Palladium Newsletter - June 2010

Dear Clients,

Welcome to our June newsletter.

We hope that you enjoy it as a useful resource for offshore matters. Our focus in this extended edition is on the STEP Caribbean Conference, the emergency June 22 budget in the UK as well as on the introduction of the BVI’s Securities and Investment Business Act, 2010, which came into force on May 17.

Many of the great and the good in the IFC world - and a few others - gathered in balmy Barbados for four days of listening to pre-eminent speakers in their fields and networking.

One of the most notable themes was of course on the OECD/G7’s attack on perceived non-compliance of IFCs and their role in the world of legitimate business in the future. While the OECD’s speaker made it clear the powerful organisation does wish to eradicate blanket ‘banking secrecy’, and while Tax Information Exchange Agreements (‘TIEAs’) may invoke fear in some, the ultimate conclusion drawn from the conference was that IFCs not only should form part of the legitimate global economy but that they in fact improve productivity, stimulate economies and increase tax takes of global economies, G7 countries included:

http://www.ifcforum.org/show_article.php?id=2

When better than now for such forces of economic good, so the STEP delegates thought. In addition, Professor Jason Sharman PHD of Griffith University was speaking at the event which made the case for IFCs all the more poignant. It was his 2009 report which, at the height of the witch hunt against IFCs, pointed the finger of shoddy compliance and ease of money laundering not at poorly regulated IFCs but at the USA (Wyoming, Delaware, Nevada in particular) and the UK above all.

So where for the future? Well, firstly, the goal posts have not changed. Asset protection, confidentiality, estate planning – as well as legitimate tax planning, where appropriate – are all areas in which STEP members may provide useful service to the international community.

Secondly, the focus areas have shifted as certain governments – especially the USA, UK and France – continue to restrict the use of IFCs in wealth planning. Perhaps as a displacement for these market areas, special features by various experts were run on the seminal emerging markets of our time: Brazil, India, Russia and China, as well as Latin America as a unit.

Palladium’s trust company’s jurisdiction of New Zealand is gaining further plaudits due to its excellent use of English, ‘white listed status’ in many Latin American countries (as well as, for example, Italy and Romania), OECD membership and consequent ‘clean’ perception, high quality of staff as well as the flexibility of its legislation and laws. Until 2011 STEP conference in New Zealand then...

We’ve been keeping tabs on the budget as Palladium’s marketing base is in London, after all. London, the great winner in the boom years of the last decade, has been sorely affected by the banking crisis and tax hikes are inevitable post-bank bailout and mid-recession. Thankfully, no knee-jerk reaction has caused a mass exodus of the wealthy nomadic whom London and the UK desperately needs to retain. Yet. We’ll be commenting in particular on the revised CGT rules and speculate on the probable consequences of such. We’ll also highlight any change to non-domiciled resident rules (IHT expected to take effect on non-doms resident in the UK for 7 of the last 9 years, not 17 of the last 20) which will no doubt keep some STEP members and fiduciary service providers busy.

This new Act may have been introduced unnoticed by many of you whose clients or who personally have BVI Business Companies. Ostensibly, SIBA regulates funds primarily and is ensuring that the BVI retains its place as a modern funds jurisdiction, not least as the last major piece of legislation for funds was implemented 14 years ago. Yet the provisions of SIBA extend far beyond fund regulation and in particular require authorisation for the following business practices of all of the 400,000 odd active BVI entities. Broadly, the four main areas of regulation are:



It is this first theme which has gone most unnoticed. The upshot of SIBA is that any BVI company requires a licence from the BVI Financial Services Commission (‘FSC’) if it conducts ‘investment business’ from the BVI. Crucially, such investment business is being conducted from the BVI and the definition includes providing investment advice or dealing in investments. So for many of the BVI companies which receive commissions for investment services all over the world, this represents a potential pitfall in the near term. There is a grace period for non-compliance up until 17 November 2010; in the meantime, some of you may feel it wise to talk to Palladium.

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 until next month,

Stephen


UAE and the Netherlands sign double-tax treaty:
http://www.uaeinteract.com/docs/UAE_and_Holland_sign_agreement_on_double_taxation/25226.htm

UK approach to financial regulation outlined:
http://www.hm-treasury.gov.uk/speech_fst_020610.htm

Panama now has 7 tax treaties in the space of one year - Belgium, Italy, Holland, Barbados, Spain, Mexico – and now Qatar:
http://news.xinhuanet.com/english2010/business/2010-05/13/c_13292150.htm

US to hike fund manager tax rates:
http://www.gibraltarlaw.com/liv_tax_feed_details.php?id=43578

Dominica, Grenada and Saint Lucia now also on the ‘white list’:
http://www.stepjournal.org/news/news/three_more_caribbean_ifcs.aspx

Anguilla’s ship registry almost into top tier:
http://www.anguillaexpress.com/?p=2827'