Bulletin 27

Printable Version

EUROPE: EU Member States agree cross-border freezing regulation

The European Commission’s proposed EU-wide regulation on the freezing and confiscation of assets across borders has been confirmed by Member States’ governments.

INTERNATIONAL FINANCIAL CENTRES: Clamping down on IFCs ‘would not raise tax revenues for larger countries’, says analysts

The UK-based Institute of Economic Affairs policy research organisation has published a paper emphasising the positive functions of international financial centres, and calling for a rational debate about their role in facilitating global trade and investment. The report says IFCs’ tax neutrality helps mitigate the risk of multiple taxation, while the attacks on them by European politicians are ‘little more than demagoguery and a desire to eliminate tax competition’.

EUROPE: DAC-6 reporting rules will catch many non-tax transactions

European Union companies and intermediaries will have to put in place systems to identify transactions affected by the new EU Aggressive Tax Planning Arrangements (DAC 6) rules, under the Administrative Cooperation Directive. A wide range of transactions will have to be reported to taxpayers’ home tax authorities, many of them ordinary financing or corporate transactions with no particular tax objective, says law firm Clifford Chance.

TURKEY: More analysis of amnesty conditions

Turkey’s new tax amnesty law, gazetted on 18 May 2018 allows individual and corporate taxpayers who declare their overseas money, gold, foreign exchange, securities and other capital market instruments, repatriate these assets to Turkey within three months, and pay a 2 per cent charge, to dispose of the assets freely without further tax investigation or assessment provided that the taxpayer satisfies certain conditions.

QATAR: Government to allow 100 per cent foreign investment in all sectors

Qatar’s government has announced that a draft law now awaiting pending legislative approval will allow foreign investors in all sectors to have sole ownership of company equity, instead of only 49 per cent as at present. The draft law provides that equity ownership can be transferred from one investor to another and that foreign investments are not subject to expropriation.

SWITZERLAND: Bearer shares not yet doomed as opposition builds to AML reform

The Swiss federal government’s proposed implementation of Financial Action Task Force and OECD Global Forum transparency recommendations has met stiff opposition, in particular its abolition of bearer shares and the expropriation of non-compliant shareholders.

FINANCIAL ACTION TASK FORCE: Crypto exchanges to be subject to binding rules

The Financial Action Task Force (FATF) is due to open discussions this month on introducing binding rules to govern cryptocurrency exchanges, a Japanese government official has told Reuters. Currently there are non-binding guidelines in place, which the FATF will look into following calls from international financial policymakers for greater regulation.

SPAIN: Ronaldo accepts probation over image rights tax charges

News agencies report that Portuguese footballer Cristiano Ronaldo has settled tax evasion charges brought by the Spanish authorities, paying a EUR18.8 million fine and agreeing to accept a two-year jail sentence, although Spanish criminal law allows a sentence of less than two years for a first offence to be served on probation. Ronaldo is accused of evading EUR14.7 million in taxes on EUR75 million of his image rights income, which has, for years, been handled by two Irish companies.

RUSSIA: New beneficial owner rules may deny tax treaty benefits to foreign recipients

The Russian Federal Tax Service has issued new guidance significantly increasing the requirements for foreign recipients of Russian-source income to qualify as beneficial owners eligible for tax treaty benefits. It is intended as an anti-avoidance measure, but will catch many proper holding and treasury companies, dramatically increasing substance requirements, and forcing extensive disclosure. Companies receiving passive Russian-source income may be denied tax treaty benefits if they cannot show independent business activity.

NETHERLANDS: Emergency legislation removes tax consolidation benefits

The Dutch government has published emergency draft legislation amending the country’s fiscal unity (tax consolidation) regime following a ECJ decision in February 2018 confirming the law would have to be changed. The draft law states that a Dutch fiscal unity will not be considered to exist for the purposes of applying anti-base erosion rules; excessive participation debt rules; some of the participation exemption rules; the loss relief rules on change of ownership; and reduction of dividend withholding tax in the case of an immediate redistribution. It will be retrospectively applied from 25 October 2017.

RESIDENCE: Settled UK residence status available post-Brexit for EU citizens

European Union citizens and their families who live in the UK at the point it exits the EU will be able to apply for settled status in three simple steps, under a scheme to be phased in later this year. They will only have to prove their identity, show that that they have been living continuously in the UK, and declare that they have no serious criminal convictions.

CRYPTOCURRENCIES: FCA tells financial institutions to increase scrutiny of digital currencies

The UK Financial Conduct Authority has addressed an open letter to UK financial institutions, in which it warns of the possible connections between cryptoassets and financial crime, and suggests that companies increase their compliance processes and due diligence to ensure proper regulation of digital assets. The letter says that, ‘This class of product can be abused because it offers potential anonymity and the ability to move money between countries.’.

Sources: STEP | IFC Review

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