Current Issues
MONACO NEWS
Prince Albert II visited China in April, the first time a Monaco head of state has done so. The Chinese Premier and Prince Albert II expressed support for continuing high-level contact between the two countries. China and Monaco upgraded diplomatic relations in February to ambassadorial level. As a result of the visit, Monaco is now on the official list of destinations for Chinese tourists. Prince Albert II also visited Japan where he met with their Imperial Highnesses, the Emperor and Empress of Japan.
Monaco itself is just about to receive a large number of visitors for the 66th Monaco Grand Prix. The trials start Thursday, 22th May and the final race runs on Sunday, 27th May. The Monaco Grand Prix takes place just following the Cannes Film Festival and promises to attract stars and paparazzi alike.
Business activity in Monaco is also buzzing according to the Minister of State, Jean-Paul Proust, who recently released figures showing an increase in tourism activity of 14% for the year 2006. There was a 29% increase in banking business and a 5% increase in the number of new companies starting up in Monaco for the same period. The estimated GDP for 2006 is nearly 3.5 billion euros or roughlly 50,000 Euros per capita. This is two times the GDP of France per capita and is calculated using a population for Monaco of over 65,000 people which is double the actual resident population as it includes the daily influx of workers from France and Italy.
Fact Flash: Monaco investment vehicle
"The Monaco Societe Civile Immoviliere (SCI) is the perfect investment entity for property and for holding capital" according to Christophe Medecin, EBC's expert on Monegasque business and administrative structures. "There are no prohibitive costs nor administrative barriers and the SCI is better placed when it comes to taxation".
JURISDICTIONS ROUND-UP
European Tax Issues
Asian and Pacific Issues
Middle Eastern Matters
United States Tax Issues
Aircraft and Shipping News
Feature
Please click on the area of interest to go directly to the news.
European Tax IssuesS.E.P.A.( Single Euro Payments Area)
From 1st of January 2008, a new European single payment system, the SEPA, will be put in place. The objective of this measure is to harmonize euro currency transfers (transfers, tax and credit card payments) between member countries of the European Union. This will enable companies and individuals to make or receive payment on the same terms of speed, security and cost throughout the European Union. SEPA will cover the 25 member states of European Union as well as Iceland, Norway, Liechtenstein and Switzerland. Bulgaria and Romania will benefit from this measure at a later date. It is expected to be fully implemented by from 2010.
EU Savings Tax Directive
The EU Savings Tax Directive has seen the shift of funds to "non-regulated" offshore jurisdictions. This in turn is now leading to domestic European governments legislatiing directly to stop the flow away of funds. This is no more evident than in the UK with recent initiatives targeting the recuperation of taxes on "offshore" funds. See the UK section below.
EU Common Consolidated Corporate Tax Base
The European Commision has adopted a second communication on the progress towards a Common Consolidated Corporate Tax Base (CCCTB) in prepartion for a formal proposal in 2008. This is designed to overcome the problems created by the existence of 27 different corporate tax regimes in Europe at present. Certain member states are critical of the initative however.
France
France has formally taken Panama off its list of low tax countries subject to prohibitive measures.
UK
UK Residence and domicile
1.The changes announced mean that on and after 6 April 2008, any day where the individual is present in the UK at midnight will be counted as a day of presence in the UK for residence test purposes SUBJECT TO 2 below.
2.There is an additional exemption for passengers who are in transit between two places outside the UK. The exemption caters for people who have to change airports or terminals when transiting through the UK. It will also allow people to switch between modes of transport, so they could fly in but leave by ferry or train for example.Days spent in transit, which could involve being in the UK at midnight, will not be counted as days of presence in the UK for residence test purposes so long as during transit the individual does not engage in activities that are to a substantial extent unrelated to their passage though the UK. So, for example, if they take time out to attend a business meeting then the transit exemption will not have effect.
UK Offshore Disclosure Facility
The HRMC's tax 'amnesty' or Offshore Disclosure Facility comes to an end on June 22, 2007 and it is expected that investigations will commence just over 2 weeks' later on July 9, 2007. The 'amnesty' has been targeted at UK taxpayers with undisclosed offshore bank accounts to ensure their disclosure and the payment of outstanding taxes. Under the 'amnesty' individuals have until June 22, 2007 to register an intention to make a disclosure of any tax due. There is then five months to submit the disclosure and pay any outstandings and penalties. The HMRC will start enquiries after the November 26, 2007.
The 'amnesty' follows hard on the heals of the ruling by the Finance and Tax Tribunals Special Commissioners in favour of the HMRC that compelled Barclays Bank to provide details of clients' offshore accounts.
Declaring an offshore account means not a full investigation and the penalty, which can be up to 100 percent, is capped at only 10 percent of the amount outstanding. This 10 percent is payable in addition to the tax and any interest on the tax due. Penalties for non-declaration include prosecution.
The 'amnesty' also applies to people with undisclosed tax liabilities arising from UK bank accounts.
UK Residency test - Gaines-Cooper
Currently the test for UK residency is that an individual spends over 183 days in the UK in any tax year or 91 days on average per year over a four-year period. In the recent case of Gaines-Cooper v. Revenue and Customs Commissioners, the Special Commissioners upheld the decision of the HRMC that took account of nights spent in the UK by Mr Gaines-Cooper. This gave rise to speculation that the general test to be applied for residency would be revised in practice by the HRMC so that nights spent in the UK were the determining factor and days of arrival in the UK and days of departure would no longer be excluded.
However, the Gaines-Cooper decision may still be subject to appeal and other commentators have argued that it was a decision based on the precise circumstances of Mr Gaines-Cooper with the possibility that each case could from now be decided on its own merits. Further any UK general rule would be overruled by the provisions of any international tax treaty including residency, for example, as exists between France and the UK.
