#Hong Kong on the Rise

Posted on February 21, 2012 by CitiTrust

As time quickly passes, providing business consulting services to worldwide clients becomes more and more complicated and challenging. The days where a simple IBC type company was the cure-all are gone. Clients now seek well-managed, robust corporate vehicles as well as reliable, solid, state-of-the-art banking services. Sometimes the marriage of these two features is very difficult.
Left to their own devices, clients tend to select jurisdictions regionally, based on where they themselves are located. For instance, a client in the Americas will choose a jurisdiction in the Caribbean or Central America; a client in Australia will choose Samoa or Vanuatu. But, this may be counterproductive for the affairs of the client so we must be armed with leading options. To find the most exciting, modern, and state-of the art jurisdiction in the world, we must look east to Hong Kong.

Asia’s World City

Hong Kong is a world-class financial, trading and business centre and the gateway to China. Hong Kong’s state of the art financial centre and services industry spearhead its excellent reputation. It is one of the major components of the world’s financial trio: NYLONKONG* and leads in ease of doing business and regulatory supervision while maintaining user friendliness and expeditious transactions. Hong Kong is deemed a clean jurisdiction by sophisticated investors and anyone who wishes to enter into worldwide transactions big or small. It is the preferred jurisdiction for investments, joint ventures, and for holding wholly owned foreign enterprises in China. Both B.V.I. and Cayman Island companies can be listed in the Hang Seng stock market, an avenue to raise capital and free market trading in the region and worldwide.
Hong Kong maintains double tax treaties with Belgium, Luxembourg, China, Thailand, Hungary, and Vietnam. It awaits ratification from Austria, Brunei Indonesia, Ireland, Kuwait, Netherlands, and the United Kingdom.
Asia’s World City is not only appealing to businesses and business people who engage in trade with China or the region, but for those seeking the confidentiality that is quickly slipping away in other financial centers. For example, the treaty with Belize and Belgium, as well as the anti-double taxation treaty between Hong Kong and Belgium bring about excellent business management and tax planning opportunities for European investors. Everyone can find a solution in Hong Kong.

Not China but…

Hong Kong was occupied by the UK in 1841 but on December 19, 1984, an agreement signed by China and the UK gave end to the colonial era, and Hong Kong became the Hong Kong Special Administrative Region (SAR) of the People’s Republic of China on 1 July 1997. In this agreement, China promised that, under its “one country, two systems” formula, China’s socialist economic system would not be imposed on Hong Kong and that Hong Kong would enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years.

Taxation

Because of its favorable tax regime, companies established in Hong Kong are allowed to keep what they earn. There is no distinction made between residents and non-residents either may derive profits from abroad without paying tax. It is simple; no tax is levied on profits arising abroad, even if they are remitted to Hong Kong. Income or salaries tax is levied at a standard 15%. The normal rate of profits tax is 16.5%; there is no capital gains tax, no value added tax (VAT or GST) on goods and services, no estate tax, no domestic withholding taxes on dividends, interest or royalties.

Foreign Exchange Control

There is no control on foreign exchange. You can remit any sum of money to and from any place in the world. There is really no restriction as to how much money goes into or out of an account. Funds can be held in multiple-currencies accounts. World securities market trading is also unrestricted and easily accessible.
It’s all Chinese to Me
English and Chinese are the official languages in Hong Kong. Therefore, any and all services are available to anyone in English.

Expatriation Option

As regulations tighten in high-tax countries, many seek the ultimate tax relief, expatriation, and they want it fast. Residing in Hong Kong is not complicated and can be achieved through several methods, among them, obtaining an Investment Visa, which requires an individual to be a shareholder of a Hong Kong registered company. The other alternative is applying to the Capital Investment Entrant Scheme (CIES), which requires a capital investment of approximately USD $830,000 into a legitimate asset class in Hong Kong. Under both schemes, applicants must demonstrate that they can support themselves and their dependents without public assistance, and applicants to take up employment or establish a business in Hong Kong.

In the Far East, Hong Kong is a full-bodied alternative for the client that simply needs more.

