Tax on Western Union transfers……

[Cold Warrior]

I read an article recently that stated that some 3rd world countries are considering imposing income tax on money sent home. In some countries like Mexico this can run to billions of dollars a year. Does any know if bank transfers or by Western Union are subjected to income tax in Russia, Ukraine. etc.

[vagn]

... in response to Tax on Western Union transfers……, posted by Cold Warrior on May 13, 2003

Not long ago someone posted here that he sent X thousands
of dollars to his mother-in-law so she could buy a decent
place in which to live.  She was subsequently hit with a
fairly large "gift tax."  Maybe it was a WU transfer,
though I don't recall.

My point: One needs to know what is being recorded by the
tax authorities.  Probably they have a threshold value
beyond which they consider it worthwhile to begin collections.
But, being normal tax bastards, they see no reason to
notify you of your current obligation.  Nothing stops them
from submarining the liability, accumulating it in secret
over years, and then hitting you for that plus interest
and penalties.

Expect the ATM dodge to be addressed as soon as they figure
out how to do it.  Don't expect to be notified in advance.

And, if you are buying a place for the in-laws: Keep it in
your (and/or your wife's) name -- no "gift tax", and less hassles
later when the in-laws shuffle off to that big commune in the sky.

[John K]

... in response to submarine liabilities, posted by vagn on May 14, 2003

I think it's going to be difficult for them to tax cash transfers from ATMs.  First, they would have to be able to identify who is getting the money.  Then, they'd have to identify if they are a Ukrainian/Russian native.  Finally, they'd have to figure out where in the entire country the person lives.  That's a logistical nightmare that would be almost impossible to pull off.

Western Union, on the other hand, requires a person to submit their passport, showing their citizenship and likely their address.  Much easier to report up the chain to the tax authorities...

[vagn]

... in response to The ATM dodge..., posted by John K on May 14, 2003

All they need is someone to pin the transfers on.
That someone then gets to prove it ain't them.
Holding the card should make that hard to prove.

Remember, they can wait years for the amounts
involved to make the action worthwhile.  Than
just hang around the ATM that gets used regularly,
note who comes by, and follow up.  If a search
turns up the card then serve the papers.

[John K]

... in response to Re: The ATM dodge..., posted by vagn on May 15, 2003

To park someone by an ATM day after day waiting for someone in particular to hopefully show up is ludicrous, especially with the explosion of the number of ATMs going on in Ukraine.  Example:  In the small town of Zhitomir 2 years ago there was maybe 2 or 3 ATM machines.  My last trip in February found them on practically every street block.

Also, if someone is hanging around an ATM watching people use it, nobody will use it.  Russians/Ukrainians are very perceptive and very cautious.  No Russian/Ukrainian goverment organization is going to waste precious money on such a boondoggle.  Anyone hanging around an ATM is more likely someone who's waiting for a victim to rob.

Also, the cards are registered in the US.  Therefore they are unlikely to find out any information about the user, unlike a wire transfer directly into a bank account.  ATMs are about as anonymous as you're going to get.

[Dan]

... in response to Tax on Western Union transfers……, posted by Cold Warrior on May 13, 2003

Legislation passed last year (2002) requires Ukrainian citizens to submit a report for proceeds taken from WU. It may be that the bank or institution simply takes the information about the recipient and files the report with the tax authorities, but either way, the citizen is liable for taxes on amounts received.

- Dan

[John K]

... in response to Yes Indeedy . . ., posted by Dan on May 13, 2003

Marina and her mother are both on a joint checking account I set up for them.  It's a lot cheaper for them to simply hit an ATM over there and take out cash, than it is to send money via Western Union.

At least that the way it works in theory.  When Marina first had her ATM card, she decided to only take out five or ten hryvnas at a time, to save me money.  I had to explain to her I was paying a $3.75 transaction fee for her to simply take out the equivalent of $1.  After than, she took out more reasonable amounts of cash, which saved us a lot more money.

[LP]

... in response to Yes Indeedy . . ., posted by Dan on May 13, 2003

...could be another way to spank scammers. Like back in the old days in the US when nothing else worked. Remember Capone? I wonder if the Ukie tax cops would go after them if enough W.U. receipts were submitted, especially if the receiver's whereabouts could be confirmed.

[Cold Warrior]

... in response to Yes Indeedy . . ., posted by Dan on May 13, 2003

Is the tax deducted on payout or is the transfer included in overall taxable income received?

[Dan]

... in response to Question....., posted by Cold Warrior on May 13, 2003

The report of taxable income is provided to tax authorities. It is up to the individual to reconcile with those authorities.

I do NOT believe it is deducted at payout.

I hope this helps.

- Dan

[T P Cornholio]

... in response to From What I Understand . . ., posted by Dan on May 13, 2003

I seem to recall that over a certain amount a bank may retain a percentage for taxes, just as in the US if you win a significant cash prize.  Don't remember where I saw this (perhaps in some Ukrainian banking website), but it did cause me to raise an eyebrow.