25.05.2017. BVI Court places procedural fairness above duty of confidentiality
in Company News

31 March 2017, the BVI Administrative Court held that statutory requests and notices issued for the mutual exchange of information should be subject to the same principles of fairness as any other decision or act made by a functionary of a public body, which cannot be eclipsed by a duty of confidentiality.

In Quiver Inc. & Friar Tuck Ltd. v International Tax Authority, two BVI companies were granted leave to challenge the issue by the BVI International Tax Authority (ITA) of Notices under section 5(1) of the Mutual Legal Assistance (Tax Matters) Act 2003 to produce information for the purpose of the BVI complying with a request from another state under a tax information exchange agreement (TIEA).

It was the ITA’s practice not to provide the recipient of such a Notice with information in respect of the underlying request – the requesting state, the nature of the underlying investigation, the taxpayer involved, the tax period concerned or the applicable foreign tax laws. It was argued on behalf of the companies that this denied them the basic right of procedural fairness and was unfair and unconstitutional.

The BVI Administrative Court found there was at common law a duty of procedural fairness to which public bodies like the ITA are subject, particularly when exercising functions with a power of compulsion. This required that the ITA furnish the companies with sufficient information to enable them to determine whether the Notices were lawfully issued or were liable to challenge and susceptible to being quashed.

In agreeing with the companies’ submissions, Ellis J. expressly rejected the ITA’s argument that the duty of confidentiality to which they it is subject prevails over common law rights of procedural fairness. He made an order of mandamus requiring that the ITA disclose to the companies sufficient information about the request to enable them to assess whether or not the requests were valid.

11.05.2017. Gibraltar Parliament approves private foundations bill
in Company News

31 March 2017, a bill to permit the establishment of Private Foundations in Gibraltar was passed by Parliament together with the consequential amendments to the Income Tax (2010) Act..

A foundation is an entity with a separate legal personality. The foundation charter and foundation rules establish the foundation, set out its purposes and rules for its administration and provide details of the beneficiaries and guardian. Details of the foundation are filed at Companies House in Gibraltar, which is to maintain a Register of Foundations.

The founder provides the initial assets, as an irrevocable endowment, and may reserve certain powers ­­– to appoint or remove the guardian or councillors, or to amend the constitution of the foundation. The foundation council manages the foundation and makes distributions to the beneficiaries. It must include a Gibraltar resident company that is licensed as a professional trustee in Gibraltar.

Beneficiaries may be either enfranchised or disenfranchised. Enfranchised beneficiaries are entitled to copies of the accounts and other documents relating to a foundation. A guardian may be appointed to provide protection for the beneficiaries. In certain cases, for example, if there are no designated beneficiaries, or more than 50 beneficiaries, a guardian is required to be appointed.

Books of account with respect to monies received and expended and the assets and liabilities of the foundation must be kept for five years. Financial statements, including a profit and loss account, a balance sheet, and a report made by the councillors, are to be filed annually at Companies House.

The rate of tax is 10%, which will be charged on profits or gains accrued or derived in Gibraltar from any trade, profession or vocation. The beneficiaries of a foundation who are ordinarily resident in Gibraltar will be taxed in Gibraltar on distributions received from the foundation, the use of assets owned, used or leased by the foundation, or any loan received from it.

27.04.2017. Cyprus, taxation highlights
in Company News

For our BBP clients to assist managing taxes we prepared summarized information about main taxes, showing schemes of  using companies registered in the same jurisdiction and Cyprus will be the first one.

I.Corporate Tax

Tax rate: 12,5 % / certain types of income are tax exemp or are subject to other types of taxation

Tax residency: a company is rezident in Cyprus if its management and control exercised in Cyprus

Basis of taxation: rezident companies are taxed on their worlwide income.Non-resident companies are taxed only on their Cyprus sourced income.

     Exempt income:

- profit from sales of qualifying titles(e.g.shares, bonds, options on titles)- passive interest ( e.g. bank depost interest)- dividends- profit of a permanent establishment abroad - 80% deemed expenses of the profit arising fromthe use or sale of qualifying Intellectual Property- capital gains from the disposal of immovableproperty situated outside of Cyprus

     Deductions:

Expenses incurred wholly and exclusively for the production of taxable income Donation to approved Cyprus charities
Capital allowances on fixed assets Contributions to approved funds
  Notional interest deduction on new equity

     Non-deductible expenses

Interest related with acquisition of non- business assetImmovable property tax Professional taxEntertainment expenses if excess 1% of the gross income or EUR 17086

 

II. Special cotribution for defence ( DT)

DT is a tax imposed on certain types of income earned from Cyprus tax resident entities.Non-residends are exempt from special contrubution for defence. Tax rates:

Dividend income from Cyprus resident company Nil
Dividend income from non-Cyprus resident company Nil or 17% 17%- received dividends from passive income company
Interest arising from ordinary activities of the business Nil
Other interst income 30%
Rental income ( reduced by 25%) 3%

 

III.Capital gains tax

Tax rate: 20%. Applicable only on gains from disposal of immovable property located in Cyprus or shares in companies which own such property.

IV. Withholding tax

There are no Cyprus withholding taxes on any outgoing payments from Cyprus- interest, dividends, royalties, fees. Towards non- Cyprus residents.

26.04.2017. New Zealands strengthens disclosure regime for foreign trusts
in Company News

21 February 2017, the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act, which will increase disclosure obligations for NZ resident trustees of NZ foreign trusts, received Royal Assent and was brought into force. Approved by Parliament on 14 February, the law further provides for New Zealand’s participation in the G20/OECD Common Reporting Standard for automatic international exchange of financial account information.

The disclosure requirements in respect of foreign trusts require trustees to register the trust with the Inland Revenue Department and provide: the name of the trust; the details of each trust settlement; and the name, email address, physical residential or business address, jurisdiction of tax residence, taxpayer identification number of every settlor or controller of the trust.

For a fixed trust, the trustee must provide the name, age, and taxpayer identification number of the beneficiary. For a discretionary trust, the trustee must provide details of each beneficiary or class of beneficiary sufficient for the IRD to determine, when a distribution is made under the trust, whether a person is a beneficiary.

The trustee must also provide a copy of the trust deed (and any subsequent amendments or additions) and an annual return, which must be accompanied by the filing of annual financial statements if the trustee prepares financial statements or is required to prepare financial statements, as well as details of trust distributions and the beneficiaries.

A trustee will have to register any foreign trusts by 30 June 2017 and notify any subsequent changes within 30 days. Disclosure of the information is limited to “a person who is a member of the New Zealand Police or an officer, employee, or agent of the Department of Internal Affairs”.

John Shewan, who was appointed by the government to review existing legislation following the release of the “Panama Papers” last year, recommended the new disclosure requirements.