Owen, Christopher: Global Survey – December 2018

15 November 2018, Minister of International Business and Industry Ronald Toppin announced that nine pieces of legislation would be amended or abolished as part of Barbados’ commitment to comply with the OECD Base Erosion and Profit Shifting (BEPS) programme, in particular Action 5, as well the EU criteria for fair tax competition.

Action 5 is one of the four BEPS minimum standards, and involves process for reviewing preferential tax regimes to ensure they are not harmful, and a transparency framework that applies to tax rulings.

“I can confirm that we will be compliant with the OECD and EU requirements at the end of this year. It is not that we hope to be, or that we speculate that our negotiations will go well. We will be compliant,” said Toppin.

As of 31 December 2018, the International Business Companies (IBC) Act will be abolished and no new IBC licences will be issued. The Societies with Restricted Liability Act will be amended to remove references to International Societies with Restricted Liability (ISRL) and no new ISRL licences will be issued from 31 December. Qualifying IBCs and ISRLs are entitled to remain grandfathered until 30 June 2021.

As of 1 January 2019, all IBCs and ISRLs will automatically become regular Barbados companies and societies that are permitted to conduct business locally, regionally and internationally. Former IBCs and ISRLs that earned 100% of income in foreign exchange will be entitled to receive a Foreign Currency Permit, granted by the Ministry of International Business and Industry.

“This will afford them practically the same benefits they presently enjoy,” said Toppin. “Therefore those entities, IBCs and ISRLs, are encouraged to submit their renewals as normal. My Ministry will be advising shortly on the transitioning process which will be made as smooth and as seamless for you as possible.”

All insurance entities will be governed under the Insurance Act. The Exempt Insurance Act will be repealed and the Insurance Act will be amended to remove provisions for entities known as Qualified Insurance Companies.

The Insurance Act will provide for three classes of licence: Class 1, which includes captives, will pay a licence fee and be zero taxed; Class 2, which includes all other insurance companies that insure and reinsure risk of third parties, will be taxed at the standard rate of 2%; and Class 3, which includes insurance brokers and managers, will also be taxed at the standard rate of 2%.

The International Financial Services Act (IFSA) will be repealed and the Financial Institutions Act (FIA) will be amended to create a new part that will provide for institutions conducting business that generates solely foreign currency to be licensed. The companies formerly regulated under the IFSA will now come under the FIA.

There will be four classes of licence under the FIA: Class 1 for commercial banks; Class 2 for trust companies, finance companies, merchant banks and money or value transmission service providers; Class 3 for financial holding companies; and Class 4 for foreign currency earning banks.

The International Trust Act will be renamed the Trusts (Miscellaneous Provisions) Act and all elements of ring fencing will be removed. Amendments will also be made to the Foundations Act, while the Shipping Act will be amended to remove two sections that constituted ring fencing.

Toppin noted that the government had engaged the services of experienced draftsmen to work on the required pieces of legislation and to aid the Chief Parliamentary Counsel’s office in meeting the 31 December 2018 deadline.

7 November 2018, the government of Jersey issued a document to provide companies with guidance on how the draft Taxation Companies Economic Substance Law, published on 23 October, will operate.

Published jointly with Guernsey and the Isle of Man, the document – ‘Key aspects in relation to proposed economic substance requirements, as issued by Guernsey, Isle of Man and Jersey’ – provides practical help on how the proposed laws will be implemented.

New legislation introducing economic substance requirements for companies will shortly be considered by the respective parliaments of the Crown Dependencies. Designed to address the concerns of the EU Code of Conduct Group on Business Taxation, they are expected to take effect for financial periods starting on or after 1 January 2019.

The new substance requirements will apply only to certain types of company, and will not need to be met if a company has no gross income in respect of a relevant activity. Trusts and partnerships are out of scope, although trustees and general partners that are themselves incorporated may be within scope.

The test for 'directed and managed' entities is also restated to emphasise that, although there will be overlap with the conventional 'management and control' test used to determine tax residence, there will also be specific expectations regarding meetings held in the Crown Dependencies and the need to keep associated minutes and records.

