Bulletin 31

Printable Version

Malta: The Malta Digital Innovation Authority was officially established

The Malta Digital Innovation Authority was officially established during the Delta Summit, a gathering of innovators, entrepreneurs, academics, and regulatory bodies under one roof. The authority, spearheaded by CEO Stephen McCarthy, will be responsible for promoting all governmental policies that promote Malta as the centre for excellence for technological innovation, while setting and enforcing standards that ensure compliance with any other international obligations.

IMF: IMF has cut world growth forecasts on tariff war, emerging market strains

The International Monetary Fund on Tuesday cut its global economic growth forecasts for 2018 and 2019, saying that the US-China trade war was taking a toll and emerging markets were struggling with tighter liquidity and capital outflows.

ISRAEL: Mizrahi Bank close to tax conspiracy settlement with US authorities

Israel’s Mizrahi-Tefahot bank now expects to pay the US authorities a penalty of USD116.5 million, to ward off prosecution for helping US persons evade tax on their offshore assets, it revealed in its second quarter results statement. Previously, it had estimated the penalty at only USD44 million. Last month, it rejected an offer from the US Department of Justice to settle at USD342 million, and negotiations are still continuing.

KOREA: Further tax concessions for qualified foreign workers

The South Korean government has extended the special 19 per cent flat-rate tax treatment period for foreign employees for a further three years beyond 31 December 2018.

SWITZERLAND: Consultation on blockchain and ICO regulation

The blockchain and ICO (initial coin offering) working group set up in Switzerland earlier this year has begun a public consultation on its recommendations. They include suggestions for legislation on the civil-law transfer of tokens and their treatment under insolvency law, and the creation of new financial market infrastructures.

MONEY LAUNDERING: Isle of Man given until July next year to meet FATF standards

The Council of Europe’s MONEYVAL watchdog has given the Manx government only until July 2019 to amend its money laundering legislation in line with the demands of MONEYVAL’s last mutual evaluation report in December 2016, which placed the jurisdiction in the ‘enhanced follow-up procedure’. The tight deadline explains why the Isle of Man Financial Services Commission’s consultation on its proposed reforms ended on the 11 September 2018, having been open for only one week.

CYPRUS: Identities of citizens by investment will be protected

The Nicosia government has implemented the reforms to its citizenship investment programme that were announced in May. Only authorised service providers will be able to submit applications under the renamed Cyprus Investment Scheme. Active promotion of the scheme is banned, while publication of the identity of the investors will be a criminal offence.

SWITZERLAND: Lump-sum taxation of foreign individuals

The Swiss Federal Tax Authority has issued a circular updating the rules on the lump-sum taxation of foreign nationals. The option is available only to foreigners who do not carry out any business activity in Switzerland, and who have moved to Switzerland for the first time or after living abroad for ten years. A lump sum of at least CHF400,000 will be charged.

MONEY LAUNDERING: Armenian reform deadline is extended

The Council of Europe’s MONEYVAL committee has recognised improvements in Armenia’s money laundering regime regarding risk assessments, targeted financial sanctions, politically exposed persons, regulation of non-financial professions, and law enforcement powers. But MONEYVAL still sees significant shortcomings in Armenia’s criminalisation of terrorism financing, internal controls and foreign branches and subsidiaries, and tipping-off and confidentiality laws. Armenia will remain in regular follow-up measures, and will report back in 2021.

US: Hungarian banker convicted of FATCA non-compliance

The former Chief Executive of Budapest-based bank Loyal Bank has admitted tax fraud by failing to comply with the US Foreign Account Tax Compliance Act (FATCA). Adrian Baron was extradited to the US from Budapest in July 2018, after an entrapment operation in which an American undercover agent canvassed him to open secret accounts. It is the first ever conviction for failing to comply with FATCA.

GERMANY: Blitz on foreign companies’ property transfer tax ‘evasion’

The German tax authorities are currently systematically investigating foreign companies that own residential property in Germany, for suspected evasion of real estate transfer tax (RETT) due to intra-group restructuring and acquisitions. The resulting criminal tax proceedings are currently being initiated against foreign group companies as well as their board members and directors, although RETT may be incurred by foreign group companies merely by indirect transfer of shares in companies that own German property.

PORTUGAL: Companies need not report beneficial ownership until January

Portugal has issued Ministerial Order 233/2018 setting out the legal regime for its central register of company beneficial ownership. The first beneficial owner declaration for companies already in existence on 1 October 2018 must be made between 1 January 2019 and 30 April 2019, although the necessary reporting forms have not yet been published.

Sources: STEP | IFC Review

Please contact David Marinelli should you wish to discuss any matter relating to jurisdiction & compliance risk management or asset protection pertaining to your business or your clients.