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    The Secret Private Client Tax Adviser: Hong Kong debriefing

    The meeting takes place in the welcoming lobby of an undisclosed hotel in Central, Hong Kong.

    Head Tax Native (“TN”):

    [Adjusts glasses, voice hushed] Secret Private Client Adviser in Hong Kong, your mission, should you choose to accept it, is to educate us on the detailed tax considerations in Hong Kong.

    This task requires in-depth knowledge and utmost discretion.

    Should your identity be compromised, you will be disavowed.

    Are you ready to embark on this mission?

    Secret Private Client Adviser in Hong Kong (Secret Adviser):

    [Nods firmly, a glint of excitement in their eyes] I accept. Let’s unravel the complexities of Hong Kong’s tax landscape.

    TN:

    [Opens a notebook, intrigued] Could you start by explaining the tax system in Hong Kong, especially for individuals?

    Secret Adviser:

    [Leans forward, speaking earnestly] Certainly. Hong Kong operates on a territorial basis for taxation.

    This means only income and profits arising in or derived from Hong Kong are taxed. There are two main legislations: the Inland Revenue Ordinance (IRO) and the Stamp Duty Ordinance (SDO).

    For individuals, the primary tax is the salaries tax. It’s unique because it’s imposed on income earned within Hong Kong, regardless of the individual’s tax residency. [Pauses as a waiter passes by offering snacks]

    TN:

    [Nods, taking a snack] And what about the rates for this salaries tax?

    Secret Adviser:

    [Sips coffee, then responds] Salaries tax is interesting.

    Individuals can be taxed at progressive rates from 2% to 17%, or a flat rate of 15%, depending on which method yields lower tax.

    Deductions and allowances, like contributions to the mandatory pension scheme or donations to charities, play a crucial role in determining the taxable income.

    TN:

    [Frowning slightly] What about other forms of income? Are they taxed differently?

    Secret Adviser:

    [Smiles reassuringly] Indeed. For instance, rental income is subject to property tax, but individuals can opt for personal assessment, which allows them to be taxed on their aggregate income. But remember, dividends, interest, and trust distributions are generally not taxed.

    TN:

    [Leans in, curious] What about businesses? How does profits tax work?

    Secret Adviser:

    [Gestures with hands for emphasis] Profits tax is levied on profits arising in Hong Kong from any trade, profession, or business.

    It’s similar to corporate tax but with a territorial twist. The place of incorporation or the tax residency of the company doesn’t matter as much as where the profits are made.

    The rates are 8.25% for the first HK$2 million and 16.5% thereafter for corporations.

    For unincorporated businesses, it’s 7.5% and 15%, respectively.

    [A tourist nearby loudly inquires about local attractions, causing a brief distraction]

    TN:

    [Glancing at the tourist, then back] And what about property tax?

    Secret Adviser:

    [Nods] Property tax is charged on rental income from land and buildings at 15%.

    However, if a corporation owns the property and the income is subject to profits tax, they can apply for an exemption from property tax.

    TN:

    [Scratching head] Stamp duty sounds complicated. Can you break it down?

    Secret Adviser:

    [Laughs lightly] Stamp duty in Hong Kong is indeed multi-faceted. It’s imposed on leases, transfer of immovable property, and Hong Kong stocks.

    The rates vary, and there have been additional duties in recent years to cool the property market.

    [Suddenly, a cleaner bumps into a table nearby, apologising profusely before scurrying away]

    TN:

    [Smirking at the interruption] I see. What about cross-border tax issues?

    Secret Adviser:

    [Nods seriously] Ah, that’s a critical aspect. Hong Kong’s tax treaties and agreements, especially for automatic exchange of financial information, are key.

    The IRD issues certificates of resident status for international tax matters, but the concept of tax residency is less defined in Hong Kong law.

    TN:

    [Leaning back, satisfied] This has been incredibly enlightening. Your expertise is invaluable, Secret Adviser.

    Secret Adviser:

    [Standing up, discreetly] The world of taxation is ever-evolving, especially in a dynamic city like Hong Kong. Remember, discretion is the soul of our profession.

    [They exchange a knowing look before the Adviser blends into the bustling hotel lobby.]

     

    Final thoughts

    If you have any queries about private client taxation in Hong Kong, or tax matters in Hong Kong more generally, then please get in touch.

    The Secret Private Client Tax Adviser: Ireland debriefing

    The meeting takes place in the welcoming lobby of an undisclosed hotel just off of O’Connell St in Dublin, Ireland.

    Head Tax Native (“TN”):

    Secret Private Client Adviser in Ireland,  your mission, should you choose to accept it, is to educate us on the practical tax considerations in Ireland.

