Tag Archives: Offshore Investments

Isle Of Man First To Sign UK FATCA-Style Agreement

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

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.

Isle of Man map

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.”

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Hong Kong’s Stock Exchange Acceptable Jurisdiction Guides

Far East Tax & Money Havens, , , , , ,

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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Shanghai establish Free-Trade Zone

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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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Nicaragua Approve Canal Plans

Central and South American Tax & Money Havens, ,

Nicaragua’s National Assembly has approved a bid from a Hong Kong magnate for the construction of a canal to rival Panama’s long-established waterway, costing around USD40bn.

Map of Nicaragua

Map courtesy of Biblioteca Verde

Nicaragua, one of the region’s least developed nations, had received expressions of interest from investors in several nations, including Japan, South Korea, Russia, Venezuela and Brazil.

Under the agreement, Hong Kong-based Nicaragua Canal Development Co Ltd will be granted a 50-year concession to build the canal, and a further 50 years to manage it. The project, which would involve the creation of a canal approximately 10 kilometers in length, is now anticipated to cost USD40bn, up from early estimates of USD30bn — almost four times the nation’s gross domestic product.

The Nicaraguan government had previously anticipated that the project could be completed by as early as 2019, and could handle 573 million metric tons by 2025 – substantially more than the record of 322.1 million tons of cargo handled by the Panama Canal in 2011.

Even though a significant expansion of the Panama Canal is presently underway, Nicaragua’s canal would be able to cater for ships too large to pass through the Panama Canal, of up to 400 meters in length and 60 meters in width.

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Hong Kong Offer Tax Exemption to Hedge Funds

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In a media interview, Philip Tye, Chairman of the Hong Kong branch of the Alternative Investment Management Association, which represents the hedge fund industry, confirmed that the extended tax exemption proposed in his last Budget by Financial Secretary John Tsang should strengthen Hong Kong’s position as an international asset management center.

800px-Wan_Chai_Hong_Kong

Picture of Hong Kong by Samuel Louie, retouched by Carol Spears.

In an article on the website of the South China Morning Post, Tye said that “the proposed reform plans would now make Hong Kong more attractive for fund companies to domicile their funds here. This will create job opportunities and benefit the hedge fund industry as a whole.”

To attract more private equity funds in Hong Kong, Tsang’s proposal is to extend the profits tax exemption for offshore funds to include transactions directly in private companies that are incorporated or registered outside Hong Kong (for example in Mainland China) and do not hold any Hong Kong properties nor carry out any business in Hong Kong. That would allow private equity funds to enjoy the same tax exemption as offshore funds.

In addition, while, at present, investment funds established in Hong Kong can only take the form of trusts, the Government is considering legislative amendments to introduce the open-ended investment company into Hong Kong. That should also encourage more traditional mutual funds and hedge funds to domicile in Hong Kong.

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