How Dubai Government will know that I own single person USA LLC ?

[troubled soul]

I am trying to find a way to set up a tax-free US LLC for a Dubai resident.
I know that some US states offer high levels of privacy, meaning that there is no public record of LLC ownership in those states.
If I register a single-member US LLC as a non-resident and only conduct business with US banks, there will be no financial transactions between my US and UAE bank accounts.
So, how will the Dubai government know that I own this LLC?
How Dubai Government will know that I own single person USA LLC ?

 

[JustAnotherNomad]

Ever heard about FATCA and CRS?

 

[troubled soul]

Ever heard about FATCA and CRS?

Thanks for reply...not much...just little...not in details.........Seems It is for Bank account....May be not for company.....I attach the FATCA form....Can you explain more how they know that I own USA LLC by FATCA and CRS rule....So I can try to find out some loophole ...thanks

 

[Marzio]

Ever heard about FATCA and CRS?

As you know FATCA targets US persons offshore bank accounts and US isn't part of CRS so I'd say that there's no a direct way for UAE to know who is the beneficial owner of a US LLC.

While this is true, it is also true that IRS knows who US LLC beneficial owner is through form 5472 and you'll never know if and when those informations will be shared.

 

[Sols]

The short answer is that they can't. They can try asking IRS to disclose names on tax records and once the UBO register is in place, they can inquire about that. But the US will just ignore them. UAE has no sway over the US.

FATCA and CRS are your biggest risks, but that's only a risk if your company has a bank account that's reportable.

 

[Marzio]

FATCA and CRS are your biggest risks, but that's only a risk if your company has a bank account that's reportable.

How FATCA and CRS are a risk if a non US person is the beneficial owner of a US LLC bank account in US?

FATCA is unidirectional and CRS isn't reciprocated by US

 

[JustAnotherNomad]

FATCA is bidirectional with some countries and surely if you have an account with an EU EMI like Wise, it should be reported?

 

[Marzio]

FATCA is bidirectional with some countries

First time i hear that.

I always knew that FATCA was an instrument targeted at finding offshore bank accounts of US persons.

 

[Sols]

How FATCA and CRS are a risk if a non US person is the beneficial owner of a US LLC bank account in US?

FATCA is unidirectional and CRS isn't reciprocated by US

FATCA is generally meant to be reciprocal but very few US banks actually report, the competent authority in the US barely acts on those reports, and very few countries are even eligible to receive. Although we're probably a long time away from US reporting to UAE, calling FATCA a non-risk or unidirectional would not be factual.

https://www.americanexpatfinance.co...document-implementing-tax-info-exchange-texts
Regarding CRS, you'll find I wrote "if your company has a bank account that's reportable", i.e. covering in case OP opens a bank account outside of US.

 

[JustAnotherNomad]

Hmmm, maybe it's not automatic yet? But I think information can be provided on request at least.

 

[Marzio]

FATCA is generally meant to be reciprocal but very few US banks actually report, the competent authority in the US barely acts on those reports, and very few countries are even eligible to receive

@Sols where's the list of banks that actually report and to which countries?

 

[Sols]

@Sols where's the list of banks that actually report and to which countries?

I've never seen one, but I have seen things happen in some European countries that indicate they received information under FATCA. Tax authorities finding out about bank accounts that have not transacted in those tax authorities' jurisdiction. Don't remember which US bank or banks the people had used, though. Pretty sure it was some of the big ones.

 

[JustAnotherNomad]

@Marzio Can you please PM me? It seems you have disabled PMs.

 

[jafo]

I've never seen one, but I have seen things happen in some European countries that indicate they received information under FATCA. Tax authorities finding out about bank accounts that have not transacted in those tax authorities' jurisdiction. Don't remember which US bank or banks the people had used, though. Pretty sure it was some of the big ones.

I can only imagine the sh1tstorm I would be in if someone steals my identity 2023 Identity Theft Facts and Statistics.
and uses it to transact business.

To prove that it wasn't me, I'd be sh1t out of luck, wouldn't I?

 

[Arkanoid2021]

I am trying to find a way to set up a tax-free US LLC for a Dubai resident.
I know that some US states offer high levels of privacy, meaning that there is no public record of LLC ownership in those states.
If I register a single-member US LLC as a non-resident and only conduct business with US banks, there will be no financial transactions between my US and UAE bank accounts.
So, how will the Dubai government know that I own this LLC?
How Dubai Government will know that I own single person USA LLC ?

Why do you want to hide the US LLC from Dubai govt ?

 

[tickertrader]

The short answer is that they can't. They can try asking IRS to disclose names on tax records and once the UBO register is in place, they can inquire about that. But the US will just ignore them. UAE has no sway over the US.

FATCA and CRS are your biggest risks, but that's only a risk if your company has a bank account that's reportable.

Hey Sols. I'm learning. Happened to see this thread. If I (non-us person) own a company in Cayman for example (non-us), and the company holds a bank account in US (assume this is the only bank it holds). Then I would expect the company is subject to no CRS rule and hence not reportable, right?

 

[Sols]

Hey Sols. I'm learning. Happened to see this thread. If I (non-us person) own a company in Cayman for example (non-us), and the company holds a bank account in US (assume this is the only bank it holds). Then I would expect the company is subject to no CRS rule and hence not reportable, right?

Correct. US is not signatory to CRS, so CRS does not apply. FATCA applies but the risk of reporting in your case is low because it's a company account and because FATCA reciprocity (i.e. US reporting to others) has been extremely underwhelming anyway.

 

[Clank]

Why do you want to hide the US LLC from Dubai govt ?

Corporate tax, I guess.

 

[myhand]

Hey Sols. I'm learning. Happened to see this thread. If I (non-us person) own a company in Cayman for example (non-us), and the company holds a bank account in US (assume this is the only bank it holds). Then I would expect the company is subject to no CRS rule and hence not reportable, right?

Smart solution - actually I didn't thought about it.

 

[tomboy]

the U.S. has established a network of bilateral intergovernmental agreements (IGAs) under FATCA with many countries to facilitate the exchange of tax-related information. These IGAs might lead to some level of reciprocal exchange of information, but it is not as comprehensive or as broad-based as the CRS.

There are two main types of IGAs under FATCA:

Model 1 IGA: This is a reciprocal agreement. Under a Model 1 IGA, foreign financial institutions (FFIs) in the partner country report information about U.S. account holders to their local tax authority, which then forwards the information to the IRS. Similarly, the U.S. provides the partner country with information about its residents who hold accounts in the U.S.

Model 2 IGA: This is a non-reciprocal agreement. FFIs in the partner country report directly to the IRS, and there isn't a similar automatic exchange of information from the U.S. to the partner country.

the U.S. and UAE have not entered into a FATCA IGA. This means that while UAE financial institutions may still comply with FATCA to avoid withholding taxes on U.S.-source income, there isn't a formalized structure for reciprocal exchange of tax information between the two countries.

Hey Sols. I'm learning. Happened to see this thread. If I (non-us person) own a company in Cayman for example (non-us), and the company holds a bank account in US (assume this is the only bank it holds). Then I would expect the company is subject to no CRS rule and hence not reportable, right?

Given this setup, if your Cayman company holds its only bank account in the U.S., the U.S. bank is not obligated to report under CRS. This is because the U.S. does not participate in CRS. The bank might have FATCA-related reporting obligations, but you mentioned the entity is a non-U.S. entity, so it would be the entity's responsibility (and not the bank's) to ensure any required FATCA compliance.
So, in the scenario you presented, the U.S. bank account of your Cayman company would not be reported under the CRS