    This task requires a delicate balance of expertise and discretion.

    Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.

    Do you accept?

    Secret Private Client Adviser in Ireland (Secret Adviser):

    I accept.

    Tax Natives:

    [settles into a cozy armchair in the hotel lobby] Let’s delve into the tax considerations for private clients in Ireland.

    Can you explain how an individual becomes taxable?

    Secret Adviser:

    [leans forward, tapping a pen thoughtfully] Sure. In Ireland, tax liability hinges on domicile, residence, and ordinary residence.

    For instance, if you’re in Ireland for 183 days or more in a tax year, you’re considered a resident.

    Receptionist:

    [arguing with a guest] “No, Mr Bono, we didn’t want your free album drop on Apple… and we don’t want you to do a free concert in the lobby. People are trying to relax.

    Tax Natives:

    [suppresses a chuckle, then continues] Interesting. What about individual income taxes?

    Secret Adviser:

    [sips coffee] Irish residents are taxed on worldwide income, with standard rates at 20% and higher rates up to 40%.

    There’s also the universal social charge and pay-related social insurance.

    Now, regarding capital gains…

    Tax Natives:

    [nods] Yes, how are they taxed?

    Secret Adviser:

    [adjusts glasses] Capital gains tax is 33% on personal gains above €1,270.

    But for non-domiciled residents, only gains remitted into Ireland are taxed.

    Tax Natives:

    [glancing at notes] And what about lifetime gifts?

    Secret Adviser:

    Gifts may be subject to capital acquisitions tax with various tax-free thresholds.

    For instance, you can receive €335,000 tax-free from a parent.

    Receptionist:

    [to another guest] “No, we don’t offer tours to find the end of the rainbow!”

    Tax Natives:

    [smiles, then asks] What about taxes after death?

    Secret Adviser:

    [leans back] Similar to gifts, inheritance comes under capital acquisitions tax, with the same tax-free thresholds.

    Tax Natives:

    [checking time] Lastly, any other taxes we should know about?

    Secret Adviser:

    [stands up] Well, there’s local property tax, stamp duty, and VAT on various goods and services.

    And no wealth tax in Ireland.

    Tax Natives:

    [extends hand] Thank you for these insights!

    Secret Adviser:

    [shakes hand] Happy to help. Enjoy your stay in Ireland!

    [They part ways, Tax Natives heading towards the bustling hotel exit, amused by the unique interactions of the day.]

     

    Tapping out

    If you have any queries about this top secret interview on private client tax in Ireland, or Irish tax matters in general, then please get in touch

    The Secret Private Client Tax Adviser: Japan debriefing

    The meeting takes place in an undisclosed, luxurious, but bustling hotel lobby in Tokyo.

    Head Tax Native (“TN”):

    Secret Private Client Adviser in Japan,  your mission, should you choose to accept it, is to educate us on the practical tax considerations in Japan.

    This task requires a delicate balance of expertise and discretion.

    Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.

    Do you accept?

    Secret Private Client Adviser in Japan (Secret Adviser):

    I accept.

    TN:

    [Sitting comfortably in a plush leather lobby chair] So, let’s dive into the intriguing world of tax law. Can you tell us how an individual becomes taxable in Japan?

    Secret Adviser

    [Leans forward, eager to explain] Absolutely. In Japan, it all hinges on two things: residence and source of income.

    The Income Tax Act is the main player here. If you’re domiciled in Japan or have been living there for over a year, you’re considered a resident for tax purposes.

    TN:

    [Nods, taking a sip of water] And what about non-residents?

    Secret Adviser

    Well, if you’re not a resident, you’re a non-resident. Simple, right?

    They’re only taxed on income sourced in Japan.

    TN:

    [Chuckles] That does sound straightforward. What about permanent and non-permanent residents?

    Secret Adviser

    [Counts on fingers] Permanent residents, including non-Japanese who’ve been there for five out of ten years, are taxed on their worldwide income.

    Non-permanent residents, who’ve been there less than five years, are taxed only on income from Japan or remitted to Japan.

    [A waiter suddenly appears, offering a tray of pastries.]

    Waiter:

    [Cheerfully] Complimentary pastries for our esteemed guests!

    TN:

    [Surprised but delighted] Oh, how lovely! Thank you.

    [A tourist approaches, map in hand, looking confused.]

    Tourist:

    Excuse me, could you direct me to the Imperial Palace?

    Secret Adviser

    [Pointing] Sure, it’s straight down the road, then left at the big intersection.

    Tourist: [Gratefully] Thank you so much!

    Secret Adviser:

    [Laughs] All part of the service!

