Category Archives: Far East Tax & Money Havens

Hong Kong’s Stock Exchange Acceptable Jurisdiction Guides

The Stock Exchange of Hong Kong, a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), has published 20 country guides, one for each overseas jurisdiction that has been formally ruled to be acceptable as an issuer’s place of incorporation.

Hong Kong Night Skyline

The country guide for each acceptable jurisdiction sets out, for example, comprehensive and user friendly guidance on how companies incorporated in the relevant jurisdiction can meet the requirement for equivalent shareholder protection standards in the HKEx’s Listing Rules.

Hong Kong Skyline. Picture courtesy of Base64, Wiki Commons.

“These country guides are aimed to enhance applicants’ understanding of the Exchange’s expectations, practices, procedures and considerations when applying the Listing Rules to overseas issuers,” said HKEx’s Chief Regulatory Officer and Head of Listing David Graham.

“The country guides provide guidance on how the Exchange will consider certain matters under the revised JPS. Where appropriate, we have also added our views and analysis based on the experience we have gained from various applications,” he continued.

The Exchange will in the future update a country guide when it is informed of a material change in the laws, rules or regulations in the relevant acceptable jurisdiction. New applicants and listed companies incorporated in an acceptable jurisdiction are obliged at the earliest opportunity to inform the Exchange of such material changes.

The 20 jurisdictions are Australia, Brazil, British Virgin Islands, Canada (Alberta), Canada (British Columbia), Cyprus, France, Germany, Guernsey, Isle of Man, Italy, Japan, Jersey, South Korea, Labuan, Luxembourg, Singapore, England and Wales, and the United States, both California) and Delaware. A country guide for Canada (Ontario) will only be published at a later date, as appropriate, when another applicant incorporated in Ontario applies for a listing on the Exchange.

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Hong Kong Promoted As Intellectual Property Trading Hub

The Government has formulated an overall strategic framework for promoting Hong Kong as a premier intellectual property (IP) trading hub in the region.

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As determined by a working group, which conducted many rounds of stakeholder consultation over the past few months, Hong Kong’s overall strategy on IP trading encompasses four strategic areas – “namely, enhancing its IP protection regime; supporting IP creation and exploitation; fostering IP intermediary services and manpower capacity; and pursuing promotion, education and external collaboration efforts.”

Courtesy of  Paramount Pictures, Wiki Commons.

The working group will, in 2014, explore specific policies and other support measures under each strategic area for promoting Hong Kong as a regional IP trading hub. In the meantime, two sub-groups formed under the working group will continue to deliberate on ways to spearhead further developments in certain specific areas, focusing particularly on the more specialized subjects of IP valuation, and IP arbitration and mediation.

Some of the initiatives under way and in the pipeline include the setting up of the Original Grant Patent system as a strategic step to help Hong Kong develop as an innovation and technology hub; a review of copyright to strike a balance between its protection and the freedom of expression; and the launch by the Hong Kong Trade Development Council of an online IP trading portal in January 2014 to enhance Hong Kong’s online IP trading volume, capabilities and connections.

A survey on IP trading and manpower in Hong Kong will also be conducted in 2014 to provide statistical and other relevant information to support the working group’s further deliberations.

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Hong Kong Reviews Its Trust Reforms

In his speech at the recent Hong Kong Trustees’ Association Conference 2013, the Secretary for Financial Services and the Treasury, Professor K C Chan, confirmed that the Government is keen to promote Hong Kong as a global center for trust services.

Hong Kong Skyline

Chan called the trust industry “an indispensable pillar that cements our standing as a premier international asset management center.” It offers a diverse range of services and products, including individual wealth and estate planning, as well as corporate trust services, such as trust administration and acting as a custodian. In addition, financial structures and products have been developed that utilize trusts, such as pension funds, real estate investment trusts and hedge funds.

Hong Kong Skyline courtesy of Wiki Commons user Robster1983.

He cited the many advantages that have set Hong Kong apart as a premier trust administration center. In particular, its proximity to the Mainland means the industry can offer its services to ultra-high-net-worth Chinese individuals who are seeking ways to manage their assets, as well as looking to preserve wealth and family businesses for passing on to future generations.

