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In August 2023, the Cayman Islands legislature introduced the Beneficial Ownership Transparency Bill 2023 (BOR Bill) after extensive consultations with key stakeholders in the financial services industry.
This bill aims to streamline and enhance the existing beneficial ownership framework while aligning with international standards, particularly Recommendation 24 of the Financial Action Task Force (FATF) Recommendations.
In this article, we look at the key aspects of the BOR Bill and its implications, with a focus on investment funds.
One of the primary objectives of the BOR Bill is to consolidate various pieces of beneficial ownership legislation into a single cohesive framework.
This consolidation simplifies compliance and ensures consistency across the Cayman Islands’ financial landscape. It also brings the Cayman Islands in line with international best practices, promoting transparency and accountability.
The BOR Bill takes a step further in promoting transparency by ensuring that legal entities operating within the Cayman Islands provide accurate and up-to-date beneficial ownership information.
This aligns with FATF Recommendation 24, which emphasizes the importance of granting access to reliable beneficial ownership data.
For investment funds, fund managers, and advisors in the Cayman Islands, several critical changes deserve attention:
The BOR Bill brings all partnerships, including exempted limited partnerships commonly used in investment fund structures, under the beneficial ownership regime.
This means that such partnerships will be subject to the same disclosure requirements as other legal entities.
The current exemptions available under the existing beneficial ownership regime will be eliminated.
This includes the exemption for funds registered under the Mutual Funds Act (Revised) or the Private Funds Act (Revised).
Instead, these registered funds will have to follow an “alternative route to compliance.” They must provide their corporate services provider with contact details for a licensed fund administrator or another licensed contact person within the Cayman Islands who can supply beneficial ownership information promptly upon request.
The definition of “beneficial owner” will be revised to more closely align with Cayman’s Anti-Money Laundering Regulations.
While the ownership and control percentage thresholds (25%) remain unchanged, this alignment ensures consistency and clarity in identifying beneficial owners.
Entities registered with the Cayman Islands Monetary Authority under the Securities Investment Business Act or the Virtual Asset (Service Providers) Act will no longer be exempt.
They will be required to establish and maintain a beneficial ownership register.
While there is no immediate action required until the BOR Bill becomes law (expected in phases), Cayman Islands investment fund clients are advised to prepare for compliance in advance. Here’s how:
Public Register Considerations
The BOR Bill acknowledges the Cayman Islands Government’s commitment to the UK government regarding public beneficial ownership registers.
However, it does not implement public access provisions but lays the foundation for future regulations.
The introduction of public registers hinges on future resolutions from the Cayman Parliament and ongoing consultations between the Cayman Islands Government and the UK government, considering recent judgments and privacy considerations.
The Cayman Islands’ Beneficial Ownership Transparency Bill 2023 reflects ongoing efforts to align with international standards while maintaining its status as a global financial hub.
Staying informed and prepared is crucial for investment funds and stakeholders to navigate these changes effectively.
If you have any queries about the Cayman Islands Beneficial Ownership Transparency Bill then please get in touch
In a notable step towards combating overseas economic crime and tax offences, representatives from the Financial Intelligence Units of Gibraltar, Guernsey, Isle of Man, and Jersey met at London’s Gibraltar House.
The meeting marked the continued commitment of the Quad Island Form to strengthen its framework and enhance collaboration with other authorities responsible for tackling financial crime.
During the three-day event, participants engaged in productive discussions involving the Economic Crime and Confiscation Unit from Jersey and the Isle of Man Proactive International Money Laundering Investigation Team. The primary focus was on sharing best practices in preparation for upcoming Moneyval assessments.
An important outcome of the meeting was the establishment of a dedicated subgroup that integrates tax authorities from all four jurisdictions. This initiative aims to foster greater cooperation between tax authorities and FIUs, enabling them to combat serious tax-related crimes and sophisticated fraud schemes that result in substantial illicit gains.
The participants discussed other matters, including:
The formation of this sub-group represents an encouraging step, showcasing the commitment of each jurisdiction to equip themselves with comprehensive financial intelligence and mechanisms to target criminals and illicit proceeds.
It also serves as a collaborative platform for sharing knowledge and experiences, allowing the four jurisdictions to work collectively towards their objectives.
Recognising the significance of international cooperation in combating money laundering, financial terrorism, and proliferation, the Forum emphasises the importance of collaboration, providing a vital avenue for identifying and addressing criminal activities effectively. The Forum members share common values, face similar challenges, and closely collaborate on issues of mutual importance.
Lynette Chaudhary, Director of Sovereign Tax Services, welcomes the Forum’s continued commitment to strengthening its framework and expanding collaboration. Emphasising the collaborative approach would facilitate closer working and knowledge sharing within the quad, and aid in the fight against financial crime.
