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Google use the Dutch Sandwhich to minimize taxes globally

Caribbean Tax & Money Havens, European Tax & Money Havens, ,

Google Inc. reduced its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s strategies are known to lawyers as the “Double Irish” and the “Dutch Sandwich”, and helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

See the details in this interesting article from Bloomberg by clicking here.

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Liechtenstein – New tax structure

European Tax & Money Havens, , , , ,

Determined to increase the attractiveness of Liechtenstein as a finance centre, the principality’s state parliament has adopted the government’s bill for a comprehensive reform of taxation, and has given the green light for the law to enter into force as planned on January 1, 2011. According to the government, the modern, competitive new tax system fulfils current requirements for legislation that is both internationally compatible and in accordance with European law.

Designed to be more transparent, the new simplified tax law retains the traditionally low tax rates to prevent an increased fiscal burden on individuals, excepting those with particularly high income. Indeed, as a result of the new tax structure, the tax burden will be reduced for families and taxpayers on low income.

Following the state parliament’s meeting, Liechtenstein’s Prime Minister Klaus Tschütscher welcomed the decision to adopt the historic reform of the country’s taxation after almost 50 years of the existing law. According to Tschütscher, the adoption of the modern tax law once again reinforces Liechtenstein’s political credibility and its ability to reform. The new law will serve to strengthen the principality in the current drive towards globalization and to improve the attractiveness and stability of Liechtenstein’s financial centre, he added.

An attractive system of personal income taxation

The reforms usher in a simplified system for individuals calculating their own taxes. As regards the taxation of real estate and land, this will follow the same practice as before.

Abolition of inheritance and gift tax

Inheritance and gift tax will be abolished for individuals to avoid multiple taxation. Currently, inherited or donated money is already subject to wealth and acquisitions tax. In general, however, the principle is that acquired income should basically only be taxed once during the course of an individual’s lifetime.

Benefits for companies in Liechtenstein

The government’s tax reform aims to strengthen Liechtenstein’s position in terms of international competition, as it is all too aware that tax rates are one of the key factors in business location.

Consequently, the new tax law, which was developed in close cooperation with industry, is designed to provide companies located in Liechtenstein with better opportunities to structure themselves and to adapt to global competition. The introduction of the new flat rate tax of 12.5% for all companies will ensure that all companies are taxed equally. With only a few exceptions, all businesses will be required to pay a minimum income tax of CHF 1,200 (EUR 908).

According to the government, the unequal treatment of foreign and own-capital will also be removed thanks to the introduction of the company own-capital interest deduction. Provisions on group taxation will also be included in the new law. As a result of these changes, the government believes that it will be even more attractive to set up a new company in Liechtenstein.

Abolition of coupon and capital tax

As regards legal entities, coupon tax and capital tax will be abolished, although coupon tax will still apply to any reserves as at December 31, 2010. However, in the first two years following entry into force of the new law, there will be the possibility to calculate this tax at a reduced rate of 2%. Thereafter, the tax will be calculated at a rate of 4%. The government’s decision is designed to enable a company to re-invest its capital and will serve to further increase Liechtenstein as a business location.

Measures to strengthen Liechtenstein as a centre for philanthropy

As under the existing law, legal persons that exclusively pursue charitable goals, will be exempt from tax. In the areas of both civil and tax law, the same concept of charitable status will also apply.

Attractive taxation for private asset structures

The tax law provides that legal persons can be used to manage wealth as an independent legal person and indeed as a private asset structure (Privatvermögensstruktur – PVS), provided that the PVS is exclusively active in wealth management and does not engage in any other economic activity.

Modern and compatible law

The government maintains that by making the new tax law compatible with European law, this has increased legal certainty, in particular for financial intermediaries and for their customers. The tax policy now complies with European standards.

Commenting on the reform, Prime Minister Tschütscher stated that it is a big step towards a successful future and has served to dramatically increase the economic location of Liechtenstein as a result.

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The Dubai Airport Freezone is expanding

Middle East Tax & Money Havens,

The Dubai Airport Freezone (DAFZ), a tax neutral zone in the vicinity of Dubai International Airport, has reported that business sales increased 63% during the first half of 2010 compared to the same period last year.

According to statistics released by the DAFZ, the number of companies expanding offices saw a rise of 80%, taking up an additional 64% of office space. In addition, over the period, increased business led profits higher, with companies achieving profit of 11% above targets.

Commenting, Sheikh Ahmad Bin Saeed Al Maktoum, Chairman of DAFZ and President of Dubai Civil Aviation, said:

“The increase in the number of American and European companies in the first six months by 50% compared to last year, and the 25% increase in companies from Asia and the Middle East, is evidence of the innovative services and unmatched facilities Dubai Airport Freezone [offers].”

Based next to one of the world’s busiest airports and providing a tax-free environment, the free zone houses over 1,500 companies, the majority of which are from Europe and the United States.

“The results of the first six months recorded by DAFZ is evidence of the healthy business environment in Dubai in particular and the UAE in general. It also shows the interest of international companies to establish their operations in the country,” Ahmad added.

