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    Yer name’s not down – UAE is off Dutch Tax Blacklist

    UAE is off the Dutch Blacklist – Introduction

    The Netherlands’ recent update to its list of low-taxed and non-cooperative jurisdictions for 2024 has notably excluded the United Arab Emirates (UAE), marking a shift in tax policy.

    This change follows the UAE’s introduction of a federal Corporate Income Tax (CIT) regime, setting a standard tax rate of 9% for financial years beginning on or after 1 June 2023.

    The Blacklist

    Of course, this blacklist has nothing to do with Raymond Reddington.

    Instead, the Dutch tax blacklist is a list of jurisdictions that facilitate abusive tax structures through minimal or non-existent taxation rates, defined as less than 9%.

    The presence on this list subjected entities in blacklisted jurisdictions to stringent domestic anti-abuse measures in the Netherlands.

    These included conditional withholding taxes on cross-border payments and limitations on obtaining tax rulings for transactions involving blacklisted jurisdictions, alongside the application of Controlled Foreign Corporation (CFC) rules that impacted the taxable income of Dutch entities.

    Back from black

    The removal of the UAE from this blacklist alleviates several challenges for UAE-based businesses operating in the Netherlands.

    Previously, the anti-abuse measures introduced a layer of complexity and uncertainty for transactions between the two nations.

    Now, the reclassification signals a positive development, potentially enhancing economic connections and fostering a more favorable environment for cross-border investments and collaborations.

    The UAE’s proactive adjustment of its tax regime to introduce a CIT rate aligns with global tax standards and demonstrates a commitment to fostering a transparent and cooperative financial landscape.

    This adjustment has directly influenced its standing with the Netherlands, removing barriers that once complicated financial and corporate engagements.

    UAE is off the Dutch Blacklist – Conclusion

    For businesses within the UAE with Dutch interests, this development opens doors to new opportunities and simplifies operations, heralding a phase of strengthened economic ties between the UAE and the Netherlands.

    This move is anticipated to encourage a smoother flow of trade, investment, and financial services between the two countries, reinforcing their positions in the global market.

    Final thoughts

    If you have any queries about this article on the UAE being off the Dutch Blacklist, or UAE matters more generally, then please get in touch.

    US: Washington Finalises Beneficial Ownership Database Access

    US Beneficial Ownership Access – Introduction

    In a key development for corporate transparency, the Financial Crimes Enforcement Network (FinCEN) of the US government has initiated the process of receiving beneficial ownership information reports as mandated by the Corporate Transparency Act 2021.

    This strategic move aims to fortify the battle against financial crimes by ensuring clarity in company ownership structures.

    Submission Requirements and Deadlines

    Under the new framework, existing companies are provided with a one-year window to submit their reports, while newly established entities must adhere to a 90-day filing deadline post-creation or registration with FinCEN.

    The agency is entrusted with the administration and secure management of the beneficial ownership database.

    Reporting entities are required to furnish comprehensive details for each beneficial owner, including their name, date of birth, address, and a valid identification number from an approved list of documents such as a US driving license, passport, or other state or local government-issued documents, including foreign passports.

    FinCEN’s Final Rule and Access Rights

    As 2023 drew to a close, FinCEN unveiled a final rule elucidating the conditions and authorized entities eligible to access the national beneficial ownership database.

    This rule, largely based on the previous year’s draft but incorporating notable amendments, is set to progressively allow access from 20 February onwards.

    The list of entities with granted access includes federal, state, and foreign law enforcement agencies, financial institutions, regulators involved in customer due diligence processes, and the US Treasury.

    Expansion of ‘Customer Due Diligence Requirements’

    A significant enhancement in the final rule is the broadening of the ‘customer due diligence requirements’ clause.

    This expansion now covers legal obligations designed to counteract money laundering, terrorism financing, or protect the US’s national security.

    Consequently, financial institutions are empowered to integrate FinCEN’s beneficial information into their due diligence and suspicious activity monitoring and reporting mechanisms, thereby reinforcing their compliance with the Banking Secrecy Act or sanctions enforced by the US Treasury’s Office of Foreign Assets Control.

    Phased Implementation and Pilot Program

    The implementation of access to the beneficial ownership information will commence on 20 February with a pilot program aimed at key federal agency users.

    This initial phase will be followed by extending access to other federal agencies, and subsequently to state and local law enforcement agencies.

    The final rule also paves the way for financial institutions to share beneficial ownership information with employees or contract personnel outside the USA, with specific exceptions, thus addressing operational challenges for institutions with extensive international operations and compliance functions.

    Database Operation and Data Access

    While the precise operational framework of the database remains under wraps, FinCEN has clarified its stance against providing bulk data exports to authorized users.

    Instead, an application programming interface is expected to be made available, allowing these users to conduct specific queries in the database.

    US Beneficial Ownership Access – Conclusion

    This landmark regulation marks a significant stride in the US government’s ongoing efforts to enhance corporate transparency and combat financial crimes effectively.

    If you have any queries about this article on US Beneficial Ownership Access, or any other US matters, then please get in touch.

    BVI and Online Submission for FATCA, CRS and CbC Reports

    BVI and Online Submission for FATCA, CRS and CbC Reports – Introduction

    The BVI has made a significant stride towards enhancing transparency and tax information exchange.

    It has mandated that, from 24 January 2024, all entities under its jurisdiction with certain financial reporting responsibilities, are to submit their reports exclusively through the BVI Financial Accounting Reporting System (BVIFARS).

    The relevant reporting responsibilities include:

    Background and Impetus for Change

    The shift to the digital platform is in response to the recommendations from the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum).

    Despite BVI’s AEOI legislation aligning with the Global Forum’s technical standards for years, the OECD’s 2022 review identified significant gaps in the actual AEOI implementation.

    The spotlight was on the “significant issues” concerning the assurance that Reporting Financial Institutions were accurately carrying out due diligence and reporting procedures.

    The Global Forum hence called for the BVI to fortify its domestic compliance framework to solidify CRS implementation effectiveness.

    Challenges and Proactive Measures by the BVI Government

    The BVI government candidly attributed the shortcomings to the devastating impact of Hurricanes Irma and Maria and the subsequent global COVID-19 pandemic, which significantly hindered their information exchange capabilities.

    In light of these challenges, the government requested a supplementary review to validate the improvements in their AEOI processes.

    This request was approved, with an on-site visit by the OECD slated for the first quarter of 2024 to confirm the BVI’s adherence to the stipulated conditions.

    Operational Details of the BVIFARS Portal

    With the activation of BVIFARS in January 2024, entities are now transitioning to this centralized online system for their FATCA, CRS, and CbC report submissions.

    A notable feature of this new system is the imposition of an annual usage fee of USD185 for each reporting entity, payable by 1 June each year.

    Key Deadlines and Compliance Requirements

    Entities are required to be vigilant about the following critical deadlines:

    Additionally, each legal entity is obligated to furnish its registered agent with the mandated economic substance information annually.

    The registered agent, in turn, must relay this data to the BVI International Tax Authority within six months from the end of the pertinent reporting period.

    BVI and Online Submission for FATCA, CRS and CbC Reports – Conclusion

    This transformation in the reporting process for BVI entities signifies a proactive approach to addressing the challenges previously flagged by the OECD.

    By embracing a digital and centralized reporting system, the BVI is taking definitive steps towards bolstering its compliance framework, thereby reinforcing its commitment to international tax transparency and cooperation.

    If you have any queries on this article about BVI and Online Submission for FATCA, CRS and CbC Reports, or BVI matters in general, then please get in touch.