Bulletin 32

Printable Version

IRELAND: Corporate taxation ‘road map’ turns Irish system upside down

Ireland’s Finance Minister Paschal Donohoe has announced a dramatic reform of the country’s corporate taxation, introducing new provisions for controlled foreign companies and transfer pricing. Anti-hybrid and transfer pricing rules to reduce tax avoidance by multinationals will be legislated in Finance Bill 2019, to take effect from 1 January 2020. The reforms, which implement OECD and European Union anti-tax avoidance policies, may even include moving to a territorial tax regime so that corporation tax is charged only on profits made in the country.

LUXEMBOURG: Income tax officials given access to professionals’ AML client reports

Since 10 August, the Luxembourg income tax authorities have had access to information collected by financial and legal professionals on taxpayers for anti-money laundering purposes. The information includes identification of effective beneficial owners, all measures taken by the professionals to understand the ownership and control of a structure, analysis of transactions concluded throughout the business relationship, and identification of the beneficial owner as recipient of any payment.

MONEY LAUNDERING: EU regulatory powers to be concentrated in EBA

All money laundering enforcement powers over EU financial institutions are to be concentrated within the European Banking Authority, under new European Commission proposals. Commission Vice-President Valdis Dombrovskis says money laundering supervision ‘has failed all too often in the EU’ and, in future, national anti-money laundering supervisors will have to comply with EU rules.

CORRUPTION: UK British crime agency warns of stepped-up campaign against ‘dirty money’

A senior police officer at the UK National Crime Agency (NCA) has warned of a ‘significant scaling up’ of the agency’s operations against tainted money brought into the country by ‘corrupt foreign elites’. Donald Toon, one of the NCA’s directors, said the NCA was expecting to expand its use of unexplained wealth orders in the next few months, though cases will take time to come to court.

SWITZERLAND: One step closer to corporate tax reform

The Swiss parliament has approved a package of corporate tax reforms designed to keep it off the European Union’s blacklist, which will list jurisdictions that offer preferential rates to foreign companies as well as jurisdictions that practice tax secrecy. ‘Tax Proposal 17’ will abolish the special tax status granted to 24,000 foreign companies that pay low cantonal corporation tax rates, and cantonal governments will lower the tax rates charged to Swiss-resident companies. However, the proposal may yet be defeated by referendum.

SWISS BANKING: Credit Suisse falls foul of money laundering regulator

Switzerland’s Financial Market Supervisory Authority (FINMA) has accused the Swiss bank Credit Suisse of failing to prevent money laundering in the corruption cases concerning FIFA, the Brazilian oil corporation Petrobras, and the Venezuelan oil corporation Petróleos de Venezuela SA. The bank reportedly also failed to apply appropriate due-diligence measures to a politically exposed person, whom it was ‘too slow to identify and treat as posing increased risks’.

TAX AVOIDANCE: McDonald’s double non-taxation strategy did not amount to state aid

The European Commission has completed its investigation into the selective non-taxation of McDonald’s profits in Luxembourg, concluding that it did not amount to illegal state aid, as it is in line with national tax laws and the US-Luxembourg double taxation treaty. The case concerned two tax rulings granted in 2009 by Luxembourg to McDonald’s that allowed the company to pay neither US nor Luxembourg tax on profits it received from third-party franchisees in Europe, the Ukraine and Russia.

TURKEY: Government cuts citizenship by investment rate

Applicants for Turkey’s citizenship by investment programme need now have only USD500,000 in the bank and a further USD500,000 available for local capital investment, after the government reduced the thresholds in response to the country’s currency crisis. Previously, individuals had to show USD3 million in the bank and make an investment of USD2 million. Other paths to citizenship, by employing workers or buying property, have also been eased.

ESTONIA: Danske Bank involved in EUR200bn money laundering scandal

Denmark’s Danske Bank has admitted its Estonian branch has been involved in ‘some very unacceptable and unpleasant matters,’ relating to the passage of EUR200 billion of suspicious funds through accounts held there by non-residents, after Danske’s acquisition of Sampo Bank in 2007. Its Chief Executive, Thomas Borgen, has resigned after an independent investigation found ‘major deficiencies’ in the bank’s money laundering procedures.

CHINA: Day-counting residence test to take effect in January 2019

Personal income tax reforms in China were approved earlier this month. New measures include a day-counting tax residence test for non-domiciled individuals; a tax clearance requirement upon emigration; more information sharing among government departments; anti-avoidance rules, in particular regarding transfer-pricing adjustments; and capping the deduction of charitable donations at 30 per cent of taxable income.

ANGUILLA: Government appoints agency to promote residence by investment

The Anguilla government has appointed a marketing agency to promote its recently announced residence-by-investment programme and attract foreign capital to the country, primarily by encouraging wealthy individuals to establish residency. The agency, Latitude, will also develop a tax residence programme.

US: Sanctions imposed on more Putin and Maduro associates

The US government has issued further sanctions against individual Russian and Venezuelan nationals linked to the countries’ governments. It warns that significant dealings with parties on its List of Specified Persons (LSP) can result in secondary sanctions, so inclusion on the LSP may function as ‘something of a signal to avoid engagement’ with these persons.

Sources: STEP | IFC Review

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