Owen, Christopher: Offshore Survey - September 2011

29 June 2011, the Swiss government issued a draft proposal to amend article 14 of the Federal Direct Tax Law as well as article 6 of the Federal Tax Harmonisation Law dealing with taxation based on expenses – so-called “lump-sum” taxation.
The amendments are intended to set a higher minimum tax base for wealthy foreigners to ensure public acceptance in the face of rising criticism that has seen the canton of Zurich voting to abolish the regime in 2009 and other cantons increasing their levies.

Lump-sum taxes have been a feature in Switzerland since 1920, allowing cantons to ignore the foreign assets and income of wealthy foreign residents and instead levy a charge that has typically been based on five times the rental value of the resident’s property.

There were 5,445 such taxpayers in 2010, according to the Conference of Cantonal Finance Ministers. Canton Vaud has the most lump-sum tax residents, followed by Valais, Ticino and Geneva. In the German-speaking areas Graubünden leads, followed by Bern. Canton Zurich has lost 92 of its 201 lump-sum taxpayers since abolishing the levy.

Under the government proposals, worldwide living expenses rather than only the Swiss living costs would be used to determine the relevant tax base. The minimum taxable base would be raised to seven times the rental value of properties, while only people with an income of at least SFr400,000 would qualify for a tax break. For married couples, both partners would have to fulfill the conditions for tax breaks.

There would be a five-year transition period for existing lump-sum taxed individuals. Cantons would be free to set their own limits for taxable income under Switzerland’s triple federal, cantonal and communal tax system.

A finance ministry statement said: “These proposed measures will improve the application of lump-sum taxation. This should strengthen its acceptance, thus both guaranteeing the country’s attractiveness as a location and a tax equality.” The proposals are expected to be discussed in the Swiss parliament during 2012.

25 March 2011, the Exempted Undertakings Tax Protection Amendment Act 2011, which extends a guarantee that the Bermuda government will not charge exempt international businesses any taxes on profits, income or capital gains until 31 March 2035, came into force.
Under the previous legislation, dating from 1966, the Minister of Finance could only grant such an assurance up to 28 March 2016. In order for an exempted undertaking to benefit from the extension, it must submit an application to the Minister of Finance, together with the application fee of $165.

As defined in the principal Act, the term ‘exempted undertakings’ includes exempted companies and partnerships, and overseas companies and partnerships. Application for a tax assurance is not obligatory, but it is expected that most exempted undertakings will apply to secure the benefits of the Act.

Premier Paula Cox said the government had no intention of starting taxation based on profit, income or capital gain. The amendment was meant to reassure businesses and make them more comfortable investing in Bermuda. She said that extending the agreement had always been on the government agenda, but had been delayed due to international concerns that the exception could lead to harmful business practices, favouring international over local businesses.

27 April 2011, the Companies (Amendment) Law 2011 was brought into force. The Amendment Law makes various changes to the Companies Law (2010 Revision) and is the first stage in the ongoing modernisation of the Companies Law to improve the competitiveness of the Cayman Islands in the areas of company registration and securities investment.
The provisions of the Law concern the amendment of merger provisions, treasury shares, paperless share transfers, share redemptions and repurchases, the execution of documents, the update of foreign company provisions, special resolutions permitting different thresholds for different matters, permitting company names in foreign script and, in the case of segregated portfolio companies, portfolio names, director’s liability, segregation of assets and termination.

Laws that were amended to facilitate the passing of the Companies Law (Amendments) Bill, 2011, were the Property (Miscellaneous Provisions) Law and the Securities Investment Business Law.

16 June 2011, the European Commission formally requested The Netherlands to amend its current tax legislation that allows companies that form a group to be taxed as a fiscal unity. It means that profits and losses of the group can be offset and intra-group transactions are eliminated.
Article 15.3.c of the Dutch Corporation Tax Law requires all the companies of the fiscal unity to be resident in The Netherlands. This rule therefore excludes fiscal unities between two Dutch subsidiary companies in the same group, held by a foreign parent company.