    TN:

    [Also laughing] Is your tax advice as efficient as your directions?

    Now, back to tax. What about inheritance tax?

    Secret Adviser

    [Nods] Inheritance tax is imposed on heirs and donees under the Inheritance Tax Act. It’s based on residence, nationality, and where the assets are.

    TN:

    [Intrigued] And income tax?

    Secret Adviser

    Apart from income tax, there’s also a special reconstruction tax and local inhabitant taxes. The total tax rate can hit up to 55.945%.

    TN:

    [Raises an eyebrow] That’s quite a number. Capital gains?

    Secret Adviser:

    Capital gains get the same treatment, with a tax rate of 20.315% until 2037.

    But, selling real estate held for less than five years? That’s taxed at 39.63%.

    TN:

    [Curious] And what about gifting?

    Secret Adviser:

    [Nods] Gifts to individuals attract gift tax, but gifts to legal entities mean corporate income tax for the recipient and deemed capital gains tax for the donor.

    TN:

    [Glancing at a luxurious watch] This is fascinating. Real property taxes?

    Secret Adviser:

    On acquiring real property, you’re looking at acquisition, registration, and license taxes. And if you hold it, there’s a fixed assets tax.

    TN:

    [Impressed] Wow, comprehensive indeed. What about non-cash assets?

    Secret Adviser:

    No taxes on exports, but imports attract customs, duties, and a 10% consumption tax.

    TN:

    [Smiling] Thank you for this insightful chat. Japan’s tax system seems as intricate as it is interesting!

    Secret Adviser:

    [Grinning] Happy to share. Japanese tax law is never dull!

    [They both stand up, shaking hands, as the lobby bustles with guests and staff.]

     

    Tapping out

    If you have any queries about this top secret interview on private client tax in Japan, or Japanese tax matters in general, then please get in touch

    Secret Private Client Tax Adviser: UK debriefing

    The meeting takes place in an undisclosed – but very salubrious – hotel room in Mayfair, London.

    Head Tax Native (“TN”):

    Secret Private Client Adviser in the UK your mission, should you choose to accept it, is to educate us on the practical tax considerations in the UK.

    This task requires a delicate balance of expertise and discretion. Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.

    Do you accept?

    Secret Private Client Adviser in UK (Secret Adviser):

    I accept.

    TN:

    [Settling into an ornate armchair, crossing legs] We’re amidst the grandeur of Mayfair, and I’m intrigued to discuss the UK tax system’s recent developments. Could you start by explaining the overarching goal of these changes?

    Secret Adviser:

    [Leaning back thoughtfully] Certainly. The UK has been focusing on fairness and efficiency in its tax system, targeting loopholes, maximizing collections, and combatting avoidance and evasion.

    TN:

    [Nods, picking up a notepad] Let’s delve into individual taxation. How does it function in the UK?

    Secret Adviser:

    [Gesturing for emphasis] Individual taxation is administered on a self-assessment basis. Taxpayers must provide HMRC with sufficient information annually, following a unique fiscal year from April 6th to the next year’s April 5th.

    TN:

    [Jotting down notes, glances up] And what about the specifics of income and capital gains tax?

    Secret Adviser:

    [Pausing as a waiter serves tea, then continues] Income tax is progressive, with a top marginal rate of 45% for high earners. Capital gains tax has evolved from a high rate with taper relief to a more simplified structure, including a flat rate for higher earners. The maximum rate is usually 20% but this might be higher for sales of residential property (28%) and some other specific assets.

    TN:

    [Sipping tea, intrigued] Moving to savings and dividends?

    Secret Adviser:

    [Smiling slightly] There’s a starting rate for savings income, plus a £2,000 tax-free dividend allowance. Capital gains tax operates similarly, with a basic rate for lower earners and a higher rate for those above £50,270.

    TN:

    [Looking up as a gentle knock on the door indicates room service arrival] And Scotland’s unique stance?

    Secret Adviser:

    [Nodding] Scotland has its own rates, introducing a starter rate and an intermediate rate, with the top rate at 47%.

    TN:

    [As room service departs, refocusing] The remittance basis seems particularly relevant for high net worth individuals.

    Secret Adviser:

    [Leaning forward] Yes, it’s key for those moving to the UK who would be regarded as non-UK domiciled.. It taxes only UK income and gains unless foreign income is brought into the country. It’s a longstanding principle with notable changes in 2008 and later years.

    TN:

    What about recent developments in this area?

    Secret Adviser:

    There have been significant changes. For instance, non-domiciled individuals in the UK for over 15 years can’t claim the remittance basis from April 2017. Essentially, there’s a long stop date beyond which there are no tax benefits of being non-UK domiciled. They’ll become taxed on worldwide income and gains.

