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Who would be an internationally mobile multi-millionaire, or dare I say it, billionaire these days?
It wasn’t so long ago that dozens of countries around the globe were practically falling over themselves to tempt some of the planet’s wealthiest people to spend some of their fortunes on their respective patches.
Of course, there was a catch.
A costly catch, well beyond the means of most people but mere pocket change for some of the individuals interested in moving from their place of origin to a more economically, culturally or politically stable location.
In the case of the UK, anyone granted clearance under what was known as the Tier One (investor) visa scheme needed to invest in excess of £2 million in shares or loan capital in “active and trading UK registered companies”
That the scheme could lead participants to obtain citizenship was hugely popular. Between its introduction in 2008 and 2021, in fact, some 13,276 applicants and their dependents were granted what became known as ‘golden visas’.
However, the influx was not without criticism.
A decade after Tier One status was unveiled, for instance, one of the UK’s leading economics think-tanks suggested that one less desirable consequence of foreign investment (of all kinds – not just the golden kind) was a hike in average 19 per cent house prices in England and Wales, exacerbating difficulties which many people had getting a foothold on the property ladder.
That report was published only weeks after the poisoning in Salisbury of the former Russian intelligence officer Sergie Skripal and his daughter, an incident which prompted a so far unpublished review of the visa scheme.
It would ultimately take Vladimir Putin’s decision to invade Ukraine for the Government to finally withdraw its golden visas because, as the then Home Secretary Priti Patel told the British Parliament it was no longer clear that it “offers the best means of encouraging investment-related migration”.
Although golden visas were at the hear of only some of the foreign investment referred to above, these two issues, house prices and the attraction of some ‘unsavoury individuals’ as cited by Patel, appear to be replicated around the world.
The European Commission also increased pressure on member states to follow suit because of the “inherent risks” posed by investor citizenship schemes.
Within the last few weeks, Spain has become the latest country to announce an end to its ‘golden visa’ scheme, echoing the Royal Economic Society’s observations on house prices rather than national security.
Ireland terminated its own ‘cash-for-visas’ system in February last year but has since warned that it will take “years” to clear a backlog of applications.
Having announced that its scheme would be scrapped, Portugal promptly backtracked, deciding to tighten the rules instead.
Malta, meanwhile, simply dug in its heels, a decision which has seen it referred to Commission’s Court of Justice.
Greece has also recently announced significant changes to its Golden Visa program, raising the required investment for prospective foreign investors from 250,000-euro property investment.
Again, this is said to because of an over-heating property market.
As of 31 March the investment threshold will see a substantial increase, with a new minimum set at 800,000 euros for properties in high-demand regions including Attica, Thessaloniki, Mykonos, Santorini, and islands with populations exceeding 3,100.
For other areas, the starting investment requirement will be adjusted to 400,000 euros.
One of the reasons that the issue hasn’t disappeared is that whilst many territories share concerns about being seen to host those who could be regarded as apologists for conflict, money talks.
If oligarchs don’t fancy coming to the UK, for instance, they can always consider Italy, Hong Kong, Latvia, Jersey, Mauritius, Namibia or Singapore where golden visa schemes or their rebranded equivalents remain.
It could be said that, in the UK, things aren’t much better for non-doms – those individuals who, like Rishi Sunak’s wife, may live in the UK but whose permanent residence is elsewhere.
Up to now that has enabled them to claim significant tax breaks by not having to pay UK tax on foreign income…but no more.
One of the eye-catching elements of the Spring Budget unveiled by the Chancellor of the Exchequer, Jeremy Hunt, last month was the abolition of that exemption and its replacement by a residence system ().
That will mean all UK residents living in the UK for more than four years paying the same tax on their foreign income and gains, regardless of their domicile status
Should Labour take power at the next General Election – which is widely expected to take place this autumn – they plan to turn the screw even tighter.
It seems that there is a common cycle when it comes to golden visas and, indeed, other fiscal carrots to attract the wealthy.
Often it seems that jurisdictions seem to become victims of their own success. Sure, the financial benefits might pack in the wealthy punters, but where does it leave house prices and, importantly, those locals looking to buy them.
Often, it seems, in the political game, this is enough to lead to change…
…and an end to the gold rush.
Israel’s parliament has passed new legislation that introduces significant reporting obligations for trustees and new tax residents, marking a notable shift in the country’s tax regulation framework.
These changes, which aim to enhance transparency and prevent tax evasion, will come into effect over the next few years.
Starting from the 2025 tax year, trustees of taxable Israeli trusts will be required to file annual reports detailing the trust’s ‘controlling individuals.’
