Weekly press report to 12 January 2017
Criminal Finances Bill: Margaret Hodge MP tables amendment to force public registers in the OTs
Margaret Hodge has tabled her long-awaited amendment to the Government’s Criminal Finances Bill, which would require the UK Government to issue an Order in Council compelling the Overseas Territories to create public registers of beneficial ownership. This would apply only to the Overseas Territories, and not the Crown Dependencies.
The amendment is backed by 80 MPs, predominantly Labour and SNP. Though, there is some support from Conservative MPs too, including from former Cabinet Minister Andrew Mitchell.
Three more nations commit to BEPS minimum standards
The OECD confirmed on 6 January that Bermuda, Côte d'Ivoire, and Kazakhstan have agreed to meet its minimum standards for BEPS. This brings the total number of countries and jurisdictions participating in the project as Associates to 94, Tax News reports.
As members of the framework, they have committed to implementing the minimum standards put forward by the OECD on BEPS. These are on: harmful tax practices, tax treaty abuse, country-by-country reporting, and dispute resolution mechanisms. The members of the framework will also pay an annual fee.
MEPs accuse Malta of ‘tax haven’ status
Malta has been accused by Green MEPs of being a tax haven after a report found the EU’s smallest member state helped multinationals avoid paying €14bn (£12.1bn, $14.8bn) in taxes between 2012 and 2015.
As reported by International Adviser, the revelations come after the country took over the EU’s rotating presidency on 1 January – a stint that will last six months.
Sven Giegold, a German Green MEP who campaigns on taxation, stated: “The tax system in Malta is generous to say the least, with large companies routinely paying as little as 5% tax on their profits. This is completely unacceptable and raises serious questions.”
The report also said that despite Malta claiming to have the highest corporation tax in the EU - 35%- in reality an elaborate regime of tax breaks for intellectual property amounts to “aggressive tax planning”, allowing some companies to pay zero corporation tax.
Regulatory equivalence high on the political agenda
During yesterday’s Treasury Select Committee meeting, Bank of England Governor Mark Carney was asked about the possibility of a regulatory equivalence regime for the City of London in the wake of Brexit, which could allow financial business to continue uninterrupted.
In reply, Carney said that it was “highly advisable” for there to be “an implementation and transition” phase for the financial sector so that it could adapt new rules under Brexit. “If there is not such a transition, we will work to mitigate these consequences as much as possible, although these are greater for Europe than for the UK,” he added. The Governor stressed it was in the interests of both the UK and the EU27 to agree on easy access for UK-based financial services companies to the EU market, and for such an agreement not to be based simply on Brussels deeming that UK regulations were equivalent to its own.
A simple equivalence regime was undesirable, he said, because “what we want to avoid is to put ourself into a position of cutting and pasting [regulatory] changes [imposed by the EU] which might not be suitable for the UK”. He added that he wanted to ensure that equivalence with EU rules is interpreted as equivalent outcomes, and he thought that the scale of equivalence desired between the UK and EU financial rules would point towards needing an institutional framework. He does not see any substantive reasons why the EU should not treat the UK financial stability rules as equivalent to EU ones.
Furthermore, global law firm Norton Rose Fulbright has published a report, commissioned by the Financial Services Negotiation Forum, which examines approaches to the interpretation and measurement of equivalence.
The report finds that there are common features between equivalence and passporting (such as cooperation arrangements, comparable regulatory frameworks and data sharing) which suggest that a framework of equivalence could be established to ensure a harmonised approach to equivalence in UK-EU negotiations.
STEP appoints new CEO
As reported by International Investment, STEP has appointed George Hodgson as its new Chief Executive.
He has been with STEP since 2009, having previously been deputy CEO and serving as interim CEO since the departure of David Harvey in June 2016.
Prior to this, he was Director of Consumer Strategy at the Association of British Insurers, the main insurance industry trade body in the UK, and has served on the staff of the Treasury Committee of the UK House of Commons.
George’s move to public policy work followed a 20-year career in investment banking as an economist and investment strategist.
Mourant Ozannes Private Equity Tracker: offshore sector to remain strong in 2017
BL Global have reported on Mourant Ozannes’ recent survey outlining the likely trends in the private equity sector throughout 2017.
Fifty per cent of limited partnerships across the world plan to increase or maintain the amount of capital they have invested in PE funds in offshore locations in the next five years, according to research commissioned by Mourant Ozannes.
According to the Mourant Ozannes study, almost nine in 10 PE professionals worldwide (88 per cent) have a positive outlook on the private equity market over the next 12 months.
Cayman Island representatives meet in Washington DC to discuss de-risking
Ministry of Financial Services and Cayman Islands Monetary Authority (CIMA) officials held in December a second round of meetings in Washington DC with key US Congressional staff, regulators and stakeholders about bank de-risking from the Caribbean perspective. The Cayman officials then contributed to Financial Stability Board discussions on an action plan to address the issue.
“It’s important to continue these talks because de-risking is still creating unintended, detrimental effects globally,” Financial Services Minister Wayne Panton stated. “We had our own taste of it when it disrupted our money services business in 2015, and the people of Cayman certainly remember their relief when the issue was resolved.”
The delegation met representatives of the US Department of State; the World Bank; senior Democratic staff for the House of Representatives Committee on Financial Services; senior staff for Senator Pat Toomey (R-PA), Chairman for Senate Subcommittee on Financial Institutions and Consumer Protection; and representatives of the Office of the Comptroller of the Currency.
2016: A year of exciting legislative developments in Bermuda
The Bermuda Royal Gazette has summarised various legislative developments in Bermuda over the last year, including:
Corporate and Tax Transparency: Bermuda is internationally recognised as a jurisdiction that advances corporate and tax transparency and compliance. It is an early adopter of the OECD’s Common Reporting Standard which effectively began on January 1, 2016 and in April 2016 Bermuda became the 33rd signatory of the Multilateral Competent Authority Agreement for Country-by-Country reporting which is a component of the OECD’s Base Erosion and Profit Shifting Project. Multinational groups based in Bermuda which satisfy the criteria requiring submission of a CbC report are required to collect and submit information for fiscal years starting on or after January 1, 2016.
Public Directors’ Register: in Bermuda, director and officer registers as well as shareholder registers are accessible to the public at a company’s registered office. However, recent company law changes mean that Bermuda companies are also now required to file director information with the Registrar of Companies to be held in a central database that will be open to public inspection.
Other key developments recognised in: Corporate Service Providers Regulation, the Rights of Third Parties, Partnerships Law and Limited Liability Companies Law.