The Gibraltar Association of Tax Advisers (GATA) was formally launched in mid-February 2023. The main objective of GATA is to:
Tax Advisers play an important role in the administration of the tax system and many taxpayers choose to use their services to assist them with their tax compliance and planning.
GATA believes that it will be beneficial to the profession, and to Gibraltar as a whole, for there to be a professional organisation that represents and promotes this distinct profession.
GATA will provide specialist tax support and a local voice for cross-border tax matters impacting Gibraltar.
In achieving this, GATA aims to work with connected well-established organisations locally, along with building relations between Gibraltar’s tax profession and its international counterparts, most notably the UK’s Chartered Institute of Taxation (CIOT).
The CIOT is the leading body in the UK for tax professionals whose primary purpose is to promote tax education. One of its key aims is to achieve a more efficient and less complex tax system for all.
GATA is looking to do something similar in Gibraltar. Its views and recommendations on tax matters will be made on this basis. GATA has met with Gibraltar’s Commissioner of Income Tax, and the CIOT, both resulting in encouraging outcomes.
GATA is looking to promote education in a variety of ways, both on its own and in conjunction with the CIOT. As a starter, it would like to offer quarterly open tax training seminars.
These seminars will be designed to cover a broad range of tax topics, from aspects which may be of interest to many taxpayers locally, to others which will focus on technical aspects of the tax regime which may be of more interest to relevant professionals.
Therefore, GATA is looking to provide a tax education and tax discussion platform. Membership of GATA is open to anyone who:
The founding members of GATA, whose specialisms cover the many aspects of tax, and represent a variety of local firms, include:
GATA officers have been elected: the Chair, Grahame Jackson; Education Officer, John Azzopardi; GSA Liaison Officer, Darren Anton; Tax Technical Officer, Paul McGonigal; and Secretary, James Bossino and Marco De La Chica.
In the first year of operation at least, there is no fee to join GATA. An open invitation stands to all those who meet the entry requirements and who are interested in joining.
Owning a business can be an exciting thing as you intimately know the vision and aspirations you hold for it – you have a clear direction in mind, and you can practically see its growth and success.
And yet, amidst it all, the less exciting tax obligations always stand close by. If you’re self-employed, you are responsible for registering with the relevant authorities and providing various documents for the necessary licences to ensure compliance with employment and tax regulations.
These requirements may initially be daunting – especially if you are a newcomer to the world of business. But fear not – the expert guidance at Tax Natives is here to support you throughout this process, ensuring that you establish yourself as a self-employed professional. With this foundation in mind, you can continue confidently and focus on developing your business.
Tax Natives is an international tax network. Our members include firms that specialise in tax compliance and advisory and provide business owners like you with personalised tax and residency services.
Our members also offer UK tax services to non-UK residents, and they can handle all your self-employment registrations, ensuring peace of mind and avoiding tax-related headaches.
As remote work becomes the new norm in many industries, employers face a maze of tax obligations when their employees operate from Canada.
Whether intentional or a result of Covid-19 travel restrictions, these arrangements can spark a range of tax issues for non-Canadian employers.
In this blog, we shed light on some key considerations and obligations that employers must navigate when their employees work remotely in Canada.
Having an employee in Canada triggers payroll tax obligations for the employer.
These include deductions for income tax, Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and any applicable provincial payroll taxes.
While resident and non-resident employers share similar obligations, non-resident employers without a presence in Canada may not be required to withhold CPP contributions.
Similarly, they may not withhold EI premiums if they are payable under the employment insurance laws of the employee’s home country.
However, when CPP contributions and/or EI premiums are due, the employer becomes liable for these on its own account.
Under a non-resident employer certificate regime, certified employers resident in a treaty country may be exempt from deducting and remitting Canadian income tax on remuneration paid to qualified non-resident employees.
To qualify, employees must be residents of a country with which Canada has a tax treaty, and they must be exempt from Canadian income tax on the remuneration due to the treaty.
Additionally, the employees must not be present in Canada for 90 or more days in any 12-month period, or not in Canada for 45 or more days in the calendar year that includes the payment time.
While this certification offers relief, employers should ensure ongoing reporting and compliance to maintain eligibility.
For employers without non-resident certification or non-qualifying employees, a Regulation 102 waiver may be sought if the remuneration is exempt from Canadian income tax due to a tax treaty.
Having an employee in Canada may expose the employer to the risk of being considered to be “carrying on business” in Canada.
A non-resident carrying on business in Canada is generally liable for tax on profits from such activities, subject to any treaty exemptions.
Certain activities of the employee, such as soliciting orders or offering sales in Canada, may cause the employer to be deemed to be carrying on business in the country.
