Citizenship by investment programs offered by countries like Antigua & Barbuda, St. Kitts & Nevis, Cyprus and Malta regularly face criticism for facilitating tax evasion.
However, deeper analysis of relationship between an individual’s citizenship status and tax status paints a completely different picture.
Contrary to popular perception, an individual’s passport has absolutely no bearing on his or her tax status. Rather, that is determined solely by their country of tax residency.
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Dominica taxes individuals in its jurisdiction based on the time spent by them on the island.
An individual who has just purchased the Dominican passport but is not a tax resident in the country won’t gain any tax benefits from the investment immigration decision.
St. Kitts & Nevis determines tax status based on time spent and purpose of stay in the island.
The US is the only country that relies solely on citizenship to determine tax residency. US citizens are subject to US tax laws irrespective of location or duration of residence.
The preferred benchmark is an individual’s country of residence, followed by virtually all countries offering citizenship by investment or permanent residence by investment programs.
Accusing nations offering golden visas or investor citizenship of facilitating tax fraud is patently unfair.
Institutions like the OECD and the European Commission have stated on record that such programs, by themselves, don’t pose a tax risk.
While investment immigration programs may have a lot of room to improve in terms of better due diligence and stricter oversight, the link with tax evasion and tax misreporting is unfair and inaccurate.