    TN:

    [Nods, writing down] And residency rules?

    Secret Adviser:

    Since 2013, residency is determined by a statutory test, considering physical presence and ties to the UK. There’s a clear day-count method now.

    TN:

    [Glances at watch, then back at the expert] The line between tax avoidance and evasion?

    Secret Adviser:

    [Firmly] It’s become a highly charged moral issue in the UK and one which has seen a lot of legislative activity as the government feels that it has support in cracking down in this area. The GAAR, introduced in 2013, aims to counteract artificial arrangements and tax abuse.

    However, there are a number of other important measures introduced or enhanced such as the Disclosure of Tax Avoidance Schemes (“DOTAS”) and Promoters of Tax Avoidance Schemes (“POTAS”) measures.

    TN:

    [Leans back] Taxation of residential property has also seen changes?

    Secret Adviser

    [Nodding] Indeed. SDLT rates have increased, especially for high-value properties and second homes. The top rate for individuals is now 15%. There are also special charges for non-residents with the temerity to acquire UK property!

    TN:

    [Slightly surprised] What about a wealth tax in the UK?

    Secret Adviser:

    The ATED and SDLT changes are essentially a wealth tax, marking a significant policy shift. It’s targeted at high-value properties and their ownership structures. However, a formally badged ‘wealth tax’ does not seem high on the government’s agenda.

    TN:

    And cross-border structuring?

    Secret Adviser:

    The UK has been proactive in recovering offshore tax liabilities. Agreements with Switzerland and others, alongside disclosure facilities, reflect this.

    TN:

    [Standing, extending a hand] Thank you for this enlightening conversation in such a fitting setting.

    Secret Adviser:

    [Shaking hands] My pleasure.

     

    Tapping out

    If you have any queries about this top secret interview on private client tax in UK, or UK tax matters in general, then please get in touch

    Secret Private Client Tax Adviser: Hong Kong Debriefing

    The meeting takes place in an undisclosed hotel room in Hong Kong…

    Head Tax Native:

    Secret Private Client Adviser in Hong Kong, your mission, should you choose to accept it, is to educate us on the practical tax considerations in Hong Kong.

    This task requires a delicate balance of expertise and discretion. Be warned, should your real identity be revealed during this covert operation, you will be disavowed by the Tax Natives and shunned by your fellow private client advisers. Do you accept?

    Secret Private Client Adviser in HK:

    I accept.

    Head Tax Native:

    [Leaning forward with curiosity] Could you enlighten us on how an individual becomes subject to tax in Hong Kong?

    Secret Private Client Adviser in HK:

    [Nods, picking up a glass and sipping thoughtfully] Of course. In Hong Kong, taxation is based on the territorial source principle. Individuals are taxed on income and profits that are derived in Hong Kong, irrespective of their domicile and nationality.

    The individual’s residence is only considered when seeking relief under a double taxation arrangement.

    [Pauses as room service arrives with refreshments] Whether income and profits are derived in Hong Kong is determined by the facts of each case.

    TN:

    [Accepting a cup of coffee] What taxes apply to an individual’s income here?

    Secret Adviser:

    [Setting down the glass] In Hong Kong, salaries tax is applied to income arising or derived from any office, employment, profit, or pension. It encompasses all forms of benefits, including salaries, commissions, bonuses, and more.

    [There is a distant crash from next door, causing a brief moment of distraction]

    The tax is calculated at progressive rates up to 17% or at a standard rate of 15%, depending on which is lower. Individuals are also entitled to various allowances and can claim deductions for specific expenses.

    TN:

    [Glancing towards the noise, then refocusing] Are there other types of taxes that individuals should be aware of?

    Secret Adviser:

    [Unperturbed by the noise] Yes, besides salaries tax, individuals engaged in business or owning property in Hong Kong face profits tax and property tax, respectively.

    [Smiles slightly] There’s also a personal assessment option for those subject to multiple taxes. Notably, Hong Kong does not impose tax on dividends, interest, or lottery winnings.

    TN:

    [Leans back, intrigued] How is capital gains tax handled?

    Secret Adviser:

    [Gestures with hands for emphasis] Hong Kong does not levy a capital gains tax. However, profits from asset disposals in Hong Kong might be subject to profits tax.

    TN:

    [Pensively tapping a finger on the table] What about the taxation of lifetime gifts?

    Secret Adviser:

    [Nodding in affirmation] Lifetime gifts are not taxed, but stamp duty applies to voluntary transfers of property or stock.

    TN:

    [Looking up as a waiter passes by] Can you tell us about inheritance tax?