The Commission does not see any possible justification for these restrictions and considers that current Dutch legislation on fiscal unities is contrary to the freedom of establishment provided in Articles 49 and 54 of the Treaty on the Functioning of the European Union and Articles 31 and 34 of the European Economic Area Agreement.

The Commission’s request takes the form of a reasoned opinion – the second step of EU infringement proceedings. In the absence of a satisfactory response within two months, the Commission may refer The Netherlands to the European Court of Justice.

19 May 2011, the European Commission formally requested the UK to amend its legislation to take into account the rulings of the European Court of Justice on the tax treatment of controlled foreign corporations (CFCs) because the UK is still not complying with EU law on freedom of establishment and free movement of capital.
Under EU law, profits of CFCs, which are subsidiaries of companies established in EU Member States or in EEA countries, should not be subject to additional taxation in the country of the parent company, if the subsidiaries are engaged in genuine economic activities.

The Commission considers that the UK’s legislative response to the ECJ’s decisions in Cases C-196/04 Cadbury Schweppes and C-201/05 Test Claimants in the CFC and Dividend GLO does not eliminate the discriminatory restriction of the anti-abuse CFC regime. The new provisions, it said, allow a UK taxpayer to reduce the taxable basis of a UK-owned CFC under certain restrictive conditions, but they fail to exclude from the CFC regime all subsidiaries established in EU/EEA Member States that are not purely artificial and are not involved in profit-shifting transactions.

The Commission sent a letter of formal notice to the UK in March 2010 and considered that the response it received in July was not satisfactory. The Commission’s request takes the form of a reasoned opinion, the second step of EU infringement proceedings. In the absence of a satisfactory response within two months, the Commission may refer the UK to the ECJ.

7 April 2011, European Court Advocate General Niilo Jaaskinen issued a legal opinion stating that Gibraltar should be regarded as a territory in its own right for purposes of its tax regime and therefore its low corporate tax regime could not be classified as discriminatory state aid.
In 2002, the UK notified the European Commission of Gibraltar’s proposed reform of corporate tax. In the event, this reform did not enter into force because Gibraltar instead opted for a different system of corporate tax but, in 2004, the Commission decided that the proposals constituted a scheme of State Aid that was incompatible with the internal market and should not be implemented.

In Government of Gibraltar and UK v Commission, the General Court held, in December 2008, that the reference framework for assessing the reform’s regional selectivity had to correspond exclusively to Gibraltar’s – rather than not the UK’s – territorial limits. It further held that the Commission had not followed a correct method of analysis. The Commission and Spain appealed to the European Court of Justice (ECJ).

In his opinion, Advocate General Jaaskinen proposed that the ECJ should dismiss both appeals. In respect of the territorial selectivity of Gibraltar’s proposed tax reform, he upheld the General Court’s conclusion that the territory of Gibraltar constituted the territorial reference framework to be used for assessing the selectivity of the intended reform.

With regard to material selectivity of Gibraltar’s intended measure, Jaaskinen considered that the State Aid rules could not be diverted from their objective in order to be used to combat tax competition between Member States. “Where a tax measure is of a general character, it constitutes an adjustment to general fiscal policy and not state aid,” he said.

Although the Advocate General’s advice is not binding, it is followed in about 80% of cases when the full court gives the final verdict. A final decision by the ECJ is expected later this year. Gibraltar’s new, radically different corporate tax regime came into force on 1 January this year.

5 May 2011, the European Court of Justice held that companies established in non-EU countries, including Overseas Countries or Territories (OCTs) of EU member states, do not benefit under EU law and therefore, in the absence of an express provision, French anti-avoidance rules can apply.
Article 990 D of the French tax code imposes an annual 3% tax on immovable property owned directly or indirectly by companies. Since 1 January 2008, French and other EU resident companies have been exempt from the tax, but companies established in non-EU countries are exempt only if they reside in a country that has an administrative assistance treaty or a nondiscrimination clause in a tax treaty with France.

In Prunus SARL v. France (C-384/09), the immovable property at issue was owned by a Luxembourg holding company that was in turn wholly owned by two British Virgin Islands companies. The Luxembourg holding company was exempt from the 3% tax but, because the BVI does not have a tax treaty or administrative assistance treaty with France, the two BVI companies were not exempt.

