American expats could have a tax relief as a new US bill introduced this month moves towards ending the country's citizenship-based taxation by only taxing those who live in the US.
The legislation has been tabled in the US House of Representatives and would exempt Americans living in countries like Canada or the UK from having to pay tax on income earned outside the United States.
North Carolina Republican Congressman George Holding, who tabled the Bill, called the current citizenship-based tax system "archaic," and said that it imposes "a costly burden on Americans living abroad."
"This common-sense bill takes a huge step towards ending the outdated, backwards policy of double-taxation of American citizens living abroad"
"This common-sense bill takes a huge step towards ending the outdated, backwards policy of double-taxation of American citizens living abroad," Holding stated.
The US is effectively the only country in the world that currently imposes citizenship-based taxation in that it taxes all its citizens regardless of where their income is earned or where they live.
In recent years, academics and various lobby groups, such as American Citizens Abroad, have argued that the U.S. should abandon its citizenship-based taxation policy to avoid double taxation.
To qualify for non-resident citizenship status under the Bill, the US individual must elect to be taxed as such, and meet certain foreign residency requirement.