The US Treasury Department says a record number of Americans living abroad are renouncing citizenship due to a stringent US tax policy.
Some 4500 individuals did so in 2015 in comparison to over 3400 people the previous year. The cause behind the massive increase in renunciations is believed to be the Foreign Accounts Tax Compliance Act, which came into force in 2010. The law imposes harsh penalties for non-compliance. In 2009, it was revealed that Swiss bank UBS had enabled its American customers to defraud the US tax authorities. This resulted in a Washington clampdown on foreign banks. The encroachment prompted many of the banks to scrap business with Americans living abroad, causing some US citizens overseas to give up their passports. Since FATCA came into effect, US authorities have collected billions from foreign banking institutions and Americans in taxes and penalties.