Chan noted that it is the Government’s goal to develop Hong Kong “as the most competitive and dynamic wealth management business center in Asia,” and that, with the setting up of the Private Wealth Management Association in September this year, “it is of vital importance that our regulations are up to date in order to take on new opportunities.”

The Government launched a trust law reform exercise in 2008, which sought to modernize the Trustee Ordinance and the Perpetuities and Accumulations Ordinance, the two main pieces of legislation in Hong Kong’s trust law regime. The exercise was brought to completion with the passage of the Trust Law (Amendment) Ordinance 2013 in July 2013.

The Amendment Ordinance, which, he said, “will put Hong Kong’s trust law on par with those of other major comparable common law jurisdictions,” will come into effect on December 1 this year. Amongst other benefits, it will enhance trustees’ default powers and introduce a host of measures that can better protect beneficiaries.

In the Government’s opinion, it should itself attract trusts to be set up in Hong Kong. In particular, through the abolition of the Rule against Perpetuities, settlors will be able to set up perpetual trusts in Hong Kong (which is still not possible in most major common law jurisdictions), and, through the introduction of the anti-forced heirship rule, settlors will not need to worry that the assets in the trusts would be clawed back by their heirs against their wishes in the future.

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Countries With Capital Controls

We have compiled a list of countries that currently have capital controls. However, notice that Belize have a two system economy. The local banks and the local economy with capital

Great Blue Hole Belize

controls,and the international banks with their international clients with no capital controls.

To some extent this is “more or less” the case with some other countries as well, like for example Cuba and Malaysia.

 

Great Blue Hole in Belize, a paradise for foreingers. Phone courtesy of Wiki Commons

Here are the countries with capital controls in alphabetic order:

Argentina
Brazil
Belize
China
Colombia
Cyprus
Cuba
Ecuador (1
Egypt
Iceland
India
Indonesia
Iran
Malaysia
Mexico (2
Russia
South Africa
South Korea
Taiwan
Ukraine
Venezuela

Description:

1.) Ecuador taxes you 5% on every wire, check, ATM or visa/master card transaction you make outside of Ecuador.

2.) Mexico have a limit on cash US Dollar transactions. However, Mexico is mainly a cash society.

Let us know if you are aware of updates to the countries mentioned above or other countries that should be added to the list.

 taxmoneyhavens.com

Shanghai establish Free-Trade Zone

The State Council has approved the establishment of the country’s first pilot free-trade zone (FTZ) in Shanghai, in what is seen as an essential step towards upgrading China’s economy through the liberalization of services and trade, with an eventual roll-out nationwide in other chosen areas.

Shanghai at night

Shanghai has already established the conditions for setting up an FTZ of almost 29 square kilometers, building on its existing comprehensive bonded zones around Waigaoqiao, Yangshan and Pudong Airport, which are reported to have serviced total trade of more than USD100bn in 2012.

 

Picture courtesy of Wikimedia: Shanghai’s financial district Pudong

Home to the country’s main stock exchange and the world’s largest port, Shanghai has been at the heart of China’s transformation from an isolated Maoist regime into an economic powerhouse.

Although final details have yet to be announced, while the removal of unnecessary administration and its legal framework is completed and submitted to the Standing Committee of the National People’s Congress, the FTZ (or, as it has been more aptly called, the “free-market area”) will be more advantageous for financial services, trade and investment.

Shanghai is to strengthen its role as a foreign exchange settlement center for international trade, with measures to promote the cross-border use of the renminbi with lessened foreign exchange conversion regulations. For example, bank accounts in the FTZ would be exempt from regulatory control by the Chinese authorities.

While further tax incentives for companies establishing in the FTZ are still to be disclosed, zero customs duties and import taxes will continue to apply to goods transferring between the FTZ and overseas destinations, and domestic merchandise that enters the FTZ is regarded as having been exported, with exporters enjoying an immediate tax rebate.

In addition, there is already an exemption from tax on business income and revenues arising from international shipping, transporting, warehousing, and shipping insurance for companies registered in the FTZ port areas.

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