Lourdes Haywood-Bogaerts is Group Legal Counsel of the Aspen Group Limited, a company formation and business management services firm, based in Hong Kong.

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TAX and regulatory conditions in Ukraine for Film Makers gone good – Conclusion –

Posted on February 20, 2012 by CitiTrust

The State Guarantees for Foreign Investors

A foreign investor may be any legal entity established in accordance with the laws of any country, any individual whose permanent place of residence is outside Ukraine, any foreign state or international organization, or any other foreign subject of investment activity.

The current law offers a number of guarantees to foreign investors, main of them are:

 Protection against future changes in legislation affecting these guarantees for a period of 10 years;

 Unrestricted repatriation of profits from investments in Ukraine;

 Compensation of losses incurred as a result of unlawful action or inaction on the part of state agencies or government officials;

Protection against nationalization, expropriation, requisition or any other measure of similar effect, except of natural disasters, emergencies, epidemics, epizootics, where appropriate and effective compensation must be provided to the investor based on the market value of the property;

 Guarantee to remit their revenues and investments when the investment activity is terminated;

 Exemption from customs duties on fixed assets imported to Ukraine as contribution to the charter fund of a company.

Ukraine has adopted ambitious moves to establish itself as an important player on the worldwide cinema and art market, in hopes to attract the hearts of European and world audience. The significant result of this national desire came in 2011 when the prestigious Palme d’Or – the highest prize awarded at the Cannes Film Festival was won by Ukrainian director Marina Vroda, with a short film “Cross”. The victory was the second for Ukraine at the Cannes festival. In 2005 the short documentary film “Travel,” by Ihor Strembytskyi, took the prize.

Following many years of Soviet restrictions, modern independent Ukraine hopes to establish itself as a world player and promote a better understanding in the worldwide community by adopting changes to attract attention from film makers and producers to make itself one of the top locations for art and culture. A rich history, unique landscape and sentimental human potential, in addition to the governments newly implemented financial benefits, helps to establish Ukraine as the location of choice for film makers worldwide.

Ludmila Kosarenko – Business and Tax Adviser in Ukraine, Ludmila has more than 15 years experience in accounting and tax consultancy, 10 years of them she took up a senior position in tax and legal services with PricewaterhouseCoopers. Ludmila and her legal and accounting partners have good practical experience to provide high quality support to the cinematographic clients. Connect with Ludmila at +380503341731, lkosarenko@i.ua or http://ua.linkedin.com/in/ludmilakosarenko

For further inquiries use our fast and confidential Live Chat service.

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TAX and regulatory conditions in Ukraine for Film Makers gone good – Part 2 –

Posted on February 17, 2012 by CitiTrust

Tax Incentives

Tax benefits for cinematography can be generally divided into two groups, as:

 Incentives applicable to film production companies and distributors, and
 Incentives applicable to the entities who sponsoring national film makers.
Incentives applicable to film production companies and distributors

The new Tax Code of Ukraine which is effective from 1 January 2011 introduced certain tax incentives for the film industry for the period until 1 January 2016, as:

• A value added tax (VAT) exemption for the:

 Supply of national films by producers, demonstrators and distributors;
 Production, including replication, of national films and foreign films dubbed, synchronized, or subtitled into the Ukrainian language;

 Dubbing, synchronizing and/or subtitling into the Ukrainian language of foreign films in Ukrainian territory;
 Exhibition, and/or distribution of national films and foreign films dubbed, synchronized and/or subtitled into the Ukrainian language.

• A corporate tax exemption for the amount of funds or value of property received by film and/or animation producers and directed to the production of national films.

• A land tax exemption for producers of national films that applies to land plots that serve for the production of national films. The Cabinet of Ministers of Ukraine sets out a list of producers that can take advantage of this exemption.

A film qualifies as a national film if it meets the following criteria established by Ukrainian Cinematography Law:

• It is produced by entities registered in Ukraine.

• The film production took place in Ukraine.

• The IP rights or property rights fully or partially belong to Ukrainian individuals or legal entities engaged in cinematographic activities.

• The basic version of the speech part of the audio cut of the film is in the Ukrainian language.