The document clarifies that only some of the core income generating activities (CIGAs) listed in the law need to be carried out by a company with 'relevant activities'. Companies will therefore have the option of seeking expert advice or engaging with specialists in other jurisdictions. There will also be a new expectation that the level of income subject to tax must be commensurate to the CIGA undertaken, and that CIGAs can be outsourced if adequately supervised.

There will be a rebuttable presumption that high-risk companies holding only intellectual property will generally fail the substance requirement, unless certain functions – development, enhancement, maintenance, protection and exploitation – are under their control. This includes the involvement of skilled staff that perform their activities in the relevant Crown Dependency.

The document can be accessed at https://www.gov.je/taxesmoney/incometax/companies/guidelines/pages/economicsubstanceforcompanies.aspx

12 November 2018, the Dubai International Financial Centre (DIFC) enacted laws to update the legal and regulatory framework for companies. The new Companies Law applies to all entities currently registered in the DIFC, as well as entities in the process of setting up in the DIFC or considering a future incorporation in the financial free zone.

The previous Companies Law recognised three main types of companies – companies limited by shares, limited liability companies (LLCs) and ‘recognised companies’ (branches of foreign companies). Under DIFC Law No. 5 of 2018, which repeals and replaces DIFC Law No.2 of 2009, the form of LLCs has been abolished and companies are now categorised either as ‘Private Companies’ and ‘Public Companies’.

Private Companies may not make an offer of their securities to the public, can have between one and 50 shareholders and must use the word ‘Limited’ or the abbreviation ‘Ltd’ after their names. There are no requirements for minimum share capital or fully paid-up shares. Private Companies must have at least one director with an optional company secretary and are not required to hold an AGM unless expressly required in their articles of association.

Public Companies may make an offer of their securities to the public, may have any number of shareholders and must use the words ‘Public Limited Company’ or the abbreviation ‘PLC’ after their names. They must have an issued and allotted share capital (excluding treasury shares) of at least US$100,000 at all times and issued shares must be paid-up as to at least 25% of their value. Public Companies must have at least two directors and a company secretary, and are required to hold an AGM.

LLCs that were incorporated under the old companies law have been automatically converted into private companies, while entities incorporated as companies limited by shares have automatically been converted into either private or public companies. All companies should have received a notification of their new status following conversion.

The changes to the companies law are accompanied by a complete overhaul of the companies and operating regulations to facilitate ease of doing business, whilst also bringing them into line with the latest requirements of the OECD and Financial Action Task Force in respect of transparency of beneficial ownership and anti-money laundering requirements.

The new Companies Law sets out an extensive set of duties on directors of both private and public companies that are based on the provisions of the UK Companies Act 2006. Directors are now obliged to exercise independent judgment and are required by law to promote the success of the company.

There is a carve-out for small private companies with annual turnovers of not more than US$5 million and with not more than 20 shareholders from having to audit their accounts. Directors of every company are still required, however, to arrange for financial accounts to be prepared in relation to each financial year regardless of audit requirements.

All DIFC companies are now required to maintain a register of ultimate beneficial owners – defined as individuals owning or controlling, directly or indirectly, at least 25% of a company. The register must be put in place within 90 days of the date of enactment of the law. It is not a public register but it must be provided to the DIFC Registrar of Companies, which also needs to be notified of any changes.

Public companies that are listed on a recognised stock exchange are not required to maintain a register of ultimate beneficial owners, unless an individual or entity owns 25% or more of the shares.

The new law also provides new levels of oversight for complex corporate arrangements, such as those associated with listed entities, mergers, schemes of arrangement and debt restructurings.

6 November 2018, the European Council removed Namibia from the EU's list of non-cooperative tax jurisdictions. The decision was taken at a meeting of the Economic and Financial Affairs Council, without discussion.

The Council said Namibia had made sufficient commitments at a high political level to address EU concerns. As a result, it has been moved from annex I of the conclusions to annex II, which covers jurisdictions that cooperate with the EU to reform their tax policies.

The Council working group responsible for the listing process, the ‘code of conduct group’, will monitor the implementation of Namibia's commitments. A total of 65 jurisdictions are now actively co-operating with the EU in implementing tax good governance standards.

The list is revised at least once a year, but the code of conduct group can recommend an update at any time. First published in December 2017, it is now down to five non-cooperative jurisdictions: American Samoa, Guam, Samoa, Trinidad & Tobago and the US Virgin Islands.