The Free Zone has been recognized as a top free zone globally, and the leading free zone in the Middle East, offering a number of incentives to prospective investors, including: exemption from corporate income tax, import and export taxes, and personal income taxes; no customs duties; no restrictions on foreign ownership; no currency restrictions; and no restrictions or taxes on the repatriation of capital and profits.

The DAFZ plans to continue expanding, by 75,000 square feet in 2011, and by 230,000 square feet starting in 2012.

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The Tuvalu International Business Corporation – Very competitive

Indian and Pacific Ocean Tax & Money Havens, ,

The Tuvalu International Business Corporation to facilitate the conduct of businesses by the international business and shipping community.

Situated in the Pacific ocean near the intersection between the equator and the international date line, Tuvalu has emerged as a modern and cost effective offshore jurisdiction to register an international business company, particularly for the shipping industry.

Formerly known as the Ellice Islands, Tuvalu consists of nine islands scattered over a million square kilometers in the Western Pacific Ocean. Tuvalu separated from the joint administration of the Gilbert & Ellice Islands and became an independent state on October 1, 1978 after more than eighty years of British colonial rule. It enjoys political stability, low taxes and a familiar legal system for international business based on common law principles.

Senior Lowtax Business Editor Jeremy Hetherington-Gore welcomed the advent of the Tuvalu International Offshore Financial Centre (OIFC): “You could say that Europe and the Americas are well-served by OIFCs, with nearly forty operating in the Atlantic basin; but there are many fewer in the Asis-Pacific zone, and this is all the more remarkable when you consider that it is going to be the dominant economic region of the world in the next twenty years. So I am very happy to see that Tuvalu is making strides both in terms of its Companies Registry and in terms of its Shipping Registry.

Tuvalu International Business Companies are governed by the Tuvalu International Companies Act which is regarded as a modern piece of corporate legislation tailored specifically to the needs of international shipping related businesses. Incorporation is quick and straight forward, and a company can be formed within one business day

Under the International Companies Act, a company incorporated as a Tuvalu IBC is required to have only one shareholder and only one director. Every company incorporated as a Tuvalu IBC is required to keep a Register of Directors and one or more Share Registers. However, the copies of the Register of Directors and Share Register kept by the registered agent and the Registrar are kept confidential, and do not form part of the public record of the Registry. IBCs are not subject to any tax liability in Tuvalu and need not file any financial statements. There is no minimum issued share capital requirement and offshore companies are exempt from stamp duty on all transactions. Shelf companies are also available. Like most offshore jurisdictions, certain restrictions are placed on Tuvalu IBCs; for example, they cannot carry on business with persons resident in Tuvalu or own real property located in the jurisdiction. Separate licences must be applied for if a company wishes to carry on banking, trust, insurance or reinsurance business. Incorporation costs are relatively low; a new incorporation costs approx. USD 1.500 inclusive of the full ‘corporate kit.’ An annual renewal tax fee of USD 425 is payable yearly.

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Dubai – Support of entrepreneurial enterprises

Middle East Tax & Money Havens, , , , ,

Dubai has announced plans to launch a new visa system – similar to that already operational in Singapore – that would expedite entrepreneurs’ visa applications and offer business formation advice as part of the Dubai’s efforts to encourage high value start-ups to the Emirate. A new bourse, specially for Small- and Medium-sized enterprises, has also been proposed for implementation in coming years.

As reported initially by Dubai-based paper the National, the EntrePass scheme has been established to encourage “start-ups with high commercial value to set up in Dubai and share knowledge and intellectual property rights with the emirate”.

In return, the paper reported, entrepreneurs will have their visa application expedited and be provided guidance from experts at the Mohammed Bin Rashid Establishment (MBRE) for Small- and Medium-sized Enterprise Development to aid them in establishing Dubai operations, as well as ongoing support. In addition, in certain cases, entrepreneurs may be eligible to financing through the UAE’s first Sharia-compliant venture capital fund, the paper reported.

According to the National’s report, the EntrePass scheme will be implemented on a small scale in the final quarter of 2010 with ten entrepreneurs offered a placement. The scheme would then be expanded thereafter, the Department for Economic Development said. It is anticipated that the scheme will run until 2012 or 2013.

In comments on the scheme to the National, Alexandar Wilians, the Director of Strategy and Policy Division at MBRE, said, “We want Dubai to be the centre for innovative small- and medium-sized enterprises (SMEs). The future of Dubai will rest on nurturing selective foreign entrepreneurs with good ideas to use Dubai as a test bed for development and to build business around it.

We are looking at any company with new business models and existing technology that can be adapted to the UAE and that could benefit Dubai through the sharing of intellectual property and knowledge transfer.

Entrepreneurial activity is a major driving force in Dubai; SMEs account for 98% of companies registered as operating from the Emirate. The MBRE is looking to support the sector’s growth, including through plans to establish a specialized stock exchange for Dubai SMEs – the Dubai SME 100 – which would allow smaller companies with lower capitalizations to gain access to extra funds through public offerings, removing capitalization-based barriers to entry. According to the National, the Dubai SME 100 ranking system would be established in March 2011, allowing for the creation of the new secondary bourse in 2012-13.

In the meantime, support for SME development is to be provided through the Emirate’s first Sharia-compliant venture capital fund, which is to provide Dubai SMEs with additional equity through repayable loans.

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