Bulletin 28

Printable Version

EUROPE: Twenty EU States attacked for not implementing anti-money laundering directive

The European Commission’s Justice Commissioner Vera Jourova has criticised the ‘slow and unsatisfactory’ transposition of the EU Fourth Anti-Money Laundering Directive into Member States’ national law. The transposition deadline expired more than a year ago, and infringement procedures for non-transposition have since been opened against 20 Member States.

HONG KONG: Grace period expires today for trust and company service providers

The deadline for trust and company service providers operating in Hong Kong to apply for a licence from the Companies Registry expired on the 28 June 2018. They have already had a 120-day transitional period to comply with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615), which nominally came into force on 1 March. Any person who carries on an unlicensed TCSP business after today is liable to a maximum fine of HKD100,000 and a six month jail sentence.

AUSTRALIA: Final rule on tax residency of foreign companies

The Australian Tax Office has released a final ruling and draft guidance to determine when a foreign incorporated company will be deemed Australian tax resident under the central management and control test of residency. The guidance reflects the Bywater court ruling in late 2016.

CYPRUS: Targets Shell and Letter Box Companies

The Central Bank of Cyprus has communicated its intention to incorporate the definition of shell/letter box company in the forthcoming revision of the AML directive. The term “shell company” shall refer to a non-publicly traded, limited liability company or any other business entity that fulfils any one of the following criteria: (a) has no physical presence ίn its country of domicile (other than a mailing address); (b) has no established economic activity, little to no independent economic value and no documentary proof to the contrary; (c) ίs registered in a jurisdiction where companies are not required to submit to the authorities independently audited financial statements; (d) has a tax residence ίn a jurisdiction recognised as a ‘tax haven’ or no tax residence whatsoever.

US: Delaware may drop objections to federal beneficial ownership bill

A federal bill to force all new US companies to disclose their beneficial ownership on registration, currently stalled in the US Congress, may now be resurrected with the support of Delaware’s Secretary of State, Jeffrey Bullock. Last month, Bullock partially endorsed the Treasury Department-sponsored bill with the admission that workable legislation was needed to help law enforcement trace the owners of limited liability companies, of which Delaware alone has 1.3 million.

INTERNATIONAL FINANCIAL CENTRES: Wealthy Asians now seek compliance rather than secrecy

Tax compliance and transparency rather than secrecy are the highest priorities for Asian high-net-worth and ultra-high-net-worth individuals when considering an overseas structure and an appropriate international finance centre, according to research by Jersey Finance. Succession planning is another vital consideration.

ENFORCEMENT: Five countries collaborate against tax crime

The tax authorities of the UK, the US, Australia, Canada and the Netherlands have set up a joint committee to improve international enforcement against tax crime and money laundering. The first meeting of the so-called J5 group (Joint Chiefs of Global Tax Enforcement) last week developed plans to detect cyber criminals and enablers of offshore tax crime. The threat of virtual currencies to tax administrations is a particular priority.

VIRTUAL CURRENCIES: Malta and Abu Dhabi open doors for blockchain businesses

The Maltese Parliament has voted into law three cryptocurrency and blockchain bills, making Malta the first country to enact legislation specifically designed to attract blockchain enterprises. At the same time, the Abu Dhabi Global Market Free Zone has launched a regulatory framework to enable businesses to operate a crypto asset business in or from the zone.

INFORMATION EXCHANGE: More than 100 jurisdictions get ready for CRS exchange in 2018

The OECD has published a new set of more than 3,200 bilateral exchange relationships established under the Common Reporting Standard Multilateral Competent Authority Agreement – an increase of more than 500 since April 2018. All 124 participating jurisdictions are due to exchange CRS information in September 2018.

INDIA: Rules issued for disclosure of company beneficial ownership

Last month India’s federal Ministry of Corporate Affairs issued new rules prescribing detailed requirements for identifying the individuals who hold ultimate control over a company. The Companies (Significant Beneficial Owners) Rules 2018 require ‘significant’ beneficial owners of a company to declare the nature of their interest to that company, where the ‘significant’ threshold has been lowered from 25 to 10 per cent.

EU: MDR/DAC6 – Member States asked to respect reporting waiver for legal professional privilege

CFE Tax Advisers Europe has issued an opinion statement on the legal professional privilege reporting requirement waiver set out in Article 8ab(5) of the Council Directive (EU) 2018/822 of 25 May 2018 (DAC6 or Mandatory Disclosure Rules Directive). The statement sets out CFE’s expectation that EU Member States will fully respect the legal professional privilege reporting waiver as set out in Article 8ab(5) of DAC6 in the course of transposition and implementation of this Directive, in those Member States where such rights exist for tax advisors under domestic law.

CHINA: New rule restricts non-dom status

A draft law amending China’s individual income tax regime has been released for public consultation. It includes a day-counting test for tax residency, specifying that non-domiciled individuals who stay in China for less than 183 days in a calendar year will pay tax only on their China-sourced income.

Sources: STEP | IFC Review

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