As we informed you in our July newsletter, following the new regulations issued by Central Bank in connection to the so called “shell companies”, the business world is undergoing a series of changes over the course of the last decade, and as it was predicted by experts, more and more jurisdictions are changing their legislation to meet the requirements imposed by the Council of the European Union.
In December 2018, the British Virgin Islands government passed the Economic Substance Act, 2018, which came into force on the 1st of January 2019. The new legislation imposes increased substance requirements for certain BVI legal entities, such as having adequate number of qualified employees in BVI, expenditure incurred in BVI, physical offices and premises on the territory of BVI, etc. Should the company fail to meet the legislative requirements for substance, penalties as high as USD 400,000 may arise.
Other countries, like Bermuda, Cayman Islands, Guernsey, Jersey, Isle of Man, Mauritius, the Bahamas and Seychelles, have also passed corresponding laws, and a new legislation is being prepared for Belize, which will also come into force anytime soon.
If you have companies or structures in any of the above jurisdictions, it is now advisable to analyze the applicability of the laws to such companies, and think about possible strategies (in particular, liquidation, restructuring, strengthening of presence in the relevant jurisdiction, transfer to another jurisdiction, etc.).
As it was mentioned in our previous newsletter, we offer you several existing and tried solutions that will help your companies maintain their business and bank accounts by way of establishment of physical presence and tax residency in UAE or Cyprus.
WHY UAE AND/OR CYPRUS?
The majority of the affected clients are predominantly based in Europe and CIS region. Most of the offshore jurisdictions are located geographically at a big distance from the location of the their businesses and functional personnel operating the business, which may result in high operational cost and difficulties due to time zone difference, lack of infrastructure and/or qualified professional assistance, complicated logistics, etc. Furthermore, many of the offshore jurisdictions have not signed yet any tax treaties, and are still considered “tax heaven”.
Cyprus, being a member of the European Union, is an island located in the southeast Mediterranean, a strategic location linking Europe, Africa and Asia. It offers excellent infrastructure for the provision of professional services, such as legal, financial, investment, shipping, real-estate, etc., with highly educated professionals, attractive IP and tax regimes, transparent legal and immigration systems, business friendly environment, EU integrated banking system and developed healthcare, education and tourism sectors. Cyprus has two airports and two international maritime ports, and is a renowned international shipping centre due to its favourable shipping taxation regime.
Depending on the needs of your business, we can propose the most suitable solution, and can offer you all the necessary legal work, support and services for any of the below solutions:
- re-domiciliation of the company to Cyprus; or
- reallocation of tax residency to Cyprus with or without registration of a branch in the official registry of Cyprus; and
subsequent establishment of a physical presence in Cyprus, including rent or investment in office premises, hiring employees, obtaining work visa permits, etc.
UNITED ARAB EMIRATES
UAE strategic location is a bridge between Asia, Middle East, Europe and Africa. With over 200 nationals, 5 major airports, and 2 world class maritime ports, it is a gateway to a large and open market of well established trading links. UAE is defined by political and economic stability. Having a low-crime profile, it also enjoys financial and monetary stability with a sophisticated banking system and ample liquidity. The government of UAE has a consistent long commitment to liberal economic policies, built on a basis of leading-edge technologies and sound regulatory systems, with no exchange controls, quotas or trade barriers, corporate profit or personal income taxes. Businesses, operating or resident in the UAE, can benefit from the Double Taxation Agreements which the UAE concluded with most of its trade partners for the purpose of promoting its development goals.
Reallocation to UAE is one of the best possible solutions for the time being, enabling you to save your businesses, establish physical presence and tax residency, for which we can offer complete package comprised of the first or both of the below steps:
- re-domiciliation of the company to the RAKICC offshore zone; and
- registration of a subsidiary in the RAK economic zone;
forming a structure which allows offshore companies to carry out their business activities in the United Arab Emirates, open bank accounts locally and internationally, rent office premises, obtain UAE visa and ID for the Managers, Directors, employees and owners, etc.
If you are interested in any of the above proposed solutions, please feel free to contact us by sending an email and we will be glad to assist you immediately by giving the best possible option from our offers starting from as low as 2500 Euro.