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Many countries across the world are changing the way they deal with overseas investors who wish to invest on their shores. Restrictions abound in many countries, from requiring native sponsors or partners to set up business, to additional taxes on foreign investment. Some may be surprised that the USA falls into the latter category.
Currently, the tax, which was introduced more than three decades ago in the 1980s, boosts the US tax income in the sum of billions; yet Republican Kevin Brady of Texas has proposed abolishing the tax in order to attract investment from abroad and increase global trade in favour of the USA. His view is that getting rid of the tax would welcome investment, leading to more US jobs.
This view takes as its base the situation in London, which has seen ever-increasing investment from abroad over the last few years, which have of course otherwise been difficult in terms of the economy. Figures cited show that more money was invested in London by Asian investors this year than in the whole of the United States. Brady is not alone in his view, but shares it with business leaders who want to encourage investment in US property, particularly by pension funds and investment trusts.
The US tax requires an overseas buyer to pay between 10% and 35% of the sales tax to the US government, a sum which could easily send them to invest in London instead. The purchase power of the Asian investors is only likely to increase in the future, and Brady thinks the US should take advantage of this – stating that $9.8 billion landed in London investment this year. However, getting rid of a tax is never going to be an easy hurdle to overcome, but with the country’s real estate performing well, it is easy to see how some advocates of the abolition of the tax will want the US to see more of the investment action from the Far and Middle East.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.