1 December 2018, the G20 leaders issued a communiqué at the conclusion of their summit in Buenos Aires, Argentina, that reaffirmed their commitment to work for a globally fair, sustainable, and modern international tax system based, in particular on tax treaties and transfer pricing rules.

“Worldwide implementation of the OECD/G20 Base Erosion and Profit Shifting package remains essential. We will continue to work together to seek a consensus-based solution to address the impacts of the digitalisation of the economy on the international tax system with an update in 2019 and a final report by 2020,” it said.

“We welcome the commencement of the automatic exchange of financial account information and acknowledge the strengthened criteria developed by the OECD to identify jurisdictions that have not satisfactorily implemented the tax transparency standards. Defensive measures will be considered against listed jurisdictions. All jurisdictions should sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters.”

22 November 2018, the Global Forum on Transparency and Exchange of Information for Tax Purposes issued its second ‘Automatic Exchange of Information (AEOI) Implementation Report 2018’ at its annual meeting held in Punta del Este, Uruguay.

The meeting marked the widespread rollout of automatic exchange of financial account of information with 4,500 successful bilateral exchanges having taken place under the new AEOI Standard in 2018 by 86 jurisdictions. Each exchange contained detailed information about the financial accounts that each jurisdiction’s taxpayers hold abroad.

“This milestone represents a major success, with even more jurisdictions expected to commence exchanges in the coming months, said the Global Forum. However, “While the vast majority of the 100 jurisdictions committed to commence exchanges in 2017 or 2018 delivered on their commitments, an effective AEOI Standard based on a level playing field requires full delivery by all.”

In particular, the Global Forum said: “All jurisdictions asked to commit to the Global Forum’s AEOI Standard have now done so, except the US. As of 2015, the US exchanges certain information automatically pursuant to its various Model 1 FATCA intergovernmental agreements, which includes recognition by the government of the US of the need to achieve full reciprocity.”

The Global Forum also said that it should be noted that it is fully expected that a particular jurisdiction may have sent information to many fewer partners than all other 97 jurisdictions in 2018. It said there were a number of understandable reasons for jurisdictions not to send information to all other jurisdictions and the number of exchanges was therefore dependent on various factors specific to each jurisdiction.

“Firstly,” it said, “the number of exchange partners a jurisdiction has is driven by the number of jurisdictions interested in receiving information from that jurisdiction. As an example, some jurisdictions do not wish to receive information. This includes 11 jurisdictions that do not have systems for direct taxation and exchange information only on a non-reciprocal basis (i.e. they send but do not receive information).”

It listed the 11 jurisdictions as: Anguilla, The Bahamas, Bahrain, Bermuda, the British Virgin Islands, the Cayman Islands, the Marshall Islands, Nauru, Qatar, the Turks & Caicos Islands and the United Arab Emirates.

“Secondly,” it said, “even where a jurisdiction is interested in receiving information, it must have put in place the complete domestic and international frameworks before it can commence exchanges … 10 jurisdictions still do not have the necessary frameworks in place.”

It listed the 10 jurisdictions as: Antigua & Barbuda, Brunei Darussalam, Dominica, Israel, Niue, Qatar, Sint Maarten, Trinidad & Tobago, Turkey and Vanuatu.

Following its review of the legal frameworks, the Global Forum will move to assessing the effectiveness of the AEOI Standard in practice. To this end members adopted a detailed Terms of Reference for such reviews and a work plan further develop, test and refine its approach to conducting the reviews, which will commence in 2020.

The Global Forum also published a further 22 jurisdiction reviews this year in relation to the exchange of information on request (EOIR), which has only increased in relevance with the move to AEOI and transparency initiatives in relation to base erosion and profit shifting (BEPS).

Global Forum delegates further welcomed the Punta de Este Declaration, which sets up a Latin American initiative to maximise potential of the effective use of the information exchanged under the international tax transparency standards to not only tackle tax evasion, but also corruption and other financial crimes. “This improved international tax co-operation will help counter practices contributing to all forms of financial crimes and improve direct access to information of common interest to all relevant agencies,” said the statement.

30 November 2018, the tax treaty between Hong Kong and India, signed on 19 March, entered into force. The first such treaty between the two countries, it will become effective for tax years beginning on or after 1 April 2019.

