Havana, Cuba is well known for it’s great cigars, exotic night life, beautiful women and old charm, but there are more….. Cuba has a territorial tax system for foreigners that are resident in the country. However, ordinary Cubans are taxed on their world wide income.
Faced with financial ruin, one of the last communist countries in the world is now undergoing a new revolution, Capitalism is coming back to Cuba…
The extremely low salaries and cost level adds to the attraction. The average salary for state employed Cuban’s is about USD 19 per month. An average pension is USD 5 per month.
The saying goes in Cuba:
“The government pretends to pay us and we pretend to work”.
To motivate Cuban’s to work can be a challenge according to new business owners.
The salaries is not enough to survive, and food is rationed so the state provide basic food on quotas to favorable prices, and traditional health care is free. However, pharmaceuticals are in short supply, but foreigners are given preference before ordinary Cuban’s here as well because they have money and can pay. Many Cuban’s receive money almost monthly in support from their relatives abroad (mostly in the US) that escaped the revolution.
Street view of old Havana, Cuba. Courtesy of Wiki Commons.
A large privatization program has been underway in Cuba for some time. The state has begin giving back the homes taken during the revolution to the people, and all types of small businesses have been / are being privatized.
However, there are still travelling restrictions for ordinary Cuban’s and the media and internet use are strictly controlled by the state. Dissidents are not tolerated.
As it was in Eastern Europe at the fall of communism most buildings and infrastructure incuding public transportation systems are “run down” and in need of extensive renovation. The state is broke and the Cuban’s have no savings.
The key to future investments are in the hands of the more than a million displaced Cuban’s abroad, many living in the Miami area of the United States. They have the money and could come back to Cuba in the future.
Havana city faces a serious drinking water shortage due to gross neglect of the infrastructure for decades. In addition the United Nations Environmental Program (UNEP) warns that water pollution in Cuba is a serious concern. The standard practices throughout the revolutionary period of virtually non-existent pollution limits, and detrimental agricultural practices, seem to have taken a significant toll on the Cuban environment. Cuban bays are widely recognized as being polluted.
New luxury hotels are planned on Cuba to attract foreigners. This hotels will have their own clean water systems.
High net worth individuals (“HNWIs“) around the world have traditionally regarded Switzerland, London and New York as the main global wealth management hubs. However, over the last 5 years, Singapore is increasingly regarded by such HNWIs as a serious alternative to these traditional centres.
In 2011, assets under management by Singapore-based managers have reached 1 trillion US dollars. This article briefly highlights the key factors making Singapore a rising jurisdiction amongst HNWIs for the setting up of trusts for their wealth management purposes.
Picture Singapore Skyline, courtesy of Nick Socrates Wiki Commons.
Robust Regulatory Regime: Singapore trust law is based substantially upon English trust principles. The principal statutes governing trusts that are most relevant to the private banking and wealth management industry are the Trust Companies Act1 and the Trustees Act2.
The Monetary Authority of Singapore (“MAS”) is the regulator of trust companies under the TCA, and supervises the complementary activities of trust services, private banking and wealth management in Singapore. The TCA imposes mandatory licensing for all corporations that carry on or hold themselves out as carrying on any “trust business”3 in Singapore. The licensed trust company is required to appoint at least two resident managers with certain minimum credentials and who must be approved by the MAS after a “fit and proper” test to ensure their suitability for the role.
Well Defined Legal Framework for Trusts: The Trustees Act was amended to facilitate and promote wealth management in Singapore through the use of trusts and trustee services. This is part of the Singapore government’s broader aim to enhance Singapore’s position as a leading financial and wealth management centre. Salient provisions of the Trustees Act include:
(a) Reservation of power permitted: Section 90(5) of the Trustees Act expressly provides that no trust or settlement of property on trust shall be invalid by reason only that the settlor reserves certain powers to himself. The powers concerned are those of investment or asset management.
(b) Promotion of Singapore trusts to foreigners: Under the Trustees Act, a person who is a non-Singapore citizen nor non-Singapore domicile is excluded from forced inheritance and succession rules, provided the trust is governed under Singapore law and the trustees must be resident in Singapore. This would allay fears by foreigners about the enforceability of such trusts in Singapore due to forced heirship rules in their home jurisdictions.
(c) Rules against perpetuities addressed: Under Section 27(2)(b) of the Trustees Act, the validity of a trust extends to 100 years unless a shorter period is specified in the trust, in order to address the rule against perpetuities for trusts.
Confidentiality: Singapore has enacted comprehensive secrecy and confidentiality provisions to the Banking Act, Chapter 19 of Singapore (“Banking Act”)4 and the Trust Companies Act5 to offer protection to the personal information of banking clients and settlors and beneficiaries of trusts. That said, these secrecy laws are subject to Singapore’s commitment to assist the international community in combating against money laundering, terrorism financing and tax evasion.
Friendly Tax Environment: Singapore has a territorial tax system (only Singapore-sourced income is subject to Singapore income tax) and only taxes foreign-sourced income upon its remittance (or deemed remittance) into Singapore. Capital gains are not subject to tax in Singapore and estate duty was abolished in 2008. Singapore’s highest personal income tax rate is 20% whereas its corporate tax rate is flat at 17%. In addition, Singapore has an extensive network of double taxation agreements with over 70 jurisdictions. Qualifying Foreign Trusts (“QFTs”), which are trusts created in writing where the settlor and beneficiaries are neither citizens nor residents of Singapore or are foreign companies, enjoy attractive tax exemptions. To enjoy the tax exemption, the QFT must be administered by a Singapore licensed trust company.
