Bulletin 9

Printable Version

GERMANY: Beneficial ownership registry may not be fully open to the public

The latest, and close to final, version of Germany’s legislation creating a registry of company and trust beneficial ownership implies that the register will not be fully open to the public, after members of the Bundestag finance committee rejected amendments tabled by the left and Green parties.

PANAMA: Law firm boss sees tax shelter boom in US

The co-founder of the law firm at the centre of the Panama Papers scandal says the fallout has set off a “thriving” boom in the creation of tax shelters in the United States. Juergen Mossack, who partnered with Ramon Fonseca to create the Panamanian firm Mossack Fonseca, said in a document obtained Thursday by AFP that after the Panama Papers leak a year ago, the number of new tax shelters created has fallen by 30 percent in Panama and elsewhere.

“However, jurisdictions such as Delaware, Nevada and others located in the United States, where virtually no due diligence is required… incorporations are thriving!” Mossack said. “Whilst Panama tries hard to be whiter than white, others are profiting,” he wrote.

US: Trump proposes territorial tax system

As well as his previously signalled reduction of corporation tax to 15 per cent, US president Donald Trump is proposing to fundamentally change the US tax system to a territorial regime, in which only US-related profits are taxed – though a one-time tax, as yet unspecified, would be imposed on repatriated overseas earnings. The estate tax and the alternative minimum tax would also be repealed and income tax brackets would be simplified, with a 35 per cent top rate, while eliminating all income tax reliefs other than mortgage interest and charitable deductions.

UK: Parliament rejects attempt to force public company registries on British overseas territories

Attempts by UK members of parliament to add a last-minute amendment to the Criminal Finances Bill, requiring British overseas territories to create fully public registers of the beneficial ownership of companies, have failed to reach the statute book. The bill passed its last parliamentary stages in the House of Lords yesterday (27 April 2017) in the so-called ‘wash-up’ procedure triggered by the general election announcement, without any vote being taken on the proposed amendment.

FATCA: Concession made to banks on identification of foreign taxpayers

The US Internal Revenue Service has announced a temporary relaxation of its rule requiring that a ‘beneficial owner withholding certificate’ submitted under the US’ Foreign Account Tax Compliance Act must contain a foreign taxpayer identification number and the individual beneficial owner’s date of birth. For calendar year 2017, foreign financial institutions need not provide the taxpayer identification number unless they already have a record of it, and they can obtain the date of birth from their own files rather than asking the owner to confirm it. The beneficial owner can also self-certify the information by email.

EUROPEAN UNION: Parliamentary committees again reject Commission’s money laundering blacklist as too short

The European Parliament’s Economic Committee and Justice Committee have, for the second time, rejected the European Commission’s proposed blacklist of countries at high risk of money laundering. Members of the parliament argued that the list, drawn up under the EU Anti-Money Laundering Directive, is too strongly influenced by the international Financial Action Task Force (FATF), and should include more countries than the eleven named by the Commission. The resolution now goes to a plenary session of the parliament.

INTERNATIONAL FINANCIAL CENTRES: European Parliament examines member states’ overseas territories

An expert report to the European Parliament has examined the offshore financial practices of various EU member states’ overseas territories, especially Britain’s. It compares the French, Dutch and British territories in terms of combating tax evasion, money laundering and enhancing tax transparency, and suggests how the EU could put pressure on the territories to alter their practices.

EU Moves to Clamp Down on Low-Tax Enterprise Zones

Efforts to tighten European Union rules for special economic zones with reduced tax rates moved ahead as EU presidency holder Malta submitted a compromise deal to restrict banking and insurance industry activities and impose special conditions for foreign investors, reports BNA.

Based on confidential documents seen by Bloomberg BNA, the Malta compromise, which EU member states must approve in the Code of Conduct Group for Business Taxation, also targets economic zones that don’t conduct regular tax audits. The economic zones with special tax breaks, which exist in Portugal, Spain, Latvia, Lithuania and Poland, have become especially controversial as the EU moves to establish a tax haven blacklist by the end of 2017. Critics, especially in the European Parliament, insist that some of the special low-tax economic zones within the EU amount to tax havens.

AUTOMATIC EXCHANGE OF INFORMATION: OECD takes aim at CRS avoidance schemes

The OECD’s centre for tax policy has launched a disclosure facility for reporting schemes that aim to circumvent the internationally agreed Common Reporting Standard (CRS) for automatic exchange of taxpayers’ account information. The OECD plans to record all actual or perceived loopholes and analyse them to develop appropriate ways to deal with them. Jurisdictions subscribing to the CRS will also have to put in place anti-abuse rules to prevent any practices intended to circumvent CRS reporting and due diligence procedures.

TAX TRANSPARENCY: Luxembourg investors win right to challenge French tax information request

The European Court of Justice has confirmed an earlier advocate’s opinion that taxpayers must be given a chance to challenge court orders granting foreign requests for their tax information, if they allege the request lacks ‘foreseeable relevance’. The case (Berlioz Investment Fund SA v Luxembourg, C-682/15) concerns a French company’s claim for exemption from French withholding tax on dividends paid to its Luxembourg parent Berlioz. The latter refused to disclose the names, addresses and equitable interests of its members and was fined EUR250,000 without the right to challenge the order.

RUSSIA: Tax uncertainties remain for controlling persons of CFCs

Bulletins recently issued by the Russian Ministry of Finance explain the new rules on disclosing the profits of controlled foreign companies (CFCs) operated by Russian tax residents. Russian taxpayers who control foreign companies ‘who do not wish to be faced with the difficulties arising from the new rules can, as part of the tax amnesty, and until 31 December 2017 inclusive, opt for the voluntary liquidation of their CFCs, to avoid being held liable for failure to pay taxes and fees’, says CMS law firm

UK: Re-emergence of Border Officials’ power may force travellers to disclose passwords

The arrest and charge of Muhammad Rabbani in the UK last week, for refusing to provide the passwords to his laptop at Heathrow Airport, should cause businesses to reconsider their policy on travelling with devices containing material subject to legal professional privilege, says a British solicitor. The US immigration authorities have also recently adopted a policy of requiring travellers from Europe to disclose passwords.

PORTUGAL: Bearer shares banned

Portugal’s parliament has enacted Law 15/2017 prohibiting the issuance of bearer securities. Any existing bearer shares that are not converted into nominative securities before 4 November 2017 will no longer be transferable, and will not be entitled to receive dividends.

INTERNATIONAL TAXATION: Europe’s hybrid mismatch rules take effect in 2020

European finance ministers have formally adopted new rules to block tax avoidance by multinational companies that exploit ‘hybrid mismatches’ between member states’ and non-EU countries’ tax systems. The agreement completes amendment of the Anti Tax Avoidance Directive (ATAD 2016/1164) and will mostly come into force on 1 January 2020, though one of the provisions (Article 9a regarding reverse hybrid mismatches) will not be introduced until 2022.

INTERNATIONAL TAXATION: Guidance on denying inappropriate treaty benefits

The Organisation for Economic Co-operation and Development (OECD) has issued guidance on how it will assess a jurisdiction’s willingness to deny tax treaty benefits to multinational companies that try to claim them inappropriately, as part of its Base Erosion and Profit Shifting initiative. The OECD has also issued a discussion draft regarding transfer pricing of hard-to-value intangibles.

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.