These individuals include the settlor, trustees, protector, and beneficiaries, as well as the controlling individuals of any beneficiary corporations. This information must be included with the trust’s annual tax return.
Additionally, from 1 January 2026, all trustees residing in Israel must report the trust’s controlling individuals and their places of residence to the Israeli tax authorities.
This requirement is mandatory even if the trust is not subject to Israeli reporting and taxation, such as when none of the settlors or beneficiaries are Israeli residents.
The reports must be submitted within 90 days of the creation of the trust, or by April 2026 for trusts established before the implementation of this amendment.
The legislation also alters the reporting exemptions for new Israeli tax residents and veteran returning residents.
Previously, these individuals enjoyed a ten-year exemption from reporting foreign assets and income after becoming Israeli residents.
Under the new law, this exemption will be abolished for individuals who become Israeli residents starting from 1 January 2026.
Although these new residents will still benefit from a tax exemption on foreign-earned income during the grace period, they are now required to report this income.
The amendments extend to the rules governing controlled foreign companies (CFCs).
Under the current framework, a foreign company is not considered an Israeli resident during the exemption period if it is controlled and managed by an individual who is a new or returning tax resident.
The new legislation grants the Israeli tax authority the power to demand that such CFCs provide necessary information or file tax returns in Israel, enhancing the government’s ability to monitor and tax these entities.
These legislative changes underscore Israel’s commitment to tightening its tax regulations and aligning with global standards to combat tax evasion and enhance financial transparency.
Trustees, tax residents, and entities affected by these changes should prepare to comply with the new requirements.
It is advisable for stakeholders to consult with legal and tax professionals to understand the full implications of these amendments and ensure compliance with the updated regulations.
The introduction of these reporting obligations reflects a broader trend of increasing tax regulation and enforcement seen in jurisdictions worldwide, as governments seek to secure revenue and prevent tax base erosion.
As the effective dates for these changes approach, affected parties will need to stay informed and take proactive steps to adapt to the new regulatory landscape in Israel.
If you have any queries about this article on the New Reporting Requirements for Trustees and New Tax Residents, or tax matters in Israel more generally, then please get in touch.
In a significant policy shift outlined in the Spring Budget 2024, Chancellor Jeremy Hunt has announced comprehensive reforms to the tax treatment of non-UK domiciled individuals (non-doms) residing in the UK.
These changes, aimed at restructuring the non-dom regime, will notably impact potential purchasers of UK property.
Here, we delve into the key aspects of the proposed adjustments and what they mean for buyers of UK real estate.
Non-doms are individuals whose permanent home is not in the UK, yet who spend part of the year living in the country.
Under the current system, non-doms can avoid UK tax on their foreign income and gains (FIG) by not bringing these funds into the UK, leveraging the ‘remittance basis’ of taxation.
The UK Government plans to eliminate the non-dom regime, transitioning to a new residence-based tax system effective from 6 April 2025.
Under this new regime, individuals moving to the UK after spending at least a decade abroad will enjoy a four-year period during which they are exempt from UK tax on their worldwide FIG, regardless of whether the income is brought into the UK.
The transition period in 2025/26 and 2026/27 will also introduce specific reliefs.
It’s important to note that while the UK Inheritance Tax (IHT) exposure for non-UK assets may change under the new rules, the IHT treatment for UK residential property remains unchanged.
This means all property owners, regardless of their domicile status or eligibility for the four-year exemption, will still face IHT on UK properties.
For non-residents purchasing UK property, the upcoming changes will have no direct impact, provided they manage their days spent in the UK carefully to avoid becoming tax residents.
Conversely, those relocating to the UK might find the new regime more favorable, as they can bring FIG into the UK without tax implications for the first four years of residence—a simplification of the current system.
However, buyers planning a long-term move should consider the broader implications on their worldwide assets, as residing in the UK beyond four years subjects their global FIG to UK tax, and a ten-year stay brings their entire worldwide estate under the UK IHT regime.
Investors purchasing properties for their children or for investment purposes need to consult with advisors to navigate the best funding strategies and understand their IHT exposure.
A Singaporean buying a property in Mayfair for rental and capital appreciation purposes will remain unaffected by the tax regime changes, given their non-resident status.
However, the tax rate on gains from UK residential property sales will adjust from 28% to 24% starting 6 April 2024.
A couple from the Middle East buying a London property for short stays will need to carefully manage their time spent in the UK to avoid residency and its tax implications.
Consulting with tax advisors is crucial to understanding the residency thresholds.
An American buying a flat in London for his daughter presents a unique case due to the US’s global taxation on citizens.
The entrepreneur might face lesser impact from the UK’s tax changes and should explore ways to optimize his tax position, considering the US and UK tax obligations.