Open Economy and Sound Economic Policies: Singapore’s greatest competitive advantage is the openness of its economy. It has been regularly rated as one of the world’s freest economy, and easiest jurisdiction to carry on business by the World Bank. There is no exchange control, and the exchange rate of the Singapore dollar is managed by MAS, against a basket of currencies of its main trading partners, with the objective of keeping inflation low and maintaining the purchasing power of the Singapore dollar. Global financial institutions (including private bankers) and fund managers are attracted to Singapore due to its competitive tax incentives for the financial and wealth management industry.
The wealth management industry in Singapore continues to be in an exciting phase of growth, notwithstanding current global economic uncertainties. Singapore has set its sights on attracting the world’s wealthiest to its shores. With its open economy, well-defined legal and regulatory framework, and tax neutrality, Singapore is well positioned to be the premier wealth management hub in Asia, acting as the gateway for the world to tap Asian investments and to the world for Asian investors.
1 Chapter 336 of Singapore (“TCA”).
2 Chapter 337 of Singapore (“Trustees Act”).
4 Under Section 47 of the Banking Act, a blanket prohibition exists against disclosure of “customer information” by a bank (or any of its officers) to any other person except as expressly provided in the Banking Act.
5 Similar provision prohibits disclosure of information regarding a “protected party” (which is defined as, in relation to a trust company, a trust for which the trust company provides trust business services and includes the settlor and beneficiary under the trust) by a licensed trust company (or any of its officers) to any other person, except as expressly provided in the TCA.
University of Florida Assistant Law Professor Omri Marian discusses potential tax abuses using Bitcoin.
Omri Marian speaks on Bloomberg Television’s “In The Loop.” Source: Bloomberg News.
A new global report on internet connectivity says that Hong Kong continues to have the fastest average peak internet speed, and that it has the third-highest average connection speed.
Cloud service provider Akamai found that Hong Kong has an average peak internet speed of 65.4Mbps, ahead of South Korea, Japan, and Singapore. However, South Korea came first for average connection speed, at 22.1Mbps, while Hong Kong came third, after Japan, at 12.5Mbps. Further, 81 percent of Hong Kong’s connections were above 4Mbps, and 38 percent were above 10Mbps.
The UK was ranked 14th for average connection, at 9.1Mbps; 77 percent of the country’s connections were above 4Mbps, and 27 percent were above 10Mbps. By comparison, Spain’s average connection was 6.9Mbps, with 71 percent above 4Mbps and 14 percent above 10Mbps.
Hong Kong star Ella Koon. Picture courtesy of Wiki Common.
Meanwhile, Australia’s average connection was 5.5Mbps, with 51 percent 4Mbps and 8.1 percent above 10Mbps.
Akamai’s figures refer to the third quarter of 2013. The company explains that it has a globally-distributed Intelligent Platform made up of a distributed network of servers and intelligent software, which delivers over two trillion interactions daily. The Platform allows Akamai to gather large amounts of information on many metrics, including connection speeds and network connectivity/availability issues, and the data is published quarterly in the company’s State of the Internet Report.
The company describes the report as a “key reference for those involved in broadband initiatives around the world, whether at an industry or government level.”
The Isle of Man has become the first British dependent territory to sign an agreement with the United Kingdom extending the automatic disclosure of tax information.
The intergovernmental agreement was signed in London on October 10 by Chief Minister Allan Bell and HM Treasury Exchequer Secretary David Gauke.
It is modeled on the requirements of the Foreign Account Tax Compliance Act (FATCA) introduced by the United States to ensure the tax compliance of its citizens with international interests.
On the current timetable for implementation of the new agreement, the two Governments have agreed to start exchanging additional information from 2016.
Map courtesy of FamilySearch Wiki Commons
The Isle of Man already shares information automatically on personal savings income with the UK and other European Union countries, having been the first non-EU jurisdiction to make a public commitment to this under the EU Savings Directive in June 2009. The Island was also the first to commit, in December last year, to the FATCA-style agreement with the UK extending the scope of automatic disclosure to include, for example, companies and trusts.
The Chief Minister said: “In signing this historic agreement with the United Kingdom we are underlining the message to our neighbors and the wider world that our Island is a responsible center for top quality international business.
“The Isle of Man was the first to strike this agreement with the UK and we are now the first to sign, demonstrating the clear commitment of both countries to the development of a new global standard in automatic exchange.”
Mr Bell added: “Today’s signing is a significant step towards that global standard and further proof that the tax haven moniker in relation to the Isle of Man is well and truly dead, as David Cameron recognized recently in the House of Commons.”
He went on: “The Isle of Man is a forward looking country with a diverse, dynamic economy and a track record of leading the way in the field of international tax co-operation.”
“We have a long-established policy of complying with global standards, and we saw some time ago that enhanced automatic exchange of information on the FATCA model was becoming the new global standard in tax transparency.”