    Secret Adviser:

    [Leans forward] There is no inheritance tax or estate duty in Hong Kong for deaths after February 11, 2006.

    TN:

    [Sipping coffee] What taxes are applicable to real property?

    Secret Adviser:

    [Counts off on fingers] Property tax is charged on rental income from real property. Stamp duty is also applicable on property transfers and leases, with varying rates based on several factors.

    TN:

    Are there taxes on importing or exporting non-cash assets?

    Secret Adviser:

    [With a confident tone]

    Generally, Hong Kong maintains a free trade policy. Most imports are tax-free, with certain exceptions like liquors and motor vehicles.

    TN:

    [Raises an eyebrow] Any other taxes that are particularly relevant?

    Secret Adviser:

    Profits tax is significant for individuals running a business in Hong Kong, with rates depending on the amount of assessable profits.

    Additionally, there’s a 2023 tax concession scheme for family-owned investment vehicles managed by single-family offices.

    TN:

    [Glancing briefly at a watch] What about trusts and asset-holding vehicles?

    Secret Adviser:

    [Nods affirmatively] Trusts in Hong Kong are taxed as separate entities. They are liable for profits tax and property tax based on their activities and holdings. Stamp duty also applies to their transactions involving properties or stock.

    TN:

    How does taxation work for charities?

    Secret Adviser:

    [With a sense of pride] Charities recognised by the Inland Revenue Department are exempt from taxation. Donations to these charities are tax-deductible.

    TN:

    [Checks phone for a moment, then looks up] Finally, could you elaborate on anti-avoidance tax provisions?

    Secret Adviser:

    The Inland Revenue Ordinance contains provisions to address artificial or fictitious transactions and transactions designed primarily for tax benefits. These can be disregarded or recharacterized by the IRD to prevent tax avoidance.

    [The interview concludes as the sounds of the bustling city filter in from outside]

     

    Mission extraction

    If you have any queries about this top secret interview on private client tax in Hong Kong, or HK tax matters in general, then please get in touch

    The Secret Private Client Tax Adviser: Italy debriefing

    The meeting takes place in an undisclosed, luxurious, but bustling hotel lobby in Rome

    Head Tax Native (“TN”):

    Secret Private Client Adviser in Japan,  your mission, should you choose to accept it, is to educate us on the practical tax considerations in Japan.

    This task requires a delicate balance of expertise and discretion. Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.

    Do you accept?

    Secret Private Client Adviser in Italy (Secret Adviser):

    I accept.

    Tax Natives:

    [settles into a plush chair in the bustling hotel lobby, notebook ready] So, let’s dive straight into Italy’s tax residency rules.

    What makes someone a tax resident here?

    Secret Adviser:

    [leans forward, glasses reflecting the lobby’s chandeliers] It’s about presence and connection.

    If you’re registered at an Italian municipality, have your domicile or main center of interests in Italy for over 183 days a year, you’re a tax resident.

    Interestingly, even if you leave the registry and move to a low-tax country, you might still be deemed a resident unless proven otherwise.

    Receptionist:

    [animatedly to a guest] “No, the gondola ride isn’t included with your room, this is Rome, not Venice!”

    Tax Natives:

    [smiles, then refocuses] And for these residents, how does Italy tax their income?

    Secret Adviser:

    [sips espresso] Residents face worldwide income taxation, meaning they’re taxed on income earned both in and outside Italy.

    The IRPEF system classifies income into categories like employment, business, and capital, applying progressive rates from 23% to 43%.

    Confused Tourist:

    [interrupts, brandishing a map] Could you point me to the Leaning Tower of Pisa?

    Secret Adviser:

    [points gently] That’s a bit of a journey from here. Head to the train station… and get a train to Pisa.

    Now, regarding non-residents…

    Tax Natives:

    [jots down notes, intrigued] Yes, how are non-residents taxed?

    Secret Adviser:

    Non-residents are taxed only on their Italian-sourced income.

    But there’s an appealing flat tax option for new residents, like a €100,000 substitute tax on foreign income.

    Tax Natives:

    [nods] That’s the famous ‘non-dom’ regime we hear so much about?

    Go on… tell us a bit more. Don’t be shy!

    Secret Adviser:

    [Laughs] OK, you twist my arm!

    As I say, one of the most advantageous aspects of the regime is that Italy now offers a flat tax rate for high-net-worth individuals.

    [Takes another sip of Espresso for extra fortitude]

    As a high-net-worth individual, you have the option to pay €100,000 per annum on any foreign income you generate as an Italian tax resident.

    The rate is fixed – it doesn’t matter  how much foreign income you have.