Incentives for the entities sponsoring national film makers

Cash or in-kind donations to the resident’s film producers aimed at the production of national films (including animation) and audiovisual works can be deducted as an expense for corporate profit tax purposes, of up to 10% of the previous year’s taxable income.

Favorable taxation of individuals income

Rather favorable tax rate based on the size of income, at 15% and 17% is set in Ukraine.

Individuals who are tax residents of Ukraine are subject to personal income tax on their worldwide income. Non-resident individuals are taxed only on income from Ukrainian sources.

This tax rate does not depend on the tax status of the individual. The profit of non-residents is taxable at the tax rates established for residents of Ukraine.

Conclusion – “The State Guarantees for Foreign Investors” Monday

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TAX and regulatory conditions in Ukraine for Film Makers gone good

Posted on February 16, 2012 by CitiTrust

Ukraine makes changes to move as an independent player within the international marketplace. In spite of a turbulent and dramatic history, the country has preserved a unique culture and identity since it’s earliest days through modern times. The directing career of Ukrainian Oleksandr Dovzhenko was one of the landmarks in twentieth century world cinematography. His works have entered the golden heritage of the Ukrainian and world cinema. In 1958 at the International exhibition in Brussels his film Earth (1930) was recognized as one of the best twelve films of all time.

During the last 10 years however, the film industry in Ukraine has been underdeveloped mostly because of the lack of financing, and governmental financial/tax incentives.

Last year the government has moved to adopt more favorable conditions to help make the Ukraine a ‘shooting location of choice’, hoping to attract worldwide film producers to consider their country as an optimum location for film production.

The following is a list of highlights and recent changes the Ukraine has implemented to attract the attention of artists and filmmakers worldwide:

 Ukraine entered into the European Convention on Cinematographic Co-Production on 18 March 2009
 Simple approach to film production regulations
 IP including internationally can be easy legalized and dully saved
 Legal guarantees of foreign investments
 Very attractive location possibility: unique landscape (sea, Crimea subtropics, mountings, north forests, many churches, natural colorful countryside, more that 250 sunny days per year, i.e.)
 There is enough qualified human potential able to support the film process
 Rather developed IT technology and computer graphic
 Undeveloped cinema distribution, that why it can be attractive to the investors who seek such opportunities
 Effective 1 January 2012, the IFRS was introduced as an alternative to local GAAP. Companies will now be free to choose IFRS as a guidance for their financial reporting, and it is no longer required to maintain their accounting in local GAAP.
 The tax incentives applicable to the film industry

As a business and tax adviser, I would like to draw attention to the tax benefits for film production in the Ukraine, and the legal guarantees which the Ukrainian Government provides for investments by foreign film makers and producers.

Part II – “INCENTIVES” tomorrow

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Cititrust @BOSCO TaxPro Conference – Ukraine

Posted on February 15, 2012 by CitiTrust

Kiev, February 2012

1. Conference: BOSCO – TaxPro Conference
2. Date: February 24, 2012
3. Place: Kiev, Ukraine – The Premier Palace Hotel
4. Presenter: Mr. Jonathan Brathwaite
5. Topic: – “ How to Structure and Manage your Wealth in today’s Offshore World”

Bio on Presenter

Jonathan has worked in corporations in the United Kingdom for nearly 15 years including British Airways Engineering and in the City at Level 3 Communications, as a commercial executive in the sales division. After call to the Bar of England and Wales, Jonathan qualified a Barbados attorney at law while working as an international tax consultant. Jonathan worked as a self employed international tax consultant while living in London, developing and implementing cross border tax structures for the last eight years. Jonathan moved to Barbados in 2011 and practices Barbados and international tax law using mainly the jurisdiction of Barbados to provide tax efficient cross border wealth management structures to high net worth individuals resident in the UK, Canada and US.

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The Ukrainian Tax Code 2011 – Part 4 – Conclusion

Posted on February 15, 2012 by CitiTrust

The HNWI or SME will find international multilayered structures more expensive than traditional offshore structures to establish and operate. There is a business case and Cititrust is aware of this and will help the client to deliver and operate a structure with a valid business case.