Employers entitled to treaty benefits are exempt from Canadian income tax on business profits if they do not have a permanent establishment (PE) in Canada.
However, certain scenarios, like employees having the authority to conclude contracts, may trigger PE status and tax obligations.
When employees provide services in Canada, the employer’s customer may need to deduct and remit 15% of the payment for those services to the CRA unless a waiver is obtained.
Employers can apply for waivers to reduce or eliminate withholding taxes, depending on treaty provisions and income projections.
Value-added taxes (GST/HST) apply on the supply of goods and services in Canada, requiring non-resident employers to register and comply with the GST/HST regime if they make taxable supplies in the country.
In sum, remote work arrangements in Canada can create complex tax implications for non-Canadian employers.
Understanding and fulfilling these obligations is essential to avoid potential pitfalls and ensure compliance with Canadian tax laws.
Seeking professional advice can illuminate the path forward and help employers navigate the tax terrain with confidence.
If you have any queries about this or other Canadian tax matters then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
In this case, the “it” being the tax return… so say the IRS, anyway.
Yes, it has been reported in Law 360 that the Internal Revenue Service (“IRS”) has issued a determination against Beyonce asserting that she owes the agency $3m in taxes, interest and penalties.
A petition was filed on Monday by the IRS. In it, they argued that Beyonce had failed to report royalty income in 2018.
In addition, it also stated that she had incorrectly claimed deductions for the same and the following year. This included the Qualified Business Deduction and also deductions for legal and professional fees and management fees.
The US tax agency says that she owes back taxes of $805k for the 2018 year and $1.4m for the 2019 year.
In addition, the IRS has imposed penalties of $161k and $288k for each respective year. On top of this, interest is estimated at around $264k.
Enough to make anyone… er… Sasha Fierce.
Musical tax miscreants – IRS hall of fame
It’s no secret that the world of music is filled with glamour, fame, and fortune. But beneath the shimmering surface, some of our most beloved artists have found themselves in the crosshairs of the Internal Revenue Service (IRS). When the taxman comes knocking, even the brightest stars can find themselves in a financial bind. Let’s take a look at some other music legends who’ve hit a sour note with the IRS.
We are told that Beyonce rejects these claims and has asked for a trial to help settle the dispute.
The US tax court case is Beyonce Knowles-Carter v Commissioner under docket number 5695-23.
If you have any queries about this article on Beyonce IRS investigation, or US tax matters in general, then please get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
The Australian Taxation Office (ATO) has announced that a new Register of Foreign Ownership of Australian Assets is set to come into effect on 1 July 2023.
This Register will create several new reporting obligations for foreign investors and Australian entities that become “foreign persons”, in relation to certain interests in Australian land, entities and businesses.
Foreign investors will be required to provide notice to the Commissioner of Taxation (the Registrar) of certain events relating to interests in land, entities and businesses in Australia. Such events include acquisitions, disposals, lease arrangements, options to purchase or lease arrangements, as well as the creation or transfer of interests in a trust.
These reporting obligations are in addition to the approval processes and reporting obligations that already apply under Australia’s Foreign Acquisitions and Takeovers Act (FATA).
In anticipation of the Register’s commencement, Treasury has released an exposure draft of amendments to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) which is open for consultation until 31 March 2023. The ATO, which will administer the Register, has also released draft data standards prescribing how and what information must be reported for inclusion in the Register.
When a “registrable event” occurs, foreign investors must give notice to the Registrar within 30 days of the “registrable event day”. This day varies depending on the type of event but is generally the date on which the notifiable event occurs, or when the person is aware or should have been aware that the relevant event has occurred.
The ATO will be launching a new online platform through which investors will be able to report interests for the new Register. A third party will also be able to be authorised by a foreign investor to give notice on behalf of the foreign investor. Civil penalties will apply for a failure to give notice within the requisite 30-day period.
The Register will not be public. The information on the Register will be subject to similar rules as those that apply to other information relating to foreign investment in Australia under the FATA. That is, the information can be disclosed to other government bodies to enable them to perform their functions or exercise their powers under the FATA.
Information on the Register will also be permitted to be disclosed to a person to whom information on the register relates.
Under the FATA, a person must notify the Treasurer within 30 days of taking certain actions approved under a no objection notification or an exemption certificate, as well as certain notifiable situations after the action has been taken. These situations include when the relevant interest ceases or changes, or the entity or business the interest relates to ceases to exist.
From 1 July 2023, these circumstances will also need to be notified to the Registrar in order to be recorded on the new Register. To reduce duplication, the draft regulations provide that by giving a notice to the Registrar of a registered circumstance, this will also satisfy any other equivalent reporting obligations to the Treasurer under the FATA in relation to the same action.
