Libya’s hidden wealth

African Tax & Money Havens, , , , ,

According to The New York Times “As the battle for Libya rages on, the struggle over control of the country’s sovereign wealth fund and its $70 billion in assets has just begun.

The fund’s nominal head is Muhammad H. Layas, perhaps Libya’s most experienced international banker. He has had a leadership role in institutions including the Libyan Arab Foreign Bank, the only bank allowed to conduct international business during the imposition of United Nations sanctions against Libya; British-Arab Commercial Bank, a London-based wholesale bank now majority owned by Libya; and the Arab Banking Corporation, a Bahrain-based bank also majority controlled by Libya.”

See the full story in The New York Times here.

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Switzerland – Bank secrecy deteriorating

European Tax & Money Havens, , ,

Switzerland said it will make it easier for foreign governments to hunt for tax cheats with Swiss bank accounts, amid continuing criticism that it still does too little to assist international tax authorities, even after years of pressure to ease bank secrecy.

The Swiss Finance Ministry said Tuesday that Switzerland will provide information on holders of bank accounts if foreign tax authorities provide just the bank account number or other information, such as a Social Security number or credit-card details.

Until now, the Swiss demanded full bank account details, as well as the name and address of the individual. Also remember that Switzerland accepts foreign countries court decisions.

However, there are attractive alternatives. We have a global approach and can help you, contact us if you need advice regarding your private banking and/or your business banking.

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Start up America – to encourage entrepreneurship

Other Tax & Money Havens

Supported by new initiatives and tax incentives, United States President Barack Obama has launched ‘Startup America’, a national campaign to encourage entrepreneurship and private sector investment in job-creating start-ups and small firms.

He announced this “historic partnership with business leaders, investors, universities, foundations, and non-profits” by revealing that leaders in the private sector will launch the ‘Startup America Partnership’, an independent and private-sector led campaign to mobilize private sector commitments. Steve Case, co-founder of AOL and chairman of the Case Foundation, will chair the Partnership.

The initiatives are aimed at uniting a range of public and private commitments to expand access to capital for high-growth startups throughout the country; increase entrepreneurship education and mentorship programmes; strengthen commercialization of the USD 148bn in annual federally-funded research and development, which can generate innovative startups and entirely new industries; identify and remove unnecessary barriers to high-growth startups; and expand collaborations between large companies and startups.

As examples of the latter, Intel and IBM are committing USD 200m and USD 150m respectively to bring companies together, promote entrepreneurs and new business ventures, while HP and Facebook have also confirmed their participation in the scheme.

While the Small Business Administration (SBA) will commit USD 2bn, as a match to private sector investment, over the next five years to accelerate capital support for startups and high-growth firms, the President’s new budget will propose making permanent the elimination of capital gains taxes on certain investments in small businesses.

The 100% exclusion from tax for capital gains realized on the sale of certain small business stock held for more than five years was passed as a temporary provision in 2010 as part of the Small Business Jobs Act signed in September. The amount of gain eligible for the exclusion is limited to the greater of USD 10m, or ten times the taxpayer’s basis in the stock. This provision applies to qualified small business stock issued after December 31, 2010, and before January 1, 2012. However, the government’s 2012 budget proposal would make this provision permanent.

The budget will also propose expanding the New Markets Tax Credit to encourage private sector investment in startups and small businesses operating in lower-income communities.

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Paraguay – Dollar economy – Still no personal income tax

Central and South American Tax & Money Havens, , , , , , , , ,

Paraguay has a number of advantages going for it like 10% VAT (the lowest in South America), no personal income tax, 10% corporate tax (the lowest in South America), low labor cost, young population, plenty of commodities and enormous fresh water resources. In addition the capital Asunción has the lowest general price level in the world of any capital.

The personal “no income tax” regime should last at least to 2013 and very likely beyond. Bolivia and Guatemala are other countries in the region with “low or almost no” personal income tax. The employer’s contribution to social security is 16.5% of an employee’s (worker) total salary which includes bonuses. The employee’s (worker) portion is 9%

However, dividend distributions are subject to a 5% corporate income tax. Dividends distributed to non residents are subject to a 15% withholding tax.

Paraguay has a high degree of openness in the economy and a high degree of dollarization. There is no foreign exchange control in Paraguay.

Paraguay is a member of Mercosur. Other members of this trade organization are Argentine, Brazil and Uruguay. Venezuela is in the process of being a future member. The purpose of Mercosur is free trade with limited or no custom between its member countries as well as visa free travelling. Mercosur is planning to introduce the same “car plate” among its members.

See more in IMF research document regarding Paraguay here

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France – Higher threshold for wealth tax

European Tax & Money Havens

French Budget Minister and government spokesman François Baroin has evoked the idea of increasing the threshold for wealth tax in France (l’impôt de solidarité sur la fortune – ISF) to reduce the number of taxpayers subject to the tax.

As the number of hypotheses for reforming taxation in France continues to rise, Baroin recently alluded to one suggestion currently being examined by the government, notably to increase the threshold from which taxpayers in France become subject to wealth tax.

Pointing out that over half of individuals in France are subject to wealth tax, Baroin explained that if the threshold for wealth tax is increased from EUR 790,000 to either EUR 1.2m or EUR 1.3m, between 250,000 and 300,000 taxpayers then no longer have to pay the tax.

Emphasizing the need to initiate a debate on the problem of wealth tax, including the issue of principal residence, and to also open a discussion on the problem of income from capital, Baroin confirmed that the problem of the French tax shield mechanism then arises. Now a symbol of fiscal injustice and a source of increasing embarrassment for the government, the highly controversial tax shield mechanism (le bouclier fiscal) currently limits direct taxes in France to 50% of income.

Nevertheless, Baroin reiterated that reform of taxation in France will be more comprehensive and not just limited to the issues of wealth tax and the tax shield. Indeed, French President Nicolas Sarkozy recently revealed his intention to create a new tax on income from assets in order to abolish both the tax shield and wealth tax. Any proposals to remove the wealth tax are, however, likely to provoke heated parliamentary debates and to meet with fierce opposition.

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