They asserted that the French provisions violated article 63 of the Treaty on the Functioning of the European Union (TFEU) on the free movement of capital. However the ECJ held that the provisions are compatible with EU law because the grandfather clause in article 64(1) of the TFEU states that the article 63 prohibition of restrictions on the free movement of capital is without prejudice to the application to non-member states of any restrictions that existed on 31 December 1993, under national or EU law, regarding the movement of capital to or from such state involving direct investment (including investment in immovable property).

The Court noted that the French provisions entered into force on 1 January 1993 and have not been subsequently amended. “It follows that the restrictions imposed by national legislation such as that at issue in the main proceedings are permissible in relation to OCTs [overseas countries or territories] under Article 64(1) TFEU,” the ECJ held.

The judgment has major implications for similar companies established in other OCTs such as Aruba, Bermuda, the Cayman Islands, and the Netherlands Antilles.

20 June 2011, the EU Economic and Financial Affairs Council (Ecofin) completed its assessment of Jersey and the Isle of Man’s zero-ten tax regimes and will review proposed amendments to the regime in September.
Both islands have proposed “rollback” provisions to remove the discriminatory aspects of the treatment of shareholders that were deemed harmful by the EU Code of Conduct Group in February. These amendments are due to be considered by the Code Group later this year.

The UK has provided an opinion that, in principle and without the use of any other anti-avoidance measures that replicate the harmful effects, a zero-10 regime on its own could well be Code compliant. But this comes with the caveat that it is the view of other key Member States that will be key in the formal assessment of “rollback”.

The UK has also separately stated that it would support the introduction of a territorial regime in the Crown Dependencies, as it has for Gibraltar: whose new territorial regime will be informally assessed by the Code Group in September.

The EU Code of Conduct Group is expected to assess the amended zero-ten regime in September, with a final decision on the proposed amendments expected from Ecofin in December.

On 29 June, Guernsey Chief Minister Lyndon Trott said: “Guernsey has always maintained that it will not undermine its economy, through either the timing or outcome of the review process, and thus cannot and will not determine its preferred direction of travel until the final outcome of the Code Group review is known.”

1 June 2011, the European Free Trade Association (EFTA) approved a scheme on tax deductions in respect of intellectual property rights in Liechtenstein. The scheme allows 80% of the income from intellectual property rights to be claimed as a deductible expense prior to the imposition of corporation tax.
Liechtenstein introduced a new tax provision on intellectual property rights (Art. 55 Tax Act and Art. 33 Tax Ordinance) as part of the new tax law applicable from 1 January 2011. To ensure that it was in line with the regulations on state aid set out in article 61 of the agreement on the European Economic Area (EEA), this regulation was submitted to approval by EFTA.

Under new intellectual property scheme, 80% of the income derived from intellectual property rights created or acquired after 1 January 2011 is tax deductible. With an ordinary tax rate of 12.5%, income from intellectual property will only be taxed at 2.5%. The deduction can also be made if the intellectual property rights are used by the company itself, applying to the income arising from the intellectual property that would have been generated if the use had been assigned to a third party.

The regulation is applicable for patents rights, trademarks, designs and utility models, provided that they are registered in Liechtenstein or abroad. Prior to making the 80% deduction, associated tax-relevant expenses including write-downs on intellectual property rights can be claimed.

EFTA considered that no aid was involved because the tax deduction was available to all businesses, irrespective of size, legal structure and sector. Therefore, the scheme did not favour any product or services.

The significance of the new regulation will increase with the number of double tax treaties signed by Liechtenstein. After treaties concluded with Hong Kong, Luxembourg and San Marino, the government is continuing its efforts to set up a comprehensive treaty network.

12 July 2011, the EU Economic and Financial Affairs Council (Ecofin) approved proposals from the European Commission to begin negotiating changes to agreements signed in 2004 by Switzerland, Liechtenstein, Monaco, Andorra and San Marino on the taxation of savings income received by European Union (EU) residents under the Savings Tax Directive.
The proposed changes would amend the equivalent procedures in these third-party countries to close current loopholes, to expand the application of the withholding tax, or automatic exchange of information, on a wider range of savings instruments such as pensions and life insurance products.