Cititrust is an independent international corporate services provider. Using a large network of international relationships and our international offices Cititrust can implement and provide the best price for
implementing and maintaining international structures.

Cititrust can provide all the services required to;

 Company incorporation, resourcing and maintenance.
 Trust or Foundation setup and Trustee Board services
 International banking and ancillary support services

As an independent service provider, Cititrust has the wide network of commercial relationships with tax advisers and service providers to be able to negotiate the best prices on establishing and operating these structures.

For more information on a wide array of data to build the perfect offshore investment strategy please sign up for Cititrust EDGE Q1-2012 Magazine

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Cititrust international does not provide legal or tax advice. Cititrust advises clients to seek appropriate legal,
tax or other professional advice on the particular facts and circumstances at issue.

Contact Details
Cititrust Seychelles
Seychelles@cititrustintl.biz

http://www.cititrust.biz/index.php

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The Ukrainian Tax Code 2011 – Part 3 – Strategy

Posted on February 14, 2012 by CitiTrust

The Ukrainian parliament has clearly frowned upon the widespread use of offshore companies. The Ukrainian government is currently in the process of signing a number of double tax treaties. It seems the Ukrainian government prefers that cross border business be carried out in line with the treaties that it has signed. We explore a number of these treaties here;

1: Considering UTC provisions restricting payments to Offshore Companies. The first simple step in our approach is that the non-Ukrainian company investing in Ukraine or licensing the IP to the Ukraine or providing services to the Ukraine not be an offshore company. There are many
alternatives.

2: Complying with the UTC requirement for Beneficial Ownership
The company outside Ukraine receiving the foreign payments from Ukraine, must satisfy the definition of beneficial owner. The UTC has a specific definition of “beneficial owner”. Beneficial owner, is defined by the UTC, where companies are located in countries that Ukraine has double tax treaties with as, an entity that is entitled to receive income.

An entity that is entitled to receive income but acts in the capacity of an agent, nominee or acts as an intermediary, cannot qualify as a beneficial owner. With such a definition, the Ukrainian tax authorities can apply a beneficial ownership test in respect of repatriation or cross border service arrangements.

3: Bringing it all together – Using the Ukraine – UAE Tax treaty Taking a high level look at the Ukraine – UAE DTA and how it might apply. The first thing to note is that Ukraine has a double tax treaty with UAE. The UAE Ukraine treaty rates are; 5% for Dividends, 3% for Interest and 0-10% for Royalties1 The zero percent rate applies to scientific work copyright royalties, patent royalties, secret formula royalties, and to information concerning industrial, commercial, and scientific experience. The 10 percent rate applies to literary and artistic work copyright royalties. The UAE company, properly structured and resourced, will meet the definition of beneficial owner. The UAE is a zero tax country. So the royalty income from Ukraine is not taxed in the UAE. The Ukraine tax authorities will allow the zero% withholding rates for royalties paid from the Ukraine company to the UAE company. The royalty expense in the Ukrainian company will be tax deductible because the payment is being made to a foreign company that is from a jurisdiction that has a DTA with Ukraine. It is not an offshore company.

4: Where the BVI or offshore company might still be used

If asset protection is desired by the Ukrainian or foreign investor, offshore trust or foundation structures in can be used as shown below to hold the entire structure. An offshore trust or foundation can maintain perpetual stewardship over the assets and enable the structure to remain intact and not be disturbed by births, deaths, marriages.

The Belize trust is internationally recognized for its zero limitation period. This means the trust becomes effective and binding immediately as it is created. There is no delay. The structure can be put in place quickly and effectively.

For further inquiries use our fast and confidential Live Chat service.

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The New Ukrainian Tax Code – Section 2 – The Impact

Posted on February 13, 2012 by CitiTrust

Considering the specific tax measures that the Ukrainian government has taken, Ukrainian residents that own Offshore companies such as those registered in the BVI or Seychelles may need to give serious consideration to the following:

1. Whether the use of a BVI or other offshore company to invoice Ukrainian companies and persons is any longer possible.
2. Whether the use of an Offshore company is a tax efficient vehicle for owning shares in Ukrainian companies and receiving dividend payments from the Ukrainian subsidiary.
3. Whether an offshore company can be used to license IP to Ukrainian residents and receive royalty payments from them.
4. Whether offshore companies can be used to invoice Ukrainian companies and persons for engineering and other services provided to them.
5. If the non-resident company receiving the payments from the Ukraine is the “beneficial owner” the payments due to be received from the Ukrainian person.