    [Leans back]

    There is an exemption from paying wealth tax in Italy on your foreign investments, including paying tax on the value of foreign real estate investments.

    In addition, there is an exemption from inheritance and gift tax payable in Italy.

    [starts unconsciously twiddling with spoon]

    But don’t get carried away. Any income you generate in Italy will not fall under the flat tax and will be taxed at standard Italian rates.

    The scheme is likely to be most beneficial if most of your income is – and will continue to be – generated outside Italy.

    TN:

    Intriguing. How long does this regime apply to  taxpayer?

    Secret Adviser:

    The flat tax rate is applicable for a period of fifteen years, which is counted from the first year that you benefit from Italian tax residency.

    TN:

    And all that great food and wine. What is there not to love?

    Secret Adviser:

    Indeed!

    TN:

    What about capital gains?

    Secret Adviser:

    Capital gains, typically from financial assets like stocks or bonds, are taxed at 26%.

    But there are lower rates, like 12.5% for government securities.

    There is no tax on real estate sales if held for more than five years.

    Tax Natives:

    And the approach to lifetime gifts and inheritances?

    Secret Adviser:

    Gifts are subject to indirect tax, with rates depending on the relationship between donor and donee.

    Inheritance tax also varies but offers some exemptions, especially for direct relatives.

    Tourist:

    [returns, cheerfully] Got my ticket to Pisa, thanks!

    Tax Natives:

    [stands up] Just a quick one on real property taxes before we wrap up?

    Secret Adviser:

    [standing too] Sure.

    The key ones are IMU and TARI, but your primary residence is typically exempt, barring luxury properties.

    Tax Natives:

    [extends a hand] Thanks for your insights. I’ve learned a lot about Italian tax laws today.

    Secret Adviser:

    [shakes hand warmly] Happy to help. Enjoy your time in Italy!

    [They part ways, the Tax Natives heading towards the bustling hotel exit, amused and enlightened by the day’s interactions.]

    The Secret Private Client Tax Adviser: Malaysia debriefing

    The meeting takes place in an undisclosed, luxurious, but bustling hotel lobby in Kuala Lumpur.

    Head Tax Native (“TN”):

    Secret Private Client Adviser in Malaysia,  your mission, should you choose to accept it, is to educate us on the practical tax considerations in Malaysia.

    This task requires a delicate balance of expertise and discretion.

    Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.

    Do you accept?

    Secret Private Client Adviser in Malaysia (Secret Adviser):

    I accept.

    Tax Natives:

    [sits comfortably in a bustling hotel lobby, opens a notebook] Let’s look at some of the tax considerations for private clients in Malaysia.

    How does one become a tax resident there?

    Secret Adviser:

    [leans forward, adjusts glasses] It’s quite straightforward under the Income Tax Act.

    Since 2004, Malaysia’s taxation is based on territoriality, not residency.

    Essentially, if you derive income from Malaysia, you’re taxable, irrespective of your residency status.

    Receptionist:

    [argues with a guest in the background] “No, sir, the breakfast buffet doesn’t include unlimited lobster!”

    Tax Natives:

    [smiles, then refocuses] What about personal tax rates for residents?

    Secret Adviser:

    [glances at a chart in a folder] For residents, the tax rates are graduated.

    For instance, the first 5,000 ringgit is taxed at 0%, and it scales up to 30% for amounts exceeding 2 million ringgit.

    Non-residents, on the other hand, are taxed at a flat 30% rate on their Malaysian income, regardless of the amount.

    Cleaner:

    [approaches, vacuum in tow] Sorry to disturb, could you lift your feet? [They comply as the diligent cleaner vacuums under the table]

    Tax Natives:

    [chuckles, then continues] I guess Corporate tax seems crucial too. Can you elaborate on that?

    Secret Adviser:

    Certainly. A company managed and controlled in Malaysia is deemed tax resident.

    The general tax rate is 24%, but it’s reduced to 17% on the first 600,000 ringgit for smaller companies.

    [Bellhop walks by, accidentally drops a stack of towels, causing a small commotion.]

    Tax Natives:

    [helps pick up towels] What a lively place! Now, what about the taxation of gifts and inheritances?

    Secret Adviser:

    [nods approvingly] Gifts are usually not taxed.

    However, if the gift is in the form of real property, it’s subject to stamp duty. As for inheritance, Malaysia scrapped the inheritance tax in 1991.

    Tourist:

    [returns, still lost] Is the museum this way?

    Secret Adviser:

    [corrects them with a smile] It’s the other way. And regarding capital gains…

    Tax Natives:

    [glances at the clock] I see we’re running short on time. Your insights have been invaluable. Shall we continue this over lunch?

