Tag Archives: Free Trade

Belarus a Tax Haven for the Digital Economy

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Belarus has legalized transactions in crypto-currencies, part of a drive to foster private sector growth and attract foreign investment by liberalizing its Soviet-style economy.

The Belarus government will not tax mining, trading of cryptocurrencies, and sale of digital tokens. Activities related to mining, creation, acquisition and sale of digital tokens will remain tax-free until 2023, throughout the next five years. The decree legalizes initial coin offerings and transactions in crypto-currencies, including their exchange for traditional currencies on Belarussian exchanges, while all trades will be tax-free for the next five years.

It also allows local IT companies to operate in part under English law – a gesture to foreign investors, who can struggle to navigate the Belarussian legal system.

The Belarussian IT sector has flourished, attracting foreign workers, expatriate Belarussians and locals to jobs that pay about five times the average wage. Dozens of software companies operate in Minsk’s high-tech IT park (HTP), including U.S.-based EPAM Systems (EPAM.N), founded by two Belarussians in 1993. Belarussian software engineers are also behind the Japanese-controlled Viber messenger and the popular video game World of Tanks.

New Conditions for IT companies

1. The validity period for HTP’s special legal status will be extended until January 2049. The following companies, which specialise in software development or other IT businesses, can become HTP residents:

  • Design, development, support, sale, maintenance of software and (or) firmware based on or using the Blockchain, and distributed databases,
  • Creation, training of neural networks and other algorithms in the specialised sections of Artificial Intelligence, and implementation of the results of this activity,
  • Development, support, maintenance and production of unmanned vehicle driving systems,
  • Development or separate development stages of medical technologies, biotechnologies as well as the implementation of the results of these developments,
  • Business processes outsourcing activity,
  • Software publishing and promotion,
  • Mining, cryptocurrencies exchange activity, cryptocurrency converter activity, other activity using tokens,
  • Cybersport activity. The list is not exhaustive. The HTP supervisory board is authorised to establish other kinds of activity that a company can specialise in to become a HTP resident.

2. Within the framework of the special HTP legal status, the existing tax and NSSF (National Social Security Fund) benefits are preserved and new ones introduced. Among the existing HTP residents’ benefits, the major ones are as follows:

  • Exemption from income tax and VAT (pursuant to the general rule). Instead, HTP residents pay 1% of gross revenues in favour of the HTP administration,
  • Individual income tax is paid at a lower rate (9%), and NSSF fees are calculated according to the average country wages, instead of actual wages (3-4 times lower). Additional benefits, aiming to stimulate Product Development IT companies, are the following:
  • Exemption from VAT, based on the use of foreign entities to provide marketing, advertising, consulting and some other services to HTP residents,
  • Zeroing of foreign entities’ income tax rate, with respect to the income from carve-out of stocks, shares in authorised capital, participatory interest in HTP residents’ property (provided that they continuously possess it for not less than 365 days), as well as royalties, earnings from advertising services and other kinds of income, paid by HTP residents.

3. HTP residents’ activities shall be simplified. Residents shall have a right:

  • To conduct operations with e-money without a range of limitations,
  • To open accounts in foreign banks and other credit and financial institutions, to receive money into these accounts without the permission of the National Bank,
  • Capital can be moved through currency transactions if conducted after notifying the National Bank and with their permission,
  • To execute primary accounting documents personally, when performing business transactions with non-residents of the Republic of Belarus.

Regulations regarding the procedure for the conduct and control of foreign trade transactions do not apply to transactions made by HTP residents.

4. Investment according to English Law will be allowed. HTP residents are allowed to sign agreements with third parties that are actively implemented in international business. For example:

  • Agreement on granting right of first refusal to execute contracts,
  • Convertible loan agreements,
  • Property loss indemnity agreements,
  • Agreements, stipulating liability for labour pirating,
  • Non-compete agreements with employees with payment of compensation for the period of noncompete obligations,
  • To issue irrevocable power of attorney.

5. The set of measures, focused on attracting top-ranked IT-specialists, is finalised.

  • HTP residents do not have to get the permissions related to the employment of foreigners. Foreign employees will receive a temporary residence permit under the simplified procedure,
  • Visas for foreign employees and founders of the HTP residents are cancelled. The maximum time limit of their temporary stay is increased up to 180 days.

Belarus will create an unprecedented ecosystem for the regulation of the circulation of cryptocurrencies and tokens. Major provisions:

  • The rights of physical and legal entities in terms of token circulation are defined. Legal entities are entitled to possess tokens, create and list their own tokens through HTP residents; buy, exchange tokens and perform other operations using tokens only through the cryptocurrency exchanges and cryptocurrency exchange operators.
  • Individuals are entitled to possess tokens; perform mining; exchange tokens, buy and sell them for Belarusian rubles, foreign currency, e-money, as well as present and bequeath tokens. The mining activity of individuals, tokens purchasing and sale shall not be considered entrepreneurial activity.
  • Tokens and revenues from operations with them shall not be subject to declaration by the individuals.
  • Turnovers, profits (income, proceeds) from various operations with tokens are not recognised as taxable items until January 2023.