Part 3 – Tomorrow -

Don’t forget Cititrust will be at the Conference: BOSCO – TaxPro Conference

- Date: February 24, 2012
- Place: Kiev, Ukraine – The Premier Palace Hotel
- Presenter: Mr. Jonathan Brathwaite
- Topic: – “ How to Structure and Manage your Wealth in today’s Offshore World”

For further inquiries use our fast and confidential Live Chat service.

For more information on a wide array of data to build the perfect offshore investment strategy please sign up for Cititrust EDGE Q1-2012 Magazine

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VAT exemption for consulting services no longer exists in Ukraine

Posted on February 10, 2012 by CitiTrust

VAT exemption for consulting services no longer exists in Ukraine. 

As officially published June 17th, the VAT exemptions on consulting, engineering, auditing, IT and other similar services has been cancelled effective July 1st according to the recently adopted law in Ukraine.

VAT exemptions permitted under the January 1st Tax Code were considered very generous and somewhat of a surprise by the Professional and Business community, however the tax provisions brought about some confusion and many questions by both servicer providers as well as customers whether or not a certain type of service qualified for this special tax exemption.
It is believed that the cancellation of the VAT tax exemptions would alleviate these questions, thus reducing tension for both the Tax Authority and the taxpayers who were confused by the previous tax provision. 

The new law effective July 1st will influence the taxation of consulting services for engineering, auditing, Information Technology, etc… the following ways:

·Supply of such services to local customers will be apply to 20%VAT
·Supply of such services to non-resident still will not be subject to VAT due to definition of place of supply for such kind of services (but no input VAT relevant to the services is allowed if such exemption is applied)
·Supply of such services by non-residents will be subject to 20% VAT under the reverse-charge procedure 

The service providers who used the privilege before July 1 would wonder whether they are entitled to a refund of their VAT input related to their non-current assets which they were not allowed to credit in the previous period under the exemption.  Because neither Tax Code nor the new law addressed the change do not contain this possibility, most taxpayers will look for direction from the Tax Authority regarding this matter relying on its good faith, as otherwise the service providers would appear to be unfairly penalized through no fault of their own as a result of the law makers who did not envision such logic provision in the Law.

In Ukraine the local GAAP can be substituted by IFRS that what most accounting and business society have been waited long time

The Law N3332 of 12 May 2011 introduces IFRS as an alternative to local GAAP. The Law is valid from 11 June 2011 with some provisions taking effect from 1 January 2012.
Companies will now be free to choose IFRS as a guidance or the local GAAP for their financial reporting, and it is no longer required to maintain their accounting in local GAAP.  The Law does however require financial institutions, public companies, banks, insurance companies, and some other companies listed by the Government must prepare their financial statements in IFRS starting January 1, 2012.
Surely many companies will choose IFRS as its general accounting guidance along with those companies mandated to do so by the Government.  For many international companies, this will relieve the added expense and burden of maintaining double accounting records to satisfy both local and offshore users.
It is expected that such progressive introduction would increase the investment attractiveness of Ukraine, simplify the procedure of attracting offshore capital by local businesses, and assure ownership rights of shareholders, investors and creditors.    
However, there is a room for discussion in regard to which period the new IFRS requirement should apply, whether it should be the 2011 financial year or the 1st quarter of  2012.  The Law does not precisely state this effective date, so additional explanation is expected from the Ministry of Finance.
Ludmila Kosarenko – Business and Tax Adviser in Ukraine,  Ludmila has more than 15 years experience in accounting and  tax    consultancy,  10 years  of them she took up a senior position    in tax and legal services  with PricewaterhouseCoopers. Connect with Ludmila at             +380503341731     ,lkosarenko@i.ua or  http://ua.linkedin.com/in/ludmilakosarenko
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