These changes mark a pivotal moment for non-dom individuals engaged in the UK real estate market.
It’s imperative for potential buyers and existing non-dom property owners to seek comprehensive advice to navigate the evolving tax landscape effectively.
Final thoughts
If you have any queries on this article on the Spring Budget 2024: Implications for Non-Dom Real Estate Buyers, or UK tax matters more generally, then please get in touch.
In a move stated as an attempt to alleviate its ongoing housing crisis, Greece has announced significant changes to its Golden Visa program, effectively raising the required investment for prospective foreign investors.
Initiated in 2014, the Golden Visa program has been instrumental in attracting foreign investment by offering a renewable, five-year residence permit in exchange for a 250,000-euro property investment.
As of 31 March the investment threshold will see a substantial increase, with a new minimum set at 800,000 euros for properties in high-demand regions including Attica, Thessaloniki, Mykonos, Santorini, and islands with populations exceeding 3,100.
For other areas, the starting investment requirement will be adjusted to 400,000 euros.
This adjustment comes in response to a significant surge in rental prices, which have escalated by 20 percent since Greece emerged from a nearly decade-long financial downturn in 2018, as reported by the Bank of Greece.
Under the revised guidelines, investors are now obligated to purchase properties of at least 120 square meters.
For those investing in historic properties or industrial buildings repurposed as residential spaces, the investment floor remains at 250,000 euros.
Data from the Migration Ministry highlights the program’s popularity, with a record 10,214 visa-related applications filed last year, including both new acquisitions and renewals.
Out of these, 5,701 Golden Visas were issued in 2023 alone, with an additional 8,800 applications still under review.
The total investment channeled through the program in the past year reached at least one billion euros.
Despite the program’s success in drawing investment, the Association of Public Limited Companies and Entrepreneurship (SAE/E) has expressed skepticism regarding the government’s objective of lowering housing prices and enhancing the availability of long-term rental properties.
The Greek property market and construction sector, which suffered dramatically during the financial crisis that began in 2008, have seen over 20,000 permanent residence permits issued to real estate investors to date.
Notably, in 2021 alone, 6,405 Chinese nationals were granted residence permits under this scheme, according to data from the migration and foreign ministries.
The Greek government’s decision to increase the Golden Visa investment requirement is a bold step towards addressing the housing affordability crisis and ensuring that the program contributes positively to the nation’s economic and social landscape.
If you have any queries on this article called Greece Raises Golden Visa Investment Threshold, or Greek tax matters in general, then please get in touch.
Under Canada’s taxation system, your residency status plays a pivotal role in determining your income tax obligations and entitlements.
Whether you’re a Canadian citizen, a permanent resident, or a foreign national, understanding the factors influencing tax residency is crucial.
This article explores some of the considerations involved in determining tax residency status in Canada.
The Canadian Revenue Agency (CRA) assesses various factors, known as “residential ties,” to determine an individual’s tax residency status.
These ties can be categorized into primary and secondary ties
These include the location of a primary dwelling, spouse or common-law partner, and dependents.
Secondary ties encompass personal property in Canada, social and economic ties with Canada, immigration status, healthcare coverage, driver’s license, vehicle registration, and memberships in Canadian organizations.
While primary ties carry significant weight, secondary ties are also considered collectively to ascertain residency status accurately.
The duration of an individual’s stay in Canada within a tax year is a crucial factor in residency determination.
Spending 183 days or more in Canada during a tax year typically results in Canadian residency for tax purposes.
However, even shorter stays can impact residency status when coupled with primary and secondary residential ties.
In cases of dual residency, where an individual is considered a resident of both Canada and another country for tax purposes, treaty tie-breaker rules apply.
These rules help resolve conflicts in residency status and prevent double taxation by considering factors such as the individual’s permanent home, center of vital interests, habitual abode, and nationality.
Based on the above criteria, individuals are categorized into three residency status groups by the CRA:
Individuals with significant residential ties to Canada are subject to Canadian income tax on their worldwide income.
Those lacking significant residential ties are subject to Canadian tax solely on Canadian-source income.
Certain individuals not meeting residency criteria may be deemed residents under specific circumstances, such as establishing significant ties to Canada without residency in another country under a tax treaty.
If uncertain about residency status, individuals can seek guidance from tax professionals and utilize CRA forms like Form NR74 (Entering Canada) or NR73 (Leaving Canada) to assess ties to Canada.
Advanced income tax rulings from the Income Tax Rulings Directorate offer further assurance, although they require thorough documentation and are legally binding.
