Offshore companies have long been a popular option for businesses to make the most of attractive tax and financial frameworks around the world. However, there have been several legislative attempts recently at limiting the benefits that are available to companies looking to take advantage of such opportunities.
recent such move has been the proposal from Texas congressman, Lloyd Doggett, to change laws so that it would no longer be legal for corporations to hold income overseas.
In addition, authorities around the world are pressuring jurisdictions to remove secrecy laws which protect the confidentiality of clients using offshore services. Several countries have also signed tax agreements with some offshore jurisdictions in an effort to return unpaid taxes from private bank accounts.
One such agreement was the recent deal signed by Switzerland and the UK. The deal is expected to secure £5bn of unpaid tax for the UK exchequer by 2015. The deal will mean that UK taxpayers with funds in Swiss bank accounts will have to pay tax rates of 48 per cent on income from investments, 40 per cent on dividends and 27 per cent on gains. The move is a bid by the UK government to stop people from hiding the proceeds of tax evasion and is expected to come in
to force in 2013, subject to Parliamentary scrutiny.
Other offshore news includes research that has shown Jersey to be the favoured low-tax jurisdiction for the subsidiaries of FTSE 100 companies.
Research by charity, ActionAid, and reported by the Telegraph in October, showed that out of the 100 companies listed on the London Stock Exchange, 98 of them use tax haven-based subsidiaries in throughout the world, with Jersey hosting the majority. The report also showed that the Cayman Islands rank second and Luxembourg third.
Over the next few pages, as part of Lawyer Monthly’s Legal Focus feature on Offshore Companies, we speak to several legal professionals experienced in this sector. Here they discuss the recently updated Experienced Investor Fund (EIF) regulations for Gibraltar, the Dodd Frank Act and the general issues surrounding this practice area.