Memo of Advice to Mr. US on Taxation System Case Study

Memo of Advice to Mr. US on Taxation System - Case turn over ExampleThe tax rates are applied to taxable income which is arrived after deducting all expenditure incurred by the individual as specified in IRS. Every US citizen (Mr.US) working and residing abroad is bound to cover up income from sources outside the unite States under Form 1099 from foreign returner (Publication 525, 2010). According to Arnold and McIntyre (3) individuals confront serious risks of having to pay excessive levels of tax as Mr. US being citizen of US and resident of UK may ca-ca to hand out with tax laws of both countries. However dual residence problems are generally resolved by dint of the haul breaker in tax treaties betwixt the two countries i.e. US and UK. Mr.US can be benefited from the double tax income treaty which follows the OECD Model Tax Convention. Mr. US shall file a report of Foreign Bank and pecuniary Accounts (FBAR) as his account is maintained by foreign organization in Mauriti us, a labor post which contracts the services of Mr. US to Newco in London for the period of five years. Tax Exchange In throwation Agreements between US and UK are incorporated in Double Taxation Treaty and Mr. US will harbour to comply with the double taxation treaty of filing the FBAR reports and paying income tax for his income earned for his services. Similarly, Labor deputation in Mauritius will pay taxes for its income from UK in Mauritius as well as United Kingdom as per the double taxation treaty existing between these two countries. As evident from the case study, Mr. US could face dual source issues arising through varying definitions in tax jurisdictions i.e. in US and UK. Mr. US may seek tax exemption within double taxation treaty between United States and United Kingdom. Mr. US may claim tax deduction in double taxation through exemption, credit or tax deduction through structured finance and possible exemptions in form of dividends and capital gains (Arnold and McI ntyre,Ch. 15). It is informed that many tax jurisdictions do non grant deductions for future risk deviation or contingency provisions while some countries permit deduction for pension provisions. Mr. US shall begin tax exemption from pension provision granted by Mauritius broker firm. The Mauritius broker company intends to pass on a discretionary go for in favor of Mr. US family owned by Mauritius firm. It is mentioned that shareholders dividends do not in any legally relevant sense arise in the taxing state which bureau the taxation belongs to the country to which the corporation belongs, i.e. Mauritius where the firm will be established (Arnold and McIntyre,Ch.3 53). The discretionary trust, where the remaining $225k have been diverted will be paid by the trust wholly under double taxation treat between two countries United States and Mauritius, as the residence of trustees is in US while the trust is incorporated in Mauritius (Arnold and McIntyre,Ch.1, 21). Works Cited Arn old Brian J and McIntyre Micheal J International Tax Primer, Chapter