    Secret Adviser:

    [stands, extends a hand] That would be great. Let’s discuss over some Malaysian cuisine!

    Cleaner:

    [over the noise of the vacuum] Enjoy your meal!

    [They leave the lobby, weaving through the lively chaos of tourists, staff, and the ever-busy cleaner.]

     

    Tapping out

    If you have any queries about this top secret interview on private client tax in Malaysia or Malaysian tax matters in general, then please get in touch

    Non-Habitual Residence (NHR) regime: Losing the habit?

    Non-Habitual Residence (NHR) regime – Introduction

     

    The Portuguese Prime Minister announced an intention to terminate the “Non-Habitual Resident” taxation regime (‘NHR Regime’).

     

    This has been an attractive and popular tax regime that provided tax benefits to non-residents moving to Portugal. 

     

    On 10 October 2023, the Draft State Budget Law proposed the end of the NHR Regime from 1 January 2024. 

     

    This means that individuals acquiring tax residency in Portugal or holding a Portuguese residence permit until 31 December 2023, can still apply for the NHR Program. 

     

    The final draft law is expected to be available by the end of November 2023.

     

    Practical Issues 

     

    The practical issues are perhaps, refreshingly simple.

     

    Those individuals wishing to benefit from the NHR Regime must establish tax residency in Portugal before December 31st, 2023, and submit the NHR application promptly.

     

    As such, there is a feel of an ‘Everything Must Go’ style fiscal sale in the offing.

     

    The 2024 Draft State Budget Law

     

    Under the 2024 Draft State Budget Law, individuals relocating to Portugal between 1 January 2024, and 31 December 2026, who haven’t resided in Portugal in the previous 5 years, are eligible for a 50% deduction on taxable income, up to a maximum of €250,000 for 5 consecutive years. 

     

    Standard progressive tax rates apply to the remaining taxable income, and foreign-source income may be taxable in Portugal. Contractors and freelancers may have additional deductions during the first and second years.

     

    In addition, a new taxation regime, available for 10 years, will apply to individuals who have not resided in Portugal for the past 5 years. 

     

    It’s limited to university professionals, scientific research, income from companies with contractual tax benefits for productive investment projects, and income from companies under the R&D tax incentives system (SIFIDE) paid to individuals with a PhD.

     

    Under this regime, foreign-source income (except pensions) will be exempt, and a flat 20% tax rate will apply to employment and self-employment income. Those benefiting from the NHR or the 50% exclusion regime are not eligible.

     

    Other Regimes for Tax Residents in Portugal

     

    The Portuguese Personal Income Tax Code offers an attractive regime for income generated through life insurance or pension funds. 

     

    Regular investment income is taxed at a flat rate of 28%, with portions of income from life insurance or pension funds being exempt under certain conditions. 

     

    Other efficient taxation arrangements can be considered on a case-by-case basis.

     

    Please note that this information is subject to change based on the final draft law.

     

    Other regimes around the world

     

    Of course, there are other jurisdictions around the world happy to accommodate mobile, wealthy, and tax savvy individuals.

     

    Cyprus and Italy both offer attractive ‘non-dom’ regimes for individuals.

     

    Jurisdictions like the UAE continue to offer welcoming low or nil personal tax rates.

     

    If you have any queries about the Non-Habitual Residence (NHR) regime, Portuguese tax, or tax matters in general, then please get in touch.

    Mauritius residency program

    Mauritius residency program – Introduction

    Nestled in the azure expanse of the Indian Ocean, the Republic of Mauritius, often fondly referred to as the ‘Jewel of the Indian Ocean,’ beckons with its tropical charm and dynamic opportunities.

    Situated about 800 km east of Madagascar, this collection of islands boasts stunning coral reefs and enjoys a maritime subtropical climate, setting the stage for both breathtaking vacations and a strategic haven for international investors looking to bridge continents.

    However, in addition to these charms, Mauritius has a multi-faceted economy and an attractive residency program.

    Mauritius residency programs – an overview

    Mauritius extends a warm welcome to individuals seeking residency, offering programs tailored to a range of personal requirements and budgets.

    Here’s a glimpse of the benefits you can enjoy by establishing residency in this captivating nation:

    1. The freedom to live, work, or retire in Mauritius.
    2. The opportunity to include qualifying dependents, such as spouse, common-law partner, fully dependent parents, and unmarried children.
    3. A secure and safe environment for you and your family.
    4. Quality educational institutions providing instruction in English and French.
    5. Access to world-class medical facilities.
    6. A legal system that blends common and civil law.
    7. A highly educated, skilled, and multilingual workforce.
    8. No inheritance, estate, or gift taxes.
    9. Generally tax-free capital gains.