Determining one’s tax residency in Canada is no simple task and the result will have significant implications for a taxpayers tax obligations and entitlements.
If you have any queries or comments on this article, or on any other Canadian tax issues, then please get in touch.
The Sostegni Ter (Dl 4/2022) has brought changes to the flat tax rules for new resident retirees in Italy.
Let’s have a closer look at these changes.
Italian law offers a privileged tax regime to individuals receiving foreign pensions who wish to transfer their tax residence to Italy, specifically to municipalities with a population not exceeding 20,000 inhabitants in certain regions.
These regions include Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Puglia, among others.
Under this regime, foreign retirees can benefit from an optional tax rate of 7%, regardless of the type of income generated abroad, for each of the nine tax periods during which the option is valid.
This favourable tax treatment also extends to individuals relocating to municipalities affected by serious seismic events, such as L’Aquila, as well as smaller municipalities like Camerino, Matelica, Tolentino, and Norcia.
To aid in identifying eligible municipalities, the “Annual municipal survey of population movement and calculation” is published on the Istat website on January 1st of the preceding year.
Operational procedures for the flat tax, including exercise methods, revocation, and cessation of effects, are outlined by the Revenue Agency.
The flat tax is formalised through the submission of the income tax return for the tax period in which the individual transfers their tax residence.
The taxpayer must meet five requirements, including non-resident status in Italy for at least five tax periods prior to the start of the option’s validity and reporting foreign source income subject to the substitute tax.
The favourable effects of the flat tax cease after five years following the tax period in which the option was exercised.
However, taxpayers can revoke the choice made in subsequent tax periods directly in the income tax return.
Clarifications from the Italian Revenue Agency confirm that the 7% flat tax applies to all retirees, regardless of nationality, receiving a foreign pension, including those receiving an INPS pension.
Loss of eligibility for the regime may occur due to failure to meet requirements, omission of tax payment, transfer to a non-eligible municipality or abroad, or emergence of Italian tax residence in the preceding five years.
No doubt the Italian flat tax regime for foreign pensioners will prove attractive to those who are looking to retire overseas.
If you have any queries about the Italian Flat Tax for New Resident Retirees, or Italian tax matters more generally, then please get in touch.
In a decisive move, Australia has terminated its “golden visa” program, initially designed to attract wealthy foreign investors by offering them residency.
The decision, a part of a broader immigration overhaul, comes after assessments revealed the scheme was underperforming in driving desired economic outcomes.
The program faced criticism for becoming a conduit for corrupt officials to transfer and conceal illicit funds within the country.
Since its inception in 2012, the significant investor visa (SIV) program has seen a predominant influx of applicants from China, representing 85% of the successful candidates.
The program required a substantial investment of over A$5m (£2.6m; $3.3m) in Australia, positioning itself as a catalyst for foreign investment and innovation.
However, reviews and government scrutiny exposed that the scheme fell short of its fundamental goals.
As a result, Australia’s government has chosen to shift its focus towards nurturing a pool of “skilled migrants” who promise to make substantial contributions to the nation’s development.
Home Affairs Minister Clare O’Neil‘s statement echoed a longstanding sentiment that the visa was not aligning with Australia’s economic and societal needs.
Transparency advocates like Clancy Moore from Transparency International Australia lauded the decision, highlighting the misuse of golden visas by corrupt elements as a channel for parking illicit wealth.
The scheme’s integrity had been in question for years, with concerns ranging from money laundering to offering refuge to individuals with lesser business acumen than initially anticipated.
Australia’s decision is part of a growing global trend where countries are reevaluating and, in some cases, discontinuing their golden visa programs.
The UK, for instance, terminated a similar initiative due to apprehensions about the influx of illicit funds, particularly from Russia.
Malta’s rapid citizenship grants to wealthy non-EU nationals also faced scrutiny, sparking debates over the potential for money laundering, tax evasion, and corruption.
As Australia turns a new leaf in its immigration policy, the focus is now on attracting talent that aligns with the nation’s growth trajectory and values.
While the golden visa scheme aimed to bring in investment, the shift towards skilled migration underscores a commitment to fostering genuine talent and expertise.
This strategic pivot not only reflects Australia’s dedication to maintaining the integrity of its borders and economy but also sets a precedent for other nations navigating the complex interplay between wealth, mobility, and security.
If you have any queries about this article called Australia Bids Farewell to Golden Visa, or Australian tax matters, then please get in touch.
The meeting takes place in the welcoming lobby of an undisclosed hotel in Central, Hong Kong.
[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?
[Nods firmly, a glint of excitement in their eyes] I accept. Let’s unravel the complexities of Hong Kong’s tax landscape.
