PEP and US Tax Residents

Politically Exposed Person (PEP)

A politically exposed person (PEP) is an individual who holds a prominent public position or office, such as a head of state, senior government official, senior executive of a state-owned corporation, or a high-ranking military officer. PEPs may also include their family members and close associates. Due to their positions of power and influence, PEPs may be at a higher risk of involvement in corruption or other illicit activities. In the context of financial services, PEPs are considered to be higher-risk clients and are subject to enhanced due diligence and monitoring by financial institutions to prevent money laundering, fraud and other financial crimes.

U.S. Tax Resident

U.S. person tax refers to the federal income tax system in the United States, which applies to U.S. citizens and resident aliens. U.S. citizens and resident aliens are taxed on their worldwide income, regardless of where it is earned, and are also subject to U.S. estate and gift taxes on their worldwide assets. U.S. citizens and resident aliens are required to file a tax return with the Internal Revenue Service (IRS) every year. The tax rate on U.S. citizens and resident aliens is progressive. The definition of a U.S. person can be more extensive than just a U.S. citizen or resident alien, and can include U.S. entities such as corporations, partnerships, and trusts. The U.S. has agreements with certain countries to avoid double taxation.