Following the OECD Model Treaty, the residency status of a person other than an individual will be determined by the mutual agreement procedure (MAP), based on its place of effective management, place of incorporation or constitution, and any other relevant factors. In the absence of the MAP, dual residents are not entitled to any relief or exemption from tax under the treaty, except as may be agreed by the competent authorities.

The treaty reduces withholding tax rates for both Indian and Hong Kong residents. Dividend withholding is reduced to 5%, while interest, royalties and technical services fees withholding is reduced to 10%. The treaty also provides for source country taxation of capital gain on sales of shares sales.

Treaty benefits will not be granted if the main purpose or one of the main purposes of any persons is non-taxation or reduced taxation through tax evasion or avoidance, including through treaty-shopping arrangements.

2 November 2018, the Hong Kong government gazetted the Inland Revenue (Amendment) (No. 7) Ordinance 2018 to implement the initiative announced in the Chief Executive's 2017 Policy Address of providing enhanced tax deduction for the expenditures incurred by enterprises on research and development (R&D) activities in Hong Kong.

The Ordinance stipulates that R&D expenditures are now classified into either ‘Type A’ expenditures that qualify for 100% deduction or ‘Type B’ expenditures that qualify for enhanced tax deduction. The arrangements are applicable to R&D expenditures incurred by enterprises on or after 1 April 2018.

The enhanced tax deduction for ‘Type B’ expenditures is a two-tier deduction regime. The deduction is 300% for the first HK$2 million of the aggregate amount of payments made to "designated local research institutions" for "qualifying R&D activities", and expenditures incurred by the enterprises for in-house qualifying R&D, and 200% for the remaining amount. There is no cap on the amount of enhanced tax deduction.

A government spokesman said: "To encourage more enterprises to conduct R&D locally so as to promote technological innovation and economic development as well as to groom local R&D talent, the Amendment Ordinance will provide enhanced tax deduction. We aim to encourage more R&D investment from private enterprises, thereby gradually reversing the ratio of public sector expenditure versus private sector expenditure on R&D from government-led to private-led, which is more sustainable."

The Ordinance also empowers the Commissioner for Innovation and Technology to designate any university or college located in Hong Kong, or any other institute, association, organisation or corporation that undertakes "qualifying R&D activities" in Hong Kong, as a "designated local research institution" for tax deduction purposes. Qualifying R&D service providers in Hong Kong may apply to the Innovation and Technology Commission (ITC) for designation.

26 November 2018, India and the People's Republic of China signed a protocol to amend the existing double tax treaty by updating the existing provisions for exchange of information to the latest international standards.

It also incorporates changes required to implement treaty related minimum standards under the OECD’s Base Erosion & Profit Shifting (BEPS) project, which allows for greater transparency of multinational companies’ tax information on a country-by-country basis.

5 November 2018, the Mauritius Financial Services Commission issued a consultation paper on establishing a regulatory framework in respect of the introduction of a new Custodian Services (Digital Asset) Licence, which will enable its holder to provide safekeeping services in relation to digital assets.

Mauritius is in the process of setting up an enabling framework for Fintech on the island. In September, the FSC issued a Guidance Note on the Recognition of Digital Assets as an asset-class for investment by sophisticated and expert Investors.

28 November 2018, the Mauritius government issued a new practice statement defining ‘place of effective management’ for tax residency purposes. The Income Tax Act has been amended by the Finance (Miscellaneous Provisions) Act 2018 to introduce a new Section 73A.

This sets out that a company that is incorporated in Mauritius will be treated as non-resident if its place of effective management is situated outside Mauritius. It must submit a return of income as required under section 116.

In determining the “place of effective management” all the relevant facts and circumstances concerning the business activities of the company, including the use of information and communication technologies in the decision making process, must be examined.

Generally, a company will be deemed to have its place of effective management in Mauritius if:

-The strategic decisions relating to the company’s core income generating activities are taken in, or from, Mauritius; and

-Either one of the following conditions is met:

-The majority of the board of directors’ meetings are held in Mauritius;

-The executive management of the company is regularly exercised in Mauritius.

Where a company incorporated in Mauritius does not meet the above conditions, it will be treated as non-resident.