On commencement of the new Register, the registers maintained by the ATO, including the Register of Foreign Ownership of Agricultural Land, the Register of Foreign Ownership of Water Entitlements, and the Register of Residential Land, will be repealed, and all information will be incorporated into the new Register. All circumstances required to be reported in relation to these registers will instead be reported to the Registrar and recorded on the new Register.
The Register of Foreign Owners of Media Assets maintained by the Australian Communications and Media Authority and the Register of Critical Infrastructure Assets administered by the Cyber and Infrastructure Security Centre will continue to operate
These key dates related to the new Register of Foreign Ownership of Australian Assets:
If you have any queries about the New Register of Foreign Ownership , or Australian tax issues or tax matters in general, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
In a recent court case, the Court of Justice in the European Union (EU) has ruled that it is legally acceptable for Italy to impose a withholding tax (WHT) and data-gathering obligations on non-resident online platforms that facilitate short-term property rentals like holiday lets.
However, the obligation to appoint an Italian tax representative liable to pay the WHT was prohibited by the EU law fundamental freedom to provide services.
The ruling has implications for other EU member states with similar rental markets, as they might also be tempted to bring in their own WHT regimes that could impact non-resident platforms.
The case began when Italy introduced three obligations on non-resident platforms in the short-term letting sector in 2017:
(1) collecting income-related data on Italian rentals,
(2) withholding tax on rental income, and
(3) appointing a local tax representative with responsibility for withholding the tax.
Airbnb challenged these rules, arguing that they were incompatible with the freedom to provide services.
The ruling is part of the EU’s ongoing attempts to regulate the economic models of online platforms in areas such as tax and data-protection.
The judgment concerns tax and data-collection and sharing obligations imposed on online platforms and the extent to which tax authorities can use platforms as a de facto compliance arm for the ‘gig’ economy.
The court held that the obligations to collect data and withhold tax at source did not constitute a restriction on the freedom to provide services. However, the obligation to appoint a tax representative in Italy was deemed a breach of the freedom to provide services.
The ruling confirms that direct taxation is not an EU-competence yet, and in principle, each member state could introduce its own WHT regime applicable to online platforms.
One key part of the case is DAC 7, a council directive that requires most online platforms to conduct due diligence on their service-providing users and report the information to one or more EU tax authorities.
DAC 7 does not require platforms to act as tax collectors; only as information providers.
In the short-term, the case allows Italy to impose WHT obligations on non-resident platforms.
The long-term implication is that other EU member states might be tempted to introduce their WHT regimes, which could impact non-resident platforms in the medium term.
If you have any queries relating to the Airbnb WHT case or Italian tax matters more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
On February 14, 2023, the Council of the European Union made changes to the list of countries that do not cooperate with the EU on tax matters.
This is called the “EU blacklist”.
Four new countries were added to the list:
With these additions, the EU blacklist list now has 16 countries on it. The other countries are as follows:
The Council gave reasons for adding these countries.
For example, the Marshall Islands was added because they have a tax system that encourages businesses to move profits offshore without any real economic activity.
Costa Rica was added because they do not provide enough information about tax matters, and they have tax policies that are considered harmful. Russia was added for the same reason.
The Bahamas was previously removed from the EU blacklist in 2018 but was added back in 2022 and remains on the list.
The new list will be officially published in the Official Journal of the EU, and the next revision will take place in October 2023.
If you have any queries relating to the EU Blacklist or tax matters more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
On 31 January, HMRC changed its guidance on unauthorised unit trusts, including Jersey Property Unit Trusts (JPUTs).
This new guidance has perhaps put a cat among the pigeons.
Previously, HMRC advised that neither authorised nor unauthorised unit trusts needed to be registered on HMRC’s trust register unless the unit trust became liable to certain UK tax liabilities.
However, the guidance for unauthorised unit trusts has now changed, meaning that JPUTs may need to be registered even if they don’t have a liability to UK tax.
JPUTs will need to be registered if they acquire UK land directly or intend to do so since 6 October 2020.
There are only two situations in which a JPUT may need to be registered: when it becomes liable for UK tax or when it acquires UK land after 6 October 2020.
If a JPUT is required to be registered, the relevant information, including contact details for each trustee and unit holder, will need to be compiled and submitted via HMRC’s online system.
The change in HMRC’s guidance means that many more JPUTs will be required to be registered on HMRC’s trust register.
Trustees and advisers should urgently check whether they have any trusts which should now be registered, and ensure they comply with the registration requirements.
Although HMRC is currently adopting a light-touch approach to penalties, trustees and advisers should not rely on this and should ensure they comply with the registration requirements.
If you have any queries relating to JPUT or tax matters more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.