    Residency permits reflect diverse needs

    For high-net-worth individuals (HNWIs) and retirees, Mauritius offers two primary routes to obtain a Residency Permit:

    1. Retired Non-Citizen Residence Permit: This 10-year permit is open to applicants aged 50 or above, who can demonstrate a monthly transfer of USD 1,500 or a total of USD 18,000 annually to a local Mauritian bank account. This permit is renewable upon meeting the income transfer requirements.
    2. Property Development Scheme (PDS) Permanent Residence Permit (PRP): With a minimum investment of USD 375,000 in qualifying real estate projects, this 20-year PRP is perfect for those looking to invest in integrated resort schemes, real estate schemes, social and ecological impact-focused projects, smart city schemes, invest hotel schemes, or ground + 2 apartment schemes.

    Additionally, there’s a third option for those who invest at least USD 375,000 in a qualifying business activity, allowing them and their dependents to receive a 20-year PRP.

    Flexible options for occupations

    Mauritius offers three categories of Occupation Permits, catering to individuals who may not meet the USD 375,000 investment threshold:

    1. Investor: This category caters to shareholders and directors of Mauritian companies, with options like the Standard (10-year permit) and the Net Asset Value (10-year permit), among others.
    2. Professional: Foreign professionals with a minimum basic monthly salary of MUR 60,000 (c. USD 1,300) (MUR 30,000 for specific sectors) can apply for this permit.
    3. Self-Employed: Non-citizens engaged in professional business activities can apply for this permit with an initial transfer of USD 35,000.

    These Occupation Permits, ranging from three to ten years, can be converted into a 20-year Permanent Residency Permit (PRP) after three years of meeting specific criteria.

    Conclusion

    As you will now appreciate, Mauritius isn’t just a vacation destination; it’s a gateway to an enriching life experience, both personally and professionally.

    If you would like more information about a Mauritius residency program or other residency programmes 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..

    Malta’s Tax Benefits for Investment Services and Insurance Expatriates

    Malta’s new tax benefits for expatriates – Introduction

    Malta, a strategic hub within the European Union, continues to attract highly skilled professionals from around the world.

    On June 19th, the Commissioner for Revenue unveiled new guidelines under Article 6 of the Income Tax Act, aimed at providing compelling tax benefits to “investment services and insurance expatriates.”

    The goal is to bolster these sectors, which have experienced substantial growth since Malta’s EU accession in 2004, by enticing top-tier talent to contribute their expertise.

    Who Qualifies?

    For those looking to make a significant impact in Malta’s investment services or insurance sectors, the criteria are well-defined.

    An ‘Investment Services Expatriate’ is someone employed by or providing services to a company holding an investment services license or recognized by the relevant competent authority.

    This includes activities like management, administration, safekeeping, and investment advice to collective investment schemes.

    Similarly, an ‘Insurance Expatriate’ works for an entity authorized under the Insurance Business Act, an insurance manager under the Insurance Distribution Act, or engaged in the business of insurance broking.

    To be eligible, these expatriates must not be ordinarily resident or domiciled in Malta, nor have resided there for a minimum of three years preceding their employment or service provision in Malta.

    The Generous Benefits

    Qualifying Investment Services or Insurance Expatriates will enjoy a range of exemptions, which makes this opportunity even more attractive.

    The tax benefits cover personal expenses paid by the employing company, such as removal costs, accommodation expenses in Malta, travel costs for the expatriate and immediate family, provision of a car in Malta, medical expenses, medical insurance, and school fees for children.

    These benefits, which are typically taxed as fringe benefits, are exempt from taxation for a remarkable period of ten years, starting from the first taxable year in Malta.

    Additionally, these expatriates will be treated as not resident in Malta for specific income tax purposes, leading to exemptions on various types of income, including interest, royalties, profits from transfers of units in collective investment schemes, shares, securities, and more. These benefits remain in effect throughout the duration of the individual’s employment as an Investment Services or Insurance Expatriate.

    It’s essential to note that individuals who qualify for these tax benefits cannot simultaneously benefit from Malta’s Highly Qualified Persons Rules. The two registration options are mutually exclusive.

    Malta’s new tax benefits for expatriates – Conclusion

    Malta’s progressive tax benefits for Investment Services and Insurance Expatriates paint an attractive landscape for skilled professionals seeking a dynamic and rewarding career within these thriving sectors.

    The generous exemptions, combined with Malta’s strategic position in the EU, make this opportunity a compelling proposition for those looking to make a significant impact while enjoying a supportive environment

    If you have any queries regarding this article on Malta’s new tax benefits for expatriates or Malta tax 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.