Oleg Tinkov is the First Businessman to be Charged with Failing to Pay US Exit Tax
The US Department of Justice has issued a provisional warrant for the arrest of Russian businessman Oleg Tinkov, who founded an online bank in Russia with over ten million clients. The Tinkov Group was floated on the London Stock Exchange for over USD $1 billion.
Authorities in the US state he renounced his US citizenship three days after the flotation in 2013. Under US tax law, this 'voluntary expatriation' automatically triggers a considered disposal of the taxpayer's entire worldwide assets, which requires the individual to declare an Initial and Annual Expatriation Statement, and to pay capital gains tax. However, according to US prosecutors, Tinkov failed to do this, reporting a 2013 income of USD $206,000, and declaring his net worth on official exit tax documents to be a mere USD $300,000.
The indictment alleges he beneficially owns over USD $1 billion of shares through a British Virgin Islands holding structure. The company where he holds a 40% shareholding is called TCS Group, and is still listed on the London Stock Exchange, which runs a global chain of luxury hotels.
Mr Tinkov was a Russian citizen who obtained a US passport in 1996, and is the first 'voluntary US expatriate' case to be publicly accused of evading US expatriation taxes. Even though renouncement is popular; with several thousand US citizens surrendering their citizenship each year and abiding by the rules.
Currently on bail in London, mandated by Westminster Magistrates’ Court; Mr Tinkov is currently seeking to challenge the US's warrant for extradition. Bail was set at GBP £20 million, backed by electronic tagging, a curfew and surrender of his passport. If successfully convicted, he could face up to 6 years in jail (3 years on each count) as well as suffering heavy financial penalties.
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