Channel Islands and Isle of Man likely to be impacted by a Brexit vote .
The Financial Times has profiled the implication of a potential Brexit on Guernsey, Jersey and the Isle of Man.
Vanessa Houlder reports that S&P, the rating agency, has warned of "further downside risks" for Jersey and Guernsey if Britain chooses to leave the EU. It argued that there would be a negative impact on the UK's financial services sector, with which the economies of Jersey and Guernsey were "closely linked". But the islanders hope that Brexit would have a relatively modest impact.
Specifically, the Isle of Man, unlike the Channel Islands, has an agreement with the UK that means it is treated as if it were part of the EU for value added tax purposes. This has led to a thriving VAT planning industry for superyachts and corporate jets. This would probably move away ' most likely to Malta ' if the UK left the EU.
Financial Centres Futures ' 90% of financial services professionals think London will suffer with a Brexit
According to research from the Financial Centres Futures, 90% of finance professionals think the competitiveness of London as a financial centre will either suffer or remain the same if the United Kingdom chooses to leave the European Union. This compares with less than 10% who believe that London's competitiveness will improve. A Brexit will have the following short term effect on the competitiveness of London as a financial centre:
According to the responses, Edinburgh, Dublin, and the Channel Islands also stand to suffer, but not as much as London. Conversely, the larger centres in mainland Europe; Zurich, Frankfurt, Luxembourg and Paris, are expected to see some positive effects on their competitiveness if the UK voters choose to Brexit
Singapore agrees to implement reforms to conquer "aggressive tax planning"
Singapore have agreed to tighten their laws in accordance with the BEPS framework
According to the Business Times, pursuant to an announcement made by the Singapore Ministry of Finance on Thursday, the nation will now require locally headquartered multinationals to file reports broken down by country, income, and taxes to the Inland Revenue Authority of Singapore (IRAS) .
According to the BEPS plan for Singapore, the country will implement a series of reforms to create new minimum standards aimed at heading off "aggressive tax planning" by multinationals. This will include reforms to improve the nation's lax tax code, prevent abuses of various treaty obligations, make transactions and financial accountability more transparent, and create a new system for dispute resolution.
In a statement, Deputy Prime Minister, Coordinating Minister for Economic and Social Policies, and Minister for Finance Tharman Shanmugaratnam said: "Singapore is committed to working with the international community to counter artificial shifting of profits, and continues to welcome substantive economic activities. We will be actively involved with the OECD and G-20 in ensuring the consistent implementation of the BEPS standards across all jurisdictions, so as to ensure a level playing field."
Bahamas ex-Cabinet Minister warns jurisdiction's financial services is "under tremendous strain"
Ryan Pinder, former Minister of Financial Services in the Bahamas, told Parliament that if the Bahamas failed to develop a viable model for the sector's growth, it would result in a "failed country" and middle class.
The Graham, Thompson & Co attorney and partner used his 2016-2017 Budget debate contribution to point out that the Bahamas' former "value proposition" of secrecy and tax avoidance had been eroded by international regulatory changes.
With tax transparency, and the upcoming automatic exchange of information, set to further transform the way that the Bahamas and other international financial centres (IFCs) do business, Mr Pinder reiterated his previous call for this nation to build a new competitive advantage based on residency.
Corporate tax avoidance: Council agrees its stance on anti-avoidance rules
On 21 June 2016, the European Council has agreed on a draft directive addressing tax avoidance practices commonly used by large companies.
The directive is part of a January 2016 package of Commission proposals to strengthen rules against corporate tax avoidance. The package builds on 2015 OECD recommendations to address tax base erosion and profit shifting (BEPS) .
The directive addresses situations where corporate groups take advantage of disparities between national tax systems in order to reduce their overall tax liability. Corporate taxpayers may benefit from low tax rates or double tax deductions. Or they can ensure that categories of income remain untaxed by making it deductible in one jurisdiction whilst in the other it is not included in the tax base. The outcome distorts business decisions and risks creating situations of unfair tax competition.
New provisions in five areas
The draft directive covers all taxpayers that are subject to corporate tax in a member states, including subsidiaries of companies based in third countries. It lays down anti-tax-avoidance rules in five specific fields:
A common EU approach
The directive will ensure that the OECD anti-BEPS measures are implemented in a coordinated manner in the EU, including by 7 member states that are not OECD members. Furthermore, pending a revised proposal from the Commission for a common consolidated corporate tax base (CCCTB) , it takes account of discussions since 2011 on an existing CCCTB proposal within the Council. Three of the five areas covered by the directive implement OECD best practice, namely the interest limitation rules, the CFC rules and the rules on hybrid mismatches. The two others, i.e. the general anti-abuse rule and the exit taxation rules, deal with BEPS-related aspects of the CCCTB proposal.
Approval and implementation
The agreement was reached following discussion by the Economic and Financial Affairs Council. On 17 June 2016, the Council reached broad agreement, subject to a silence procedure. As the procedure expired without objections being raised, the directive will be submitted to a forthcoming Council meeting for adoption. The member states will have until 31 December 2018 to transpose the directive into their national laws and regulations, except for the exit taxation rules, for which they will have until 31 December 2019. Member states that have targeted rules that are equally effective to the interest limitation rules may apply them until the OECD reaches agreement on a minimum standard or until 1 January 2024 at the latest.
As concerns the rest of the January 2016 anti-tax-avoidance package, the presidency has set an ambitious timetable. On 25 May, the Council approved a directive on the exchange of tax-related information on multinational companies and conclusions on the third country aspects of tax transparency.
The anti-tax-avoidance package follows on from a number of EU initiatives in 2015. These include a directive, adopted in December 2015, on cross-border tax rulings.
In December 2014, the European Council cited "an urgent need to advance efforts in the fight against tax avoidance and aggressive tax planning, both at the global and EU levels".