On the Thai Immigration front, there have been several announcements in recent weeks regarding the creation of the Long Term Residence, or LTR, visa in Thailand (a “residence” visa in name only as these proposed visas appear to be non-immigrant in nature although they confer a substantial portion of lawful status in Thailand, namely 10 years). There appear to be four subcategories to choose from for the prospective long term “resident” in Thailand. One category appears aimed at high net worth retirees, while another is for those who invest significant capital into Thailand, another seems geared to long staying professionals, and finally there appears to be a “digital nomad” LTR visa. However, September is the earliest that it seems such visas will be available. Concurrently, it is noteworthy that this new visa category is unlikely to be utilized by a broad segment of the expat population in Thailand, but actual usage remains to be seen.

All of this news comes on the heels of a general easing of rules regarding establishments’ opening hours in Thailand as tourists begin to trickle back into the Kingdom and enjoy the various entertainment venues the country has to offer.

On the United States Immigration front, the backlog of cases continues to cause relative delays in processing compared to times past. Many are waiting longer time periods to see visas such as the K-1 visa to be issued. Meanwhile, those seeking immigrant spouse visas, such as the CR-1 visa or the IR-1 visa are dealing with increasing delays due to the review process at the National Visa Center. Hopefully these issues will abate throughout the remainder of 2022, but such developments remain to be seen.

While some are speculating as to what this trend means in a broad socio-economic context, I feel that some analysis is necessary to put some perspective on these numbers. A reader looking at the Federal Register’s official posting regarding these numbers will likely note the following information:

For purposes of this listing, long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship.

The casual reader may wonder: what does this mean? Well to quote directly from the Cornell Law School’s website which lists sections 877 (e)(1) and 877(e)(2):

(1) In general

Any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701 (b)(6)) shall be treated for purposes of this section and sections 2107, 2501, and 6039G in the same manner as if such resident were a citizen of the United States who lost United States citizenship on the date of such cessation or commencement.

Therefore, based upon the information provided by the Federal Register and the United States statutes noted above some of those listed in the Federal Register as those renouncing their Citizenship could be United States Lawful Permanent Residents (colloquially referred to as “Green Card” holders) who have chosen to give up their permanent resident status. This explanation probably does not account for all of the “Citizenship renunciations” listed in the recent Federal Register publication, but it may account for some of these numbers. In any event, the number of those expatriating from the United States remains high compared to previous points in American history. The question remains, why are higher numbers of Americans renouncing their citizenship?

There are some who contend that the recent spike in citizenship renunciation may stem from American policy regarding taxation of United States Citizens living abroad. American Citizens (as well as lawful permanent residents) are taxed on their worldwide income, regardless of where they physically reside. This situation is in stark contrast to the tax policies of virtually every other country in the world as most countries only tax those of their citizenry who reside in their country. There are exceptions to the previous statement as issues such as domicile play into many countries’ foreign taxation policies. Many feel that the recent increases in the number of renunciations is driven by Americans with high foreign derived incomes seeking to rid themselves of the need to pay American taxes. In a major story from last year it was noted that one of the founders of Facebook had renounced his United States Citizenship before the IPO of that company’s stock. It should be noted that some argue that his tax obligations at that time may not have actually decreased as a result of his decision to give up his citizenship (due to American tax laws such as the so-called “Expatriation Tax” or “Exit Tax”), although his future tax liabilities may be reduced as a result of that decision. Perhaps more Americans are taking the (somewhat drastic) step of renouncing their citizenship in order to save some money from the tax man. Without knowing each former-American’s motivations for renouncing United States Citizenship we are left to speculate.

There may be another impetus behind the recent increase in the number of Americans renouncing their Citizenship: the FATCA. The Foreign Account Tax Compliance Act (FATCA) compels financial institutions outside of the United States to report information about accounts maintained by American Citizens or lawful permanent residents to the Internal Revenue Service. Furthermore, foreign financial institutions are also required to report on accounts maintained by foreign corporations in which Americans or Lawful Permanent Residents own a significant interest. The FATCA’s implementation has been pushed back until July of 2014. Could the looming specter of the FATCA be the reason for the recent uptick in American’s renouncing their citizenship? One of the many upshots of the FATCA is the fact that the regulatory requirements imposed by the American government on foreign banking and financial institutions can be rather burdensome. One way that these foreign institutions can relieve themselves of these burdens is by refusing to accept American customers. If there are no Americans holding accounts at a given foreign bank, then the bank does not necessarily have to comply with the provisions of the FATCA. This has lead to a situation where more and more overseas banks are refusing to provide services to Americans living and working abroad. By renouncing United States Citizenship and naturalizing to the Citizenship of another country a former American could bank in much the same manner as other foreign nationals.

The decision to renounce one’s U.S. Citizenship is a significant one and should not me made lightly. There are many benefits to being an American Citizen so those thinking of renouncing their Citizenship should review not only their tax situation, but also the intangible and tangible benefits of their American citizenship (including the US Passport). Will this trend continue? It remains to be seen, but there are many who feel that as American oversight of global taxation matters becomes more ubiquitous there will be more American’s who question the value of their citizenship.

–Benjamin W. Hart is an American attorney who resides in Bangkok, Thailand.

For related information please see: Citizenship Renunciation.