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Updated 15 Jun 2018

Six months ago Donald Trump signed a law that would have resulted in massive tax liabilities for Americans living abroad who own businesses in the countries where they live. The Levy was aimed at multinationals such as Apple and Google who keep their profits offshore to avoid paying US corporation tax, but it would have affected 1m US citizens and green card holders who own more than 10 percent of a “controlled foreign corporation”.

As of Monday (11 June 2018) the Internal Revenue Service – the IRS – issued new guidelines that expats who have tax liabilities of less than $1m would have a one-year reprieve, allowing time for Congress to review and amend the legislation.

The US has a citizenship-based taxation system, rather than a residency-based system that is operated by the UK and most other major nations.

Groups such Democrats Abroad, Republicans Overseas, and American Citizens Abroad (ACA), an advocacy group in Washington, have long argued that the US should have a residency-based system. See the ACA Press Release.

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