cover image AMINEWS
September, 2014
 
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  Your Clients Entities and Structures in Today’s Age of Global Tax Transparency, when Confidentiality is Over  
     
 

Many Automatic Exchange of Information Agreements (in addition to FATCA) are in place to combat tax evasion by taxpayers on their foreign financial accounts and cross border investments.

Today, new global regulations similar to FATCA are rapidly being finalized by the OECD and G20. The OECD has established the Standard for Automatic Exchange of Financial Account Information in Tax Matters – which comprise the Competent Authority Agreement (CAA) and the Common Reporting Standards (CRS, or the Standards). The Standards were published in July of this year and are currently being finalized for global implementation. Once the Standard has been approved, countries will start to negotiate and conclude bilateral agreements thereby implementing the Standard between signatories, e.g.: between the US and Mexico, or Brazil and Indonesia. This represents what is now a determined global attempt to prevent tax evasion.

Information on all financial accounts and related transactions will automatically be exchanged between participating countries. The Standards set out the financial account information to be exchanged (balances, interest, dividends, and sales proceeds), which financial institutions need to report and the different types of accounts and taxpayers covered (individuals and entities, including trusts and foundations).

The world has changed, and with the Standard applicable worldwide, confidentiality is effectively over. Due to the exchange of information between countries, the foreign bank accounts and foreign assets held directly or indirectly by an individual resident in the participating countries will likely become known to the tax authorities of an individual´s country of tax residence. Furthermore, with tax inspectors receiving information about financial accounts, information that is undisclosed will trigger tax audits, assessments and penalties.

Clearly this may have an impact on your clients’ entities or structures. The time to act is now – changes should be made to structures as soon as possible to ensure they are compliant before the Standards are fully implemented.

Why the urgency?

The G20 and the Global Forum are expected to approve the Standard in the coming weeks, and the Automatic Exchange of Information will commence on January 1st 2016, with the first reporting in March 2017.

Already 66 countries have committed to adhere to this Standard and to implement it in line with the agreed timeline:

All G20, all BRIC, all OECD, all EU, and many offshore jurisdictions. The countries are:  Andorra, Anguilla, Argentina, Australia, Austria, Belgium, Bermuda, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Chile, People’s Republic of China, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Montserrat, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Turks & Caicos Islands, United Kingdom, United States, and the European Union. This list is continuously updated on the following websites: http://eoi-tax.org or  http://www.oecd.org/tax/oecd-releases-full-version-of-global-standard-for-automatic-exchange-of-information.htm

How Amicorp can assist you in this new environment

Amicorp strives to ensure that all structures we work with are compliant at all levels, thus each entity at the level of the corporate tax in the jurisdiction(s) where it is active, but also at the personal income tax level of the Ultimate Beneficial Owner (UBO) in the tax resident jurisdiction.

Due to the introduction of anti-abuse legislation (Blacklist, CFC regime, etc.) or other domestic tax disclosure rules in many jurisdictions, your clients may have to disclose the assets/entities of their structure or may have to report the income from that structure in their personal tax return, regardless of whether such income is actually distributed to them. 

Given the expected rapid deployment of the Standard and global tax transparency, and the increasing domestic tax disclosure requirements, now is the time to determine whether your clients current structure still provides the benefits they were designed for, or whether the structure needs to be adjusted. 

If the structure no longer meets its requirements, you have other options and solutions available to you such as converting the existing structure to a more beneficial structure for your clients’ specific situations that allows:

  • deferral of disclosure;
  • provides asset protection;
  • provides legitimate tax and/or estate planning
Amicorp can assist with a variety of compliant solutions, including:
  • Migrate the UBO to more robust structures
  • Providing asset protection, compliant tax deferral and/or estate planning
  • Add an insurance wrapper (Single Variable Life Insurance Plan)
  • Irrevocable Discretionary Trust
  • Private Foundation
  • Investment Holding Services – funds offering tax deferral
  • Pension Plan
  • POINT - Pooled Omnibus Investment Trust
  • Listing on stock exchanges
  • Relocation services
  • Assist with non-domiciled status or change of residency
  • Limited Liability Partnership

Please contact your Amicorp representative or nearest office as soon as possible for assistance in creating the most robust solutions for your clients.

For more information about Amicorp services, and specifically our FATCA services and AmiLife FlexPlan, please visit us at:  http://www.amicorp.com/services/index.php

     
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  Disclaimer

This document is prepared for general information purposes only. Amicorp Group does not provide tax or legal advice to its clients. Any opinions contained herein should not be construed or interpreted as advice provided by Amicorp Group.