balance and value; the account‟s gross receipts and gross render the hiding of assets offshore withdrawals or payments; and other even more susceptible to discovery, and make the punishment upon dis- account related information requested by the IRS. covery even harsher.
EXPANSION OF REPORTING BIG BROTHER PROVISIONS HIT OVERSEAS FINANCIAL INSTITUTIONS REQUIREMENTS FOR FOREIGN FINANCIAL ASSETS FATCA provisions will force non-US Commencing January 1, 2011, the financial (and certain non-financial) HIRE Act expands the reporting reinstitutions to provide the IRS with quirements for individuals with an information about accounts held by interest in “specified foreign financial Americans, or suffer a 30 per cent assets” (SFFAs) exceeding a withholding tax on US-source payUS$50,000 aggregate. Some of the Most US persons living overseas have ments (generally effective January 1, information required under the new 2013). Broadly, a "financial institunow become painfully aware of the rules is similar to that for FBAR, but need to file the so-called FBAR (Form tion" is one that accepts deposits in they are not identical and constitute TD F 90-22.1, Report of Foreign Bank the ordinary course of a banking or an additional reporting requirement and Financial Accounts) with regard similar business, or that is in the that does not replace the FBAR. business of holding financial assets to their own foreign financial acFailure to make the required disclocounts or those over which they have for the account of others, or that is signature authority. Some may have engaged in the business of investing, sures can result in a $10,000 penalty reinvesting, or trading in securities, for the tax year (maximum penalty is gotten their FBAR education the partnership interests, commodities $50,000). The penalty can be waived hard way – by paying penalties as if the individual can establish reasonhigh as 50% of the value of the unre- etc. Obvious target institutions are foreign banks, funds and brokerage able cause for not filing. Reliance on ported account and risking criminal a tax professional should assist a taxprosecution. With the advent of new firms. A trust company will also be tax laws in March of 2010, taxpayers considered a foreign financial institu- payer in establishing “reasonable tion (FFI) under IRS guidance. Even cause”.
THE AMERICAN BUSINESS COUNCIL
SFFAs on which detailed information reporting is mandated include:
statute was extended only for the portion of the return related to the missing information.
Depository, custodial, or other financial accounts maintained Second, the statute is increased by a foreign financial institution; from three to six years if there is an omission of income exceeding $5,000 Foreign stocks or securities; from undisclosed foreign financial Any financial instrument or con- assets. tract held for investment that has an issuer or counterparty other than a U.S. person; and Any interest in a foreign entity. Generally this covers overseas bank and brokerage accounts, foreign funds, debt or equity interests in foreign entities etc. Reporting can apply apparently even if held only in a nominee capacity; perhaps further guidance from the IRS will be issued on this point. A new 40% penalty will be imposed on any tax understatement attributable to undisclosed foreign financial assets. STATUTE OF LIMITATIONS Generally, the IRS has only three years from the date the taxpayer files his tax return to assess further taxes or challenge the return. The HIRE Act made two changes. First, in the case of returns filed after March 18, 2010, and those that are filed before this date but for which the statute of limitation has not yet expired, the statute of limitation for the entire tax return is suspended for failure to provide certain information related to foreign assets/ transactions. If a taxpayer fails to report information about foreign financial assets, certain foreign entities (including corporations and trusts), or interests in and transfers to foreign entities that must be disclosed on any of numerous tax forms, the statute of limitation for the entire tax return does not begin until the omitted information is provided to the IRS. Prior to the new law, the
BULLET SUMMARY FATCA will: impose a 30 percent tax withholding on payments to 1)
foreign financial institutions (can include trusts) that fail to identify US accounts, their owners and assets to the IRS, or
These changes mean at a minimum, there will be an extension of time for 2) foreign corporations that do not supply the name, address, and the IRS to catch any problems with tax identification number of any your tax return and, even worse, a US individual with at least 10 complete lack of closure to one‟s tax percent ownership; transactions if any information is missing from the return relating to impose penalties up to US$50,000 foreign assets or transactions. on US taxpayers owning at least US$50,000 in offshore accounts / TO VDP OR NOT TO VDP? assets who fail to annually report The price for tax noncompliance, them as part of their US income tax already very high, just keeps escareturn; lating. Just ask any of the 14,700 taxpayers that have entered into the impose a 40 percent penalty on the amount of any understatement of IRS‟ Voluntary Disclosure Program tax attributable to undisclosed for(VDP) for offshore accounts and aseign assets; sets. Even higher prices are being paid by those who have not entered extend the statute of limitations into VDP but who are getting caught (perhaps indefinitely) in certain with unreported offshore holdings; cases involving offshore holdings. penalties can involve criminal prosecution. The offshore VDP expired in US persons should: October 2009, although many taxReview all foreign asset holdings payers are still coming forward unwith a tax professional; der the IRS‟ general VDP (even though penalties are not as clearly Determine the tax information and set out as they were in the nowother reporting that is required; expired offshore VDP). The IRS recently announced it is considering Ensure proper filings are up-toanother special offshore VDP aldate; though no details have been reMonitor the continuous IRS guidleased. Taxpayers with undisclosed ance being rendered in the foreign assets should seek professional advice about their particular situation, area; understand the options and related risks. The increase incidence of sto- Seriously consider whether “green cards” or “second” US passports are len bank data, increased enforcement efforts and powerful new weap- truly necessary and worth the tax and compliance price tags. ons for the taxman embodied in FATCA mean hiding one‟s head in the sand is simply no longer an option.
Q1 WRAP-UP Economic, Energy, and Agricultural Affairs Breakfast with Robert Hormats March 21, The American Business Council in conjunction with the Consulate General
Save the Date for UPCOMING EVENTS
Dubai hosted Robert D. Hormats, U.S. Under Secretary of State for Economic, Energy, and Agricultural Affairs who spoke at the March members breakfast. Under Secretary Hormats topic was “Update of the US Economic Recovery and Engagement in the Region”. Mr. Hormats outlined positive measures such as expanding programs for American and Arab entrepreneurs to connect and other US government backed initiatives such as the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank’s commercial interest in the region.
ARAB HEALTH BREAKFAST SUPERBOWL INTERCOUNCIL NETWORKING PRESIDENTS’ DAY
20th Annual ABC Golf Tournament at The Address Montgomerie Dubai , Emirates Hills
Thursday, April 21 DOOR PRIZE Two Round Trip Tickets to Scotland on KLM May 5, 2011 Celebrate Cinco de Mayo, with NAFTA membersCanada, America and Mexico as we combine NAFTA networking with the shake of the maracas.
Annual American Independence Day Celebration Friday, July 1, 2011 Iftar August 22 Back to Business September 12 Thank you to our President’s Day sponsors: Wild Wadi, PepsiCo, Flying Elephants, Crown Relocations, Qatar Airways, Dhamani, Gulf Drug, Sidhwa Holdings Limited, Jumeirah Group, The City Hospital, Abela & Co, Contempo, Palmer‟s Cocoa Butter Formula, Jebel Ali Golf Resort & Spa, Ruth‟s Chris Steak House, Fulbright & Jaworski, IBM, Kidville, Crowne Plaza, Hollywood Smile Clinic, United Parcel Service and Yahoo! Maktoob
Emirati Alumni Event September 26 Airshow Breakfast November 13