The HRMC has more recently issued a statement (HRMV Revenue & Customes Brief 01/07) reiterating its normal practice of disregarding days of arrival and departure for the '91 day' test.
UK Residency of trustees and tax liability
From April 6, 2007 UK resident professional trustees are no longer deemed to be non-resident for capital gains tax purposes giving rise to a UK tax liability. In the past, providing the settlor of the trust was not domiciled, resident or ordinarily resident in the UK at the time of the settlement then capital gains tax was not incurred by a UK resident professional trustee.
Now for capital gains tax purposes, the professional trustee will have to be resident in another jurisdiction. Moreover, the professional trustee should not have a permanent establishment or branch in the UK.
For further information on this and other jurisdictions please complete the Information Request Form.
Isle of Man
The Isle of Man and the UK government reached agreement to a framework of principles for the recognition of the Isle of Man's separate status within the UK's constitutional context, last month. The UK government's declaration recognises that the Isle of Man has its own identity and interests in the international area.
BVI
According to the BVI BC Act, license fees due in the course of liquidation must be paid before liquidation can conclude. Where a company is incorporated during the first six months of the calendar year, the license fee will have to be paid if the liquidation process is not completed by 31st May, 2007.
Switzerland
The row of the Swiss cantonal tax system continues with Mr Almunia, the European Union's Economic and Monetary Affairs Commissioner, asserting that there is no doubt that the Swiss cantonal tax scheme is a subsidy by another name as it offers an unfair tax advantage to companies in Switzerland, where profits are generated in the European Union. European law provides precludes the granting of tax breaks and subsidies in certain industries and regions to achieve equity across the EU. Switzerland has emphasised that it is not part of the Single European Market and should therefore not be subjected to such regulation.
For further information on these and other jurisdictions please complete the Information Request Form.
China
A new Anti Money Laundering Law is effective in the People's Republic of China from 1st January 2007. The People's Bank of China has also issued the Financial Institutions Anti-Money Laundering Regulations and the Financial Institutions Reporting and Monitoring Schemes for Large and Suspicious Transactions. The AML deals with administrative and reporting requirements and imposes sanctions and penalties for illegal activities.
Australia
The Australian Government enacted the Anti Money Laundering and Counter Terrorism Financing Act 2006 on the 7th December, 2006. There were no changes made following the draft Bill released in November. The Act adresses technical issues. The prosecution free period under the Act is now 15 months.
For further information on these and other jurisdictions please complete the Information Request Form.
United Arab Emirates
A new offshore companies registry has been set up in Ras Al Khaimah in the United Arab Emirates. It is part of the Ras Al Khaimah Free Trade Zone and is designed to attract clients to rival Dubai's Jebel Ali Free Zone. Amongst the features of companies to be registered there is no restriction on the ownership of properties and types of business. This International Registry is to allow bearer shares. Companies will be able to operate with a single director and there will be no audit requirement. Companies can also choose the prevailing legislation for dispute handling and inheritance issues.
For further information on this and other jurisdictions please complete the Information Request Form.
The United States Government met with British Virgin Islands officials in April to strengthen co-operation between the two countries in areas including illegal immigration, human smuggling, money crimes and advance clearing of yachts and ferries.
The US Department of Treasury, Justice and Homeland Security has just released its 2007 National Money Laundering Strategy with policy and strategies to fight illegal international activities and to help US financial institutions through combating money laundering and terrorist financing.
The US Securities and Exchange Commission reached agreement with the German Federal Financial Supervisory Authority in April about the sharing of information cross borders.
For further information on this and other jurisdictions please complete the Information Request Form.
The US Legal System - A general overview
The United States is a federal republic made up of 50 states (and some offshore territories) each with their own law and a federal government that has been granted powers, by the states, under the US Constitution, for national matters. The Federal Government is comprised of three parts: the Congress, the Executive and the Judiciary.
The Congress is comprised of the House of Representatives and the Senate. Members of the House of Representatives are elected by the states on the basis of proportional representation according to population. Larger states such as New York have a greater number of representatives than the less populated states such as Colorado. The Senate on the other hand, has 100 members, two elected by eash state regardless of population.
The Congress makes the laws that are administered and enforced by the Executive. The Executive is headed by the President. The President is elected nationally and is supported in the executive function by the Departments of the Federal Government, their agencies, and independent commissions whose chairmen are appointed by the President. For example, the Department of Commerce monitors the US' business activities, it's trade and investment statistics. Commissions such as the Federal Trade Commission (FTC) and the Securities Exchange Commission (SEC) have the respective roles of: enforcing the laws designed to protect consumers and businesses from deceptive and predatory practices, and, for regulating hte public offering and trading of financial instruments.
The Judiciary interprets the US Constitution and other lwas and regulations where there are national implications. The courts can also "make law" where they apply historical principles to resolve disputes in the case of no existing laws or where existing laws are unclear. US Federal judges are appointed by the President for life and are thus regarded as "impartial" not being elected as is the President.
State legal systems are made up in a similar manner - the parliament, the executive and the judiciary. State legal systems are concerned with state rather than national matters.
Any foreign company wanting to do business in the US will face both State and Federal laws.
The Isle of Man has just launched an aircraft register. The register is open to all noncommercial planes, and is expected to attract professional, corporate aircraft that will benefit from the Isle of Man's zero rate of corporation tax and zero insurance premium tax.
Some visitors to the website have suggested the inclusion of a regular feature on topical and general issues. This is the first in an intended series. If you have any suggestions or comments please do not hesitate to contact us at the address included in this website.
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