[Opens a notebook, intrigued] Could you start by explaining the tax system in Hong Kong, especially for individuals?
[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]
[Nods, taking a snack] And what about the rates for this salaries tax?
[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.
[Frowning slightly] What about other forms of income? Are they taxed differently?
[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.
[Leans in, curious] What about businesses? How does profits tax work?
[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]
[Glancing at the tourist, then back] And what about property tax?
[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.
[Scratching head] Stamp duty sounds complicated. Can you break it down?
[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]
[Smirking at the interruption] I see. What about cross-border tax issues?
[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.
[Leaning back, satisfied] This has been incredibly enlightening. Your expertise is invaluable, 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.]
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 meeting takes place in an undisclosed hotel room in Hong Kong…
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?
I accept.
[Leaning forward with curiosity] Could you enlighten us on how an individual becomes subject to tax in Hong Kong?
[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.
[Accepting a cup of coffee] What taxes apply to an individual’s income here?
[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.
[Glancing towards the noise, then refocusing] Are there other types of taxes that individuals should be aware of?
[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.
[Leans back, intrigued] How is capital gains tax handled?
[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.
[Pensively tapping a finger on the table] What about the taxation of lifetime gifts?
[Nodding in affirmation] Lifetime gifts are not taxed, but stamp duty applies to voluntary transfers of property or stock.
[Looking up as a waiter passes by] Can you tell us about inheritance tax?
[Leans forward] There is no inheritance tax or estate duty in Hong Kong for deaths after February 11, 2006.
[Sipping coffee] What taxes are applicable to real property?
[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.
Are there taxes on importing or exporting non-cash assets?
[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.
[Raises an eyebrow] Any other taxes that are particularly relevant?
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.
[Glancing briefly at a watch] What about trusts and asset-holding vehicles?
[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.
How does taxation work for charities?
[With a sense of pride] Charities recognised by the Inland Revenue Department are exempt from taxation. Donations to these charities are tax-deductible.
[Checks phone for a moment, then looks up] Finally, could you elaborate on anti-avoidance tax provisions?
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]
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
In the landscape of global investment, Citizenship by Investment (CBI) and Residency by Investment (RBI) programs offer a compelling gateway for foreign investors seeking expedited citizenship or residency in other countries.
These initiatives, while promising economic growth through substantial foreign investment, have a flip side.
It is alleged that they’ve become a magnet for unscrupulous individuals—criminals and corrupt officials—who exploit these programs to evade justice and launder billions of dollars obtained through illicit activities.
The FATF team, of course.
Recently, the Financial Action Task Force (FATF) teamed up with the Organisation for Economic Co-operation and Development (OECD) to delve into the risks and vulnerabilities of these programs in their joint project.
Their findings underscored the inherent dangers associated with CBI/RBI programs, particularly in terms of money laundering, fraud, and their adverse effects on public integrity, taxation, and migration.
FATF President T. Raja Kumar highlighted the dual nature of these investment schemes, acknowledging their potential for stimulating economic growth while underscoring the grave threats they pose when abused by criminals and corrupt entities.
“Golden” passports and visas extended through these programs often fall prey to exploitation by individuals looking to obfuscate their identities, launder illicit gains, or perpetrate further criminal activities.
The report illuminates how these programs offer criminals enhanced global mobility, enabling them to cloak their identities and illegal undertakings behind opaque corporate structures in foreign jurisdictions.
Complex and multifaceted, these international investment migration programs frequently involve multiple government agencies, intermediaries, and lack proper governance, making them vulnerable to abuse by professional facilitators.
OECD Secretary-General Cormann emphasized the alarming scale of exploitation within these citizenship and residency programs, characterizing it as a multi-billion-dollar enterprise utilized by criminals to launder the proceeds of fraud and corruption, evade accountability, or access third-party countries.
To counter these threats, the report proposes a series of measures and best practices aimed at mitigating risks.
It advocates for robust due diligence mechanisms, transparency, and integrity frameworks to be integrated into the fabric of these investment migration programs.
Additionally, it stresses the importance of dissecting how criminals exploit these programs and delineates the need for clear demarcation of roles and responsibilities among involved parties to spot and prevent fraudulent activities.
In essence, while CBI/RBI programs offer a potential gateway to economic growth, their unchecked exploitation poses a severe threat to global financial systems and integrity.
The onus lies on policymakers and administrators of these programs to adopt stringent measures, ensuring these schemes aren’t hijacked for nefarious purposes.
The report serves as a clarion call to establish a delicate equilibrium between economic prosperity and robust security measures within the realm of investment migration programs.
If you have any queries about Citizenship and Residency by Investment programs, then please get in touch.