15 November 2018, the Inclusive Framework on BEPS, through which 115 countries and jurisdictions collaborate on the implementation of the OECD Base Erosion and Profit Shifting (BEPS) package, announced that it had agreed that the ‘substantial activities requirement’ that applies to preferential regimes for geographically mobile income will also apply to ‘no or only nominal tax’ jurisdictions as a new global standard.

This move is to ensure that business activities are not relocated to such jurisdictions to avoid compliance and to ‘level the playing field’ for jurisdictions that have amended their preferential regimes to comply with BEPS action 5. Typically, these activities are headquarters, distribution centres, service centres, financing, leasing, fund management, banking, insurance, shipping, holding companies and provision of intangibles.

To be considered not harmful with respect to mobile income other than IP income, the ‘no or only nominal tax’ jurisdiction would need to ensure that core income-generating activities are undertaken by the entity in-country, that staff and expenditures are adequate and that the country can identify and enforces non-compliance.

The Inclusive Framework further noted that the nexus approach for IP assets was not easily applied in a country that had no or only nominal taxation. Therefore a similar approach to that applied for non-IP assets would be used.

“This new global standard means that mobile business income can no longer be parked in a zero tax jurisdiction without the core business functions having been undertaken by the same business entity, or in the same location,” said Pascal Saint Amans, director of the OECD Centre for Tax Policy and Administration.

“It will ensure that substantial activities must be performed in respect of the same types of mobile business activities, regardless of whether they take place in a preferential regime or in a no or only nominal tax jurisdiction.”

The announcement was made as the OECD issued its latest progress report on the ongoing implementation of BEPS Action 5, which focuses on improving transparency, including compulsory spontaneous exchange on rulings related to preferential regimes, and on requiring substantial activity for preferential regimes, such as IP regimes.

The report covered the assessment of 53 preferential tax regimes undertaken by the Forum on Harmful Tax Practices (FHTP), which concluded that:

-Andorra, Curaçao, Hong Kong (China), Mauritius, San Marino and Spain had delivered on their commitment to make legislative changes to abolish or amend 18 regimes;

-Lithuania, Mauritius and San Marino had introduced four new or replacement regimes that had been specifically designed to meet Action 5 standard;

-Aruba, Australia, the Maldives, Mongolia, Montserrat, the Philippines and Saint Lucia had made new commitments to make legislative changes to amend or abolish a further 10 regimes;

-An additional 17 regimes that had been brought into the FHTP review process in respect of Aruba, Brunei Darussalam, Curaçao, Gabon, Greece, Jordan, Kazakhstan, Malaysia, Panama, Paraguay, Saint Kitts & Nevis and the US;

-Four other regimes – in Aruba, Kenya and Paraguay – that had been found to be out of scope, were not yet operational or had already been abolished or were without harmful features.

A total of 246 regimes have now been reviewed by the FHTP. Of these: 46 had been amended or abolished; 78 were in the process of being amended or abolished; 53 had been found not to be harmful; 30 were under review; 23 were out of scope; three had been found to be harmful; three had been found to be potentially harmful; five had been found to be potentially harmful but not actually harmful; two were not operational; and three were found to be operational but in a disadvantaged area.

The FHTP will next meet in January 2019 to assess continuing reviews on the remaining regimes for which commitments to amend or abolish were made in 2017. Further discussion on all other regimes will take place through the FHTP review process in 2019. The FHTP will also work on the next steps for assessing compliance with the global standard for no or only nominal tax jurisdictions, and continue to report results to the Inclusive Framework.

20 November 2018, the OECD updated its guidance for financial institutions on Citizenship by Investment (CBI) and Residence by Investment (RBI) schemes as part of its efforts to maintain the integrity of the Common Reporting Standard (CRS).

It stated that, where residence documentation clearly identifies the programme under which it was issued, only such specific residence documentation, should be perceived as potentially high-risk in the context of the CRS due diligence procedures.

When presented with such documentation, financial institutions might consider applying the enhanced CRS due diligence procedures in order to ensure that it cannot be misused by account holders for the purpose of circumventing the CRS.

The OECD guidance will be updated on an ongoing basis where other jurisdictions adopt effective mitigating measures.

