Palladium Newsletter - July 2010

Dear Clients,

Welcome to our July newsletter.

We hope that you enjoy it as a useful resource for offshore matters. Our focus in this edition is on the ‘emergency’ June 22 budget in the UK, Palladium's offering of Brazilian companies, and the growing number of tax exchange agreements which, surprisingly perhaps, include Hong Kong and Panama (see last month’s newsletter), and which we encourage to help invigorate global commerce.
We welcome much of what Mr Osborne said and believe that acting so swiftly after taking power was a sensible move economically as well as politically. Spending cuts have been announced – as expected and thankfully - yet it was the tax changes which were of greatest interest to many of our clients.

The CGT hike by (only) 10% to 28% was less than had been forecast. There was excellent news as regards the “entrepreneurs relief" rate of 10% on the first £2m of gains being extended to the first £5m. So far so good. Further, Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years - until it reaches 24% - and the small companies' tax rate will be cut to 20%.

On the negative side, VAT will go up to 20% next year and a bank levy will be introduced. Perhaps more ominously, the much debated ‘non-dom review’ will be published next April...

As interest levels increase in the emerging markets after the credit crisis, the level of interest in Brazil in particular has been peaking. While Russia, India and China were the notable success stories of the ten years up until 2008, Brazil has been a winner since. Palladium has been involved with setting up Brazilian companies since 2006 and we help our clients navigate the myriad laws and protocols in Brazil and each of its states in setting up businesses there.

Brazil has one of the highest tax burdens in the world on its citizens and has relatively few tax treaties. Nevertheless, many firms now wish to make the step into the markets as a local player and not just through ‘rep offices’ and the like.

Palladium offers its clients ‘in-house’ Brazilian companies with registered offices, registered addresses, reliable accountants and lawyers as well as company tax code registration (‘CNPJ’). Further, we provide our clients with Brazilian tax resident directors (with ‘CPF’) and company administrators (with permanent resident visas), both of which are mandatory under Brazilian law. Should you or clients be interested in Brazil, please do contact us directly and I am sure that formally or informally we will be of great benefit to your endeavours.

Traditionally, Hong Kong has been a place some traditionally saw as a ‘soft’ place for tax and tax compliance internationally – and begin to enforce its reputation as a powerful International Finance Centre (‘IFC’). We welcome Hong Kong’s positive strides forward with its tax treaty partners now including the UK, Ireland, Brunei, Netherlands and Indonesia. Double tax treaties stimulate partnership and trust as well as the alleviation of ‘unfair’ double taxation. Moreover, our view has always been that IFCs such as the BVI, Singapore and – increasingly – New Zealand – benefit the global economy by facilitating business and investment in legitimate and predictable form. Yet again, a study vindicates this view and the call for common sense grows louder:

http://www.ifcfeed.com/articles/detail.aspx?articleid=3398&categoryid=60&loc=2

Meanwhile tax investigations in the UK are becoming more and more frequent, prominent business people are quitting the UK for Switzerland and the Far East, and the EU overall is now officially the place of highest taxation anywhere.

Please visit us at www.palladiumtrustservices.net or contact me directly at stephen@palladiumtrustservices.net if you would like more information on what Palladium can do for you.

We look forward to working with you very soon and trust that you will enjoy the articles below. Until next month,

Stephen


Hong Kong signs Double Tax Treaties with Ireland and the UK:
http://www.tax-news.com/news/Hong_Kong_Signs_DTAs_With_UK_Ireland____43931.html

Tax investigations set to increase even further:
http://www.uhy-uk.com/pages/posts/hmrc-to-seize-C2A34-billion-more-tax-from-investigations-pushing-total-amount-to-C2A316.1-billion742.php

Swiss canton luring companies away from UK...:
http://www.guardian.co.uk/business/2010/jun/13/tax-avoidance-switzerland-ftse-firms

Brevan Howard co-founder leaves UK for Switzerland...
http://www.mrscohen.com/global/brevan-howard-founder-quits-london-for-geneva/a410790?ref=citywire-global-latest-news-list

Tax rates in EU highest in the world:
http://www.stepjournal.org/news/news/europes_tax_burden_still_far.aspx