Citigroup could be fined $600,000 (£379,000) for derivative transactions
designed to help foreigners avoid taxes on dividends.
The regulatory body which oversees broker dealers, Financial Industry
Regulatory Authority, is expected to announce whether or not it will fine the
bank over “swap” transactions.
The transactions help Citi’s foreign clients receive the full value of
dividends without paying derivative taxes, which is alleged to help clients
avoid billions of dollars in US taxes, the Financial Times reported.
The move follows on from a recent revamp by the US authorities to take a
tougher stance on offshore tax operations.
The bank paid $24m to American tax authorities in 2006 in relation to
dividend taxes for swap transactions.
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