Macau Offshore Haven

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Macau is a former Portuguese colony and was administered by Portugal from the mid-16th century until late 1999 when it was ceded to China. Macau became the second Special Administrative Region after Hong Kong.

Macau by night

In 2002, the government of Macau enacted a law from 2001 which legalized gambling, and offline casinos opened up. Macau’s Internet gambling sector was regulated in 2003.

Today, Macau is the gambling center of Asia. Its offshore financial sector is growing but still is nowhere near the size of Hong Kong.

Macau by night courtesy of Inamoka, Wiki Commons.

Macau Incorporation
Macau has many different types of corporate structures available, allowing for a wide range of liability.

  • Unlimited Liability Company (S.N.C.)
  • Mixed Liability Company by Quotas (S.C.)
  • Mixed Liability Company by Shares (S.C.A.)
  • Limited Liability Company by Quotas (L.D.A.)
  • Limited Liability Company by Shares (S.A.)
  • Limited Liability Company by Sole Owner (S.U.L.)

Macau companies are exempt from tax on the first 200,000 MOP (Macau pataca), or roughly $25,000 USD, and the next 100,000 MOP is taxed at 9%. Remaining income is taxed at 12%.

Unlike Hong Kong, there’s no territorial taxation system in Macau. Worldwide income may be subject to tax. However, under the Offshore Regime of Macau, companies can be fully tax exempt if they do not operate in MOP currency, do not target Macanese persons, and do not focus on other Macanese companies.

Unlike Hong Kong, where you pay tax depending on the source of income, Macau has taken a different approach of either full tax exemption or full tax liability.

There is no sales tax (VAT) in Macau.

The Offshore Regime creates two types of offshore operations: Offshore Commercial Service Companies and Offshore Auxiliary Services Companies. Both are designated International Business Companies (IBC), but are significantly different from the IBC legislation of Belize, Seychelles, and so on.

The differences between Offshore Commercial Service Companies and Offshore Auxiliary Services Companies lie within their scope of operations. While auxiliary services companies can only perform duties for holding or parent companies, commercial service companies are free to conduct business with anyone. Auxiliary companies pay a lower annual fee—between 4,000 and 10,000 MOP less per year.

All companies in Macau—even those registered under the Offshore Regime—must prepare and file financials. The costs of forming a regular or offshore company in Macau are higher than in Hong Kong, but not by much.

Residents are liable for income tax on salary from employment with Macanese companies or salaries paid into Macau, which means that if you work remotely for a foreign company, you pay no tax. This can be used to live and work tax-free in Macau.

There is no capital gains tax, capital duty, capital acquisitions tax, inheritance tax, wealth, or sales tax.

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The U.K. to join he Chinese-led Asian Infrastructure Investment Bank as a founding member and CIPS the alt. to SWIFT ?

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The government of the United Kingdom just announced that they would be applying to join the Chinese-led Asian Infrastructure Investment Bank as a founding member.

Shanghai by night

The United States currently dominates the global financial system. But after years of sanctions, wars, debt, money printing and regulations, the rest of the world are  looking for an alternative.

The soon-to-be-live Chinese International Payment System (CIPS) will provide a way for banks to transfer funds to one another without having to use the US banking system or the US dollar.

Shanghai by night courtesy of Wiki Commons

China is also the initiator behind both the BRICS development bank (called the New Development Bank, or NDB) as well as the Asia Infrastructure Investment Bank (AIIB). Both of these are multilateral development banks that aim to end the dominance of the western-controlled World Bank and IMF.

NDB includes all the BRICS nations– Brazil, Russia, India, China, and South Africa.

Founding members of the AIIB include China, India, Indonesia, Kazakhstan, Mongolia, etc. They’re typically all rapidly growing and/or resource-rich developing nations.

New Zealand was the first western nation to join AIIB in October 2014, and Britain has just announced its intention to become the second.

The signatories to the NDB and AIIB charter documents want to create an alternative to the United States dominance of the global financial system by launching these new development banks and an alternative payment system together.

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Tax Haven Zone in Armenia Launched

Central Asia Tax & Money Havens, ,

Armenia launched last year, the first-ever tax-free business zone which is meant to mainly cater to high-tech manufacturing companies.

Armenia Map

The tax-free zone covering around 10 hectares (25 acres) of land and office space is designed for companies specializing in information technology, engineering, telecommunications, renewable energy and pharmaceuticals.

Companies based in the zone will be exempt from profit, value-added and property taxes as well as import duties.

Regional Map with Armenia courtesy of Wiki Commons

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Hong Kong Promoted As Intellectual Property Trading Hub

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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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