24 October 2018, the Panamanian government gazetted Law 57 to amend Law 41 of 2007, which established the Special Regime for the Establishment and Operation of Headquarters of Multinational Companies (SEM). The changes, which apply as from 1 January 2019, are designed to bring the SEM regime in line with the recommendations under action 5 of the OECD/G20 BEPS project.

Depending on their specific business activities, SEM licence holders will be required to maintain a minimum number of full-time employees and incur a minimum amount of annual operating expenses.

SEM licence holders must pay a 5% income tax in Panama on net taxable income derived from the services rendered, including technical or financial assistance to companies in the group.

SEM licence holders must report income attributable to specific activities in the Income Tax Statement. Allocation of income should follow the arm’s length principle. Corresponding costs and deductions will apply, and the net income will be subject to tax.

Existing SEM licence holders will be grandfathered under the previous regime until 30 June 2021, after which the amended version of Law 41 will apply.

22 November 2018, the Securities Commission of the Bahamas (SCB) announced that a complete overhaul of legislation governing the Bahamas’ investment funds industry – including an updated Investment Funds Act (IFA), as well as changes to the securities industry legislative framework – was nearing completion.

A Bill to amend the Investment Funds Act 2003 will provide for:

-Changes in the definitions of Bahamas versus non-Bahamas based funds;

-Changes in the triggers for licensing of funds;

-The ability to appoint international administrators without requiring them to be licensed;

-The introduction of licensing requirements for fund managers and regulatory oversight of custodians;

-The establishment of an AIFMD Regime enabling the Bahamas to qualify for EU ‘passporting’.

SCB executive director Christina Rolle said: “In launching the overhaul, it was important to the Commission that we develop best-in-class legislation from a regulatory point of view and to enable the jurisdiction to gain ground in the investment funds space, particularly with respect to institutional funds.”

In addition, a number of rules impacting the securities industry are near completion or in various stages of development:

-Securities Industry (Business Capital) Rules 2018 to address funding for small and medium businesses;

-Compliance Officers Rules to establish and clarify requirements and related qualifications and obligations of compliance officers, as well as to create standards that must be met in the outsourcing of the compliance function;

-Takeover Code to provide a framework for takeovers and ensure the protection of minority shareholders;

-Corporate Governance Rules to create standards that all public issuers are expected to adopt and form the basis by which the SCB will assess the effectiveness of the corporate governance framework for public companies, including state owned enterprises.

The SCB has applied to become a signatory to IOSCO’s Enhanced Multilateral Memorandum of Understanding (EMMoU) and awaits the formal response from the IOSCO Screening Group. The EMMoU includes additional powers – referred to by the acronym ACFIT – that regulators must be able to exercise. These comprise the power to:

-Obtain audit papers;

-Compel attendance for testimony;

-Assist or provide information to another regulator on the freezing of assets;

-Obtain existing records and logs from internet service providers;

-Obtain and share existing telephone records and logs.

“These enhanced ACFIT powers will go a long way to improve cross-border enforcement co-operation and assistance among securities regulators,” said Rolle. “IOSCO has stipulated that Members will have ten years within which to become compliant with and sign on to the EMMoU.”

The SCB has also designed a risk-based supervisory framework, which includes continuous AML/CFT risk identification and monitoring, along with supporting templates, and initiated discussions for the development of a regulatory framework aimed at providing clarity to participants in the crypto space.

31 October 2018, the New Zealand Parliament's Justice Select Committee cleared the Trusts Bill, which is set to replace the Trustee Act 1956 and the Perpetuities Act 1964, with only minor amendments. If enacted, it will come into force 18 months after it receives Royal Assent.

The committee recommended the insertion of new clauses to clarify that the legislation applies to all express trusts, despite the terms of a trust deed, unless certain exceptions apply. It also recommended increasing the duration of a trust, from up to 80 years, to up to a maximum of 125 years.

The committee further recommended inserting a new clause to make it clear that a trustee has an obligation to have regard to the context and objectives of a trust when performing both their mandatory duties and their default duties. Definitions for ‘default duty’ and ‘mandatory duty’ will also be inserted into the bill, along with a definition of ‘lacks capacity’.

No material changes are proposed to the beneficiaries’ rights to information. Trustees will be required to notify the beneficiaries as to certain basic information regarding the trust including that they are a beneficiary, the names and contact details of the trustees and their right to request information such as a copy of the trust deed. This is designed to ensure that beneficiaries have adequate details to be able to hold trustees accountable as to their role.

