Posts

Top 10 Tax Havens for Corporations in 2023

/0 Comments/in /by

In the world of global finance, corporations are always on the lookout for tax-efficient strategies to maximise their profits. One such strategy is finding tax havens—jurisdictions with favorable tax policies that allow businesses to reduce their tax liabilities legally. In 2023, the landscape of tax havens is constantly evolving, making it crucial for corporations to stay informed about the best destinations for their financial needs. In this article, we’ll delve into the top 10 tax havens for corporations in 2023, exploring the unique advantages each offers to businesses looking to optimise their tax obligations.

Luxembourg:

Luxembourg remains a perennial favorite for corporations seeking a tax-efficient environment. With its low corporate tax rates, extensive network of double taxation treaties, and favorable regulatory framework, Luxembourg continues to attract businesses from around the world. Its political stability and well-developed financial infrastructure make it a top choice for corporations in 2023.

Singapore:

Singapore’s reputation as a business-friendly tax haven continues to grow in 2023. It boasts a straightforward tax system, low corporate tax rates, and an efficient regulatory environment. Furthermore, Singapore’s strategic location in Asia provides access to lucrative markets across the continent.

Switzerland:

Switzerland is renowned for its banking secrecy and stability. While it has recently taken steps to increase transparency, it still offers attractive tax rates and a well-established financial sector. Swiss tax privileges continue to be a draw for corporations looking for stability and reliability.

Bermuda:

Bermuda’s appeal as a tax haven lies in its zero-tax regime. There are no corporate income taxes, capital gains taxes, or value-added taxes. However, it’s essential to note that Bermuda’s offshore status means it may not be suitable for all types of businesses.

Cayman Islands:

The Cayman Islands are synonymous with offshore financial services. With no direct taxes on corporations or individuals, this British Overseas Territory is a preferred destination for investment funds, holding companies, and financial institutions.

Ireland:

Ireland’s low corporate tax rate of 12.5% makes it a popular choice for tech giants and multinational corporations. Its membership in the European Union grants access to the Single Market, creating additional benefits for businesses.

Delaware, USA:

Delaware’s corporate-friendly legal framework has made it a domestic tax haven for many American corporations. It offers favourable corporate laws, tax benefits, and a specialised court system for resolving business disputes.

Panama:

Panama’s strategic location and favourable tax laws have contributed to its popularity among corporations. It offers territorial taxation, meaning only income generated within Panama is subject to taxation, making it a suitable choice for businesses engaged in international trade.

Isle of Man:

The Isle of Man, a Crown Dependency of the United Kingdom, is known for its low tax rates, political stability, and well-regulated financial sector. It’s particularly attractive to e-gaming and tech companies.

Hong Kong:

Despite recent political developments, Hong Kong remains an attractive tax haven in 2023. Its simple tax system, low corporate tax rate, and status as a global financial hub make it a popular choice for businesses looking to establish a presence in Asia.

Conclusion:

The world of tax havens is dynamic, with jurisdictions constantly adapting their tax policies to attract corporations. As corporations seek to minimise their tax burdens and maximise profits in 2023, these top 10 tax havens offer a range of advantages, from low tax rates to political stability and access to global markets. However, it’s crucial for businesses to consult with tax experts and legal advisors to ensure compliance with international tax regulations and to choose the tax haven that best aligns with their specific needs and goals. In an ever-changing global economy, staying informed and making informed decisions is key to corporate success.

Gradual Reduction of IOF Rate on Foreign Exchange Transactions

/1 Comment/in /by

The Tax on Financial Transactions (IOF) is a federal tax provided for in art. 153, item V of the Federal Constitution. Its function is not merely to collect taxes, but to intervene and regulate market situations, which justifies the ease with which its calculation can be modified.

Regulated by Decree no. 6.306/2007, it may be applied to five distinct situations: foreign exchange operations; insurance operations in general; credit operations; bonds and securities; and operations with gold.

Despite the importance of the tax on credit operations, that is, when financial assets are transferred between legal entities, or between individuals and legal entities, we propose here to comment on the recent changes made in the calculation of IOF on foreign exchange operations.

The IOF tax is charged on foreign exchange transactions upon delivery or availability of national or foreign currency, in cash or a document representing cash, and is calculated on the value in Real after conversion. The tax is due on settlement of the exchange operation and may be charged at a rate of up to 25%.

With a view to promoting greater economic integration of the country into the international community, Decree no. 10.997 was published on March 15, 2022, gradually reducing the IOF rates on foreign exchange transactions. The reduction also confirms the adoption of measures aimed at enabling the country to join the OECD (Organisation for Economic Cooperation and Development).

In the case of entry of funds into the country by way of a foreign loan, even through simultaneous operations, registered with the Central Bank of Brazil and with a minimum average term of up to 180 days, the rate has been reduced from 6% to zero, with the reduction being applied immediately.

The new decree has also regulated the gradual reduction of the tax on foreign exchange transactions for the purpose of complying with the obligations of credit and debit card companies or of cards for international use, in the cases specified therein, as well as on the acquisition of foreign currency in travellers checks and for loading prepaid international cards for journeys abroad. In this case, the rates will be reduced to: 5.38% as of January 2, 2023; 4.38% as of January 2, 2024; 3.38% as of January 2, 2025; 2.38% as of January 2, 2026; 1.38% as of January 2, 2027 and 0% as of January 2, 2028.

The 0.38% rate, currently applicable to foreign exchange operations in general, will be reduced to zero as of January 2, 2029, which in practice will result in a reduction to a zero rate for all operations, thereby enabling the country to be more competitive in the international arena.

The Stüssi-Neves team is at your disposal for any further explanation you may require.

Patrícia Giacomin Pádua

Partner in the Tax Area – São Paulo
patricia.padua@stussinevessp.com.br

Thailand’s PUGNATORIUS Expresses Concerns Regarding TIWB

/1 Comment/in /by

TIWB is an initiative to facilitate the transfer of tax audit knowledge and skills to developing country tax administrations using a practical, “learning by doing” approach.

Thailand’s recent participation in the “Tax Inspectors Without Borders” assistance program endangers not so much legally but factually the long-term cherished cross-border tax structures among the land of smiles. It demands sooner or later increased requirements for local tax advice and international tax planning.

TIWB allows the OECD, which is behind this raid against international tax competition, to familiarise the Thai tax authorities with OECD tax policy and viewpoints by sending their expert auditors to a tax-legally underdeveloped country, as Thailand is considered not entirely unjustified.

In the past, Thailand has been deliberately reluctant to interpret and reclassify cross-border transactions and to reinterpret double taxation agreements and tax information exchange agreements. This was done with good reason, only ostensibly inefficient, and Thailand participated in this tax-friendly treatment in several ways and at several levels.

The formal reason for Thailand’s Revenue Department to sign up for the training course for a world of “taxation without borders” is the desire to tax cross-border e-commerce and streaming services. However, this is not a limitation but only a starting point for the new right way of taxation with the friendly and targeted support by the OECD.

To address the tax challenges of the digital economy is just the first step on the 15-points-action BEPS list of the OECD. The base erosion and profit shifting initiative is e.g. also directed towards the topics of CFC controlled foreign companies, transfer pricing, abuse of tax treaties, and aggressive tax planning arrangements.

The tax counsellor PUGNATORIUS Ltd. analyses and monitors further developments and will provide practicable solutions for the more stringent requirements of future Thai tax planning. The announcements of the Thai Revenue Department are from June 2020. The Bangkok law firm sees a pressing need for action in this area for a variety of Thai tax issues.