SLG Newsletter: January

 

Dear Friends and Clients,

Usually, January already gives an indication of how the year will proceed. And it will go well.

We have more inquiries than ever about legal tax avoidance and company formations than ever before. This is probably mainly due to the further turn of the tax screw in the EU.

In January I visited several partner tax and law firms in Europe to discuss the next steps in consulting with them, namely how we can help our clients to get out of the 50+% taxation despite these new measures.

In order to implement the 5th Money Laundering Directive, the Beneficial Owners Register Act was implemented in the EU countries. It should bring a significant improvement in user-friendliness, which means that now everyone has access to  this UBO register. Similar registers are now also being created in the UAE, first in the offshore sector, then in the free zone and mainland sector.

Who is allowed to have access to this register has not yet been finally decided, but for the time being the offshore register is not public.

In order to provide the correct information to the registers , the UBO must be precisely defined. We are happy to help you with this and as your registered agent we are responsible to disclose the beneficial owner. 

Another recent transposition of an EU directive into national law is the obligation of taxpayers to disclose their aggressive tax planning models (OECD BEPS Base Erosion and Profit Shifting).

Action 12/2015: This directive was to be transposed into national law by 31.12.2019 and applied in each Member State from 1.7.2020. The obligation to notify concerns all cross-border actions if the acquisition of a tax advantage can be identified as the main advantage or one of the main advantages of the structure.

Not only the taxpayers themselves are obliged to report to the tax authorities, but also their advisors (lawyers, tax advisors) who participated in the planning of this  tax saving. However, since we do not have a branch office within the EU, this obligation does not apply to our law firm.

I have selected here only 2 examples that may influence international tax planning. Tax legislation in high-tax countries has made it its business to trap its inhabitants in an impenetrable network of regulators in order to prevent them from escaping.

But as international advisors we know the tools that can cut through this network -and we know many countries opening their doors to new residents and structures.

So – do not despair – ask us!

Yours,

Theodor Strohal

 

RAKICC: It is now possible to establish a RAKICC Foundation Structure

Ras Al Khaimah International Cooperate Centre (RAKICC) announced the enforcement of the RAKICC Foundations Regulation 2019. It is now possible to establish a Foundation by a founder to dedicate certain assets towards specified charitable or non-charitable purposes. The foundation will have a separate legal personality and can be used for a number of purposes such as financial, succession, asset protection and by charitable institutions.

If you would like to get more information about the topic, please contact us under office@slglaw.cc.

New Tourist Visa for 5 Years announced

During the UAE Cabinet’s first meeting of the year, they have announced the issuance of a five-year multi-entry tourist visa for all nationalities visiting the country. It has been proposed that visitors can stay for up to 6 months upon entry in 5-years’ time. No further information has been released regarding the new tourist visa but its implementation will likely be on the first quarter of the year.

Update on Golden Visa

A new cooperation agreement has been signed between Federal Authority for Identity and Citizenship (FAIC) and the Abu Dhabi Global Markets Registration Authority (ADGM RA). Part of the agreement states that the ADGM RA will be having exclusive rights in issuing golden visas in Abu Dhabi via the ADGM e-portal. Visa issuing conditions, requirements and process will be in accordance to Ministerial Decree No. 56 of 2018.

Update from FTA regarding the de-registration of companies TRN

The Federal Tax Authority (FTA) published information of de-registration of companies TRN number. The application for de-registration within 20 business days from the occurrence of the event has to be done, if:

– cease making taxable supplies; and

– are still making taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold pf AED 1,87,500. Or

– the value of your taxable supplies or expenses has fallen below the voluntary registration threshold in the preceding 12 calendar months; and

– the value of your taxable supplies or taxable expenses will not exceed the voluntary registration threshold in the next 30 days.

It is also possible to apply for a voluntary de-registration, if:

– are still making taxable supplies but the value in the previous 12 months was less than the mandatory registration threshold but above the voluntary registration threshold; and

– the taxable supplies will be more than the voluntary but less than the mandatory registration threshold in the next 30 days.

Furthermore, it is important to know, that a late application (after 20 business days) attracts a penalty of AED 10,000 or more and that a person who has willingly registered under VAT cannot apply for deregistration in the next 12 months following the date of registration.

If you would like to get more information about the topic, please contact us under office@slglaw.cc.

Dubai: New gratuity law in DIFC

Employment Law Amendment Law No. 04 of 2020 has been enacted this month as announced by the DIFC. Amendments were made with regards to the DIFC Employee Workplace Savings Scheme which replaces the end of service gratuity payment. The new scheme will be implemented on the 1st of February and employers are given up to 31st March to register. It also ensures employees that end of service benefits under the current regime remain in place, providing employers with the option to pay these accumulated benefits into a qualifying scheme. The new law exempts certain types of employees such as short-term workers, equity partners, employees working for government departments and bodies that have a presence in DIFC and employees who are temporarily transferred in the DIFC.

Draft for amending Federal Agency Law approved by UAE Cabinet

The UAE Cabinet has approved a draft law amending provisions in Federal Law No. 18 of 1981, also known as “Agency Law” which regulates commercial agency and distribution agreements. Changes will be seen on certain provisions of the Agency Law which concerns business sectors, public shareholding companies, UAE nationals, and foreign investors. According to the Secretariat, the new proposed law will provide for the transformation of family-owned companies to turn them into public joint stock companies and be listed publicly. It will also encourage UAE nationals to engage in business activities and invest in public shareholding companies and their commercial agencies.

Far East:

Myanmar: Business are asked to disclose ownership information

Starting from 1st January 2020, companies and state-owned enterprises (SOEs) in Myanmar involved in extraction like mineral and gemstone industries and oil and gas production and transportation companies are now required to disclose data on beneficial owners and politically exempted persons. The new regulation is in line with Notification No. 104/2019 dates October 2019 in adherence to Requirement 2.5 of the Extractive Industries Transparency Initiative (EITI) Standard 2019. A task force headed by the Directorate of Investment and Company Administration (DICA) in cooperation with the Myanmar EITI National Coordination Secretariat has been set up to assist companies to meet the requirements stated in the new regulation.

Vietnam: Government procedures for starting business shall be changed

Government Resolution No. 2 issued by the government of Vietnam this January 1 aims to improve Vietnam’s ranking in the Ease of Doing Business report conducted by the World Bank. Currently, Vietnam is on the 115th place out of 190 economies. It is considering doing the following reforms:

– shift from paper-based to online procedures,

– remove services that require paper forms and paper invoices,

–  link national databases on business, social insurance and labor,

– initiate cashless payments, and

– cut procedures needed in starting a business.

China-Hong Kong DTA: Tax Residency, Permanent Establishment Requirements Amended

China and Hong Kong have signed the Fifth Protocol to their longstanding double tax avoidance agreement (DTA).

Business entities as well as individuals holding dual residency should note that the Fifth Protocol revises several aspects of the DTA’s tax residency and permanent establishment provisions.

The Fifth Protocol came into effect starting January 1, 2020 in mainland China and will be in effect from April 1, 2020 in Hong Kong.

Companies and individuals must review their tax position in both jurisdictions to avoid being challenged by tax authorities.