15 November 2018, the Swiss Federal Tax Administration (FTA) announced that no new rulings under the Swiss principal company and finance branch regimes would be granted from 1 January 2019. Existing rulings are scheduled to sunset on 1 January 2020 as part of the Swiss Tax Reform and AHV Financing Bill (TRAF), which was approved by the federal parliament in September.

Under TRAF, all special tax regimes are scheduled to sunset on 1 January 2020 and to be replaced with measures that are compliant with international tax standards while ensuring that Switzerland remains an attractive location for multinational companies.

Unlike the rules concerning cantonal status companies, the Swiss principal and finance branch regimes are based on federal regulations rather than tax law and therefore do not require a legislative amendment. The FTA statement did not include any transitional rules.

In line with Swiss legislative procedures, the final TRAF bill may be subject to a referendum if at least 50,000 voters request it before the deadline of 19 January 2019. If a referendum is called, it is scheduled for 19 May 2019.

30 October 2018, Federal Decree-Law No. 19 of 2018 on Foreign Direct Investment (FDI Law), which permits 100% foreign ownership of companies in certain companies and sectors of the economy, was gazetted and came into force in the United Arab Emirates.

The FDI Law is aimed at boosting the UAE’s attractiveness as a location for FDI and increasing investment flows in priority sectors. It does not apply to designated economic free zone areas where 100% foreign ownership of companies is already permitted.

Previously, Article 10 of the UAE Commercial Companies Law (CCL) required that 51% or more of the shares in a company established in the UAE had to be owned by a UAE national shareholder. Amendments to the CCL in 2017 gave the UAE Cabinet powers to allow a higher percentage of foreign share ownership in specific sectors. The FDI Law now sets out the legal framework within which increased foreign ownership may be permitted.

The provisions of the FDI Law will only apply to sectors of the economy that do not appear on a 'negative list' issued by the UAE Cabinet. The initial ‘Negative List’ includes:

-Banking and financing

-Blood banks, quarantines and venom/poison banks

-Commercial agencies

-Fishing

-Insurance

-Investigation, security and military

-Medical retail (including pharmacies)

-Oil exploration and production

-Pilgrimage and Umrah services

-Postal, telecommunication and other audio visual services

-Printing and publishing

-Recruitment activities

-Road and air transport

-Water and electricity services.

The Cabinet will also issue a ‘positive list’ of the sectors applicable for full foreign investment as early as the first quarter of 2019. This is expected to include activities such as technology, space, renewable energy and artificial intelligence.

The FDI Law allows the cabinet to add or remove sectors on either list at anytime. When a sector of the economy is added to the 'positive list', the UAE Cabinet can set out further requirements that have to be satisfied by a company or its shareholders before greater levels of foreign investment will be permitted.

The new law establishes two new government bodies – the Foreign Direct Investment Unit and the Foreign Direct Investment. The FDI Unit will be responsible for proposing FDI policies to the FDI Committee and the UAE Cabinet, creating and maintaining a database of FDI projects in the UAE, monitoring and assessing their performance, facilitating registration and licensing procedures, and maintaining a register of FDI companies.

The FDI Committee, which will be chaired by the Minister of Economy, will provide recommendations to the UAE Cabinet on the activities to be included on the ‘positive list’ and amendments to the ‘negative list’, as well as presenting recommendations from the relevant authorities of each Emirate responsible for FDI affairs on granting licences to FDI Projects that are not on the ‘positive list’.

13 November 2018, Singapore signed a Tax Information Exchange Agreement (TIEA) and a reciprocal Foreign Account Tax Compliance Act Model 1 Intergovernmental Agreement (FATCA IGA) with the US.

The TIEA will permit Singapore and the US to exchange information for tax purposes. It provides that the competent authorities of the two countries will provide assistance to each other through an exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the countries concerning taxes covered by the agreement.

The reciprocal IGA provides for the automatic exchange of information with respect to financial accounts under the US FATCA. This new reciprocal IGA will supersede the existing non-reciprocal IGA, signed in 2014, when it enters into force.

The TIEA will enter into force after its ratification by Singapore. The reciprocal FATCA IGA will enter into force after its ratification by both countries.