The revisions cover a number of areas, including taxation of interest payments channelled through intermediate structures, expansion of “interest payment” to include income from financial products substantially similar to debt claims and level treatment of investment funds irrespective of their legal forms.

4 July 2011, the Hong Kong Financial Services and the Treasury Bureau announced that the Hong Kong Special Administrative Region government had received a response from China’s State Administration of Taxation to clarify the tax payable to the mainland for dividends paid by mainland companies to individual investors in Hong Kong.
A Bureau spokesman said: “The reply of the State Administration of Taxation notes that when non-foreign investment companies of the Mainland which are listed in Hong Kong distribute dividends to their shareholders, the individual shareholders in general will be subject to a withholding tax rate of 10% with reference to the arrangement for the avoidance of double taxation signed between Mainland China and Hong Kong. They do not have to make any applications for entitlement to the above-mentioned tax rate.

“For shareholders who are residents of other countries and whose home countries have reached an agreement with China on an applicable withholding tax rate higher or lower than 10%, they have to follow the bilateral tax agreement in paying tax in connection with dividends paid by Mainland companies listed in Hong Kong.”

23 July 2011, the States of Jersey approved amendments to the 1(1)k regime for high net worth individuals to remove the distinction between income earned in Jersey and that realised elsewhere. It was argued that the tax differential discouraged wealthy individuals from keeping and investing their wealth on the island.
Under the revised regime, new 1(1)k residents will be taxed at 20% on the first £625,000 of all of their worldwide income and 1% on all income thereafter. They are also required to pay a minimum tax liability of £125,000.

Previously, 1(1)k’s paid 20% on all of their Jersey-sourced income and on the first £1 million of foreign-sourced income. They then paid 10% on the next £500,000 and 1% on the remainder. The minimum amount they were required to pay was £100,000.

Jersey treasury minister Philip Ozouf said this would make for “a simple and competitive tax structure to encourage high net worth individuals to bring their investment and businesses to Jersey.” Last year Ozouf reported that there were around 130 1(1)k residents in Jersey who contributed in the region £13.5 million to government revenue annually.

20 April 2011, the Separate Limited Partnerships (Jersey) Law 2011 was brought into force. Together with the Incorporated Limited Partnerships (Jersey) Law 2011, which came into force on 26 May, they add two new limited partnership vehicles to Jersey’s limited partnership regime.
Heather Bestwick, technical director of Jersey Finance, said: “Since the Limited Partnerships (Jersey) Law 1994 came into force, the limited partnership has become a vehicle of choice in establishing private equity funds and venture capital schemes. In the last few years, Jersey’s limited partnership has also been used to form funds investing in diverse asset classes, including real estate and mezzanine debt and in raising Tier 1 capital for financial institutions.”

The key feature of a Separate Limited Partnership (SLP) is that it will have a legal personality separate from that of its partners, but without being incorporated. It will, in contrast to a limited partnership, have the flexibility to own property, enter into contracts, and litigate and be litigated against in its own name.

Separate legal personality is likely to be of particular use where the SLP will be investing in, or contracting with entities from, jurisdictions that do not recognise the concept of limited partnerships. The concept of separate legal personality is generally recognised in most jurisdictions.

An SLP may be formed for any lawful purpose and its limited partners will not be liable for the debts or obligations of the SLP, subject to certain conditions including any unpaid capital commitment. An SLP will require a general partner, which will be the only entity with unlimited liability in the dealings of the SLP with third parties, although the property of the SLP may be held in the SLP’s own name or in the name of the general partner.

The key distinction between an Incorporated Limited Partnership (ILP) and an SLP is that an ILP will be a body corporate with perpetual succession that is governed by the law of Jersey. This may be important if there were perceived to be any risk that a limited partner might otherwise be treated by a non-Jersey court as having unlimited liability.

An ILP may be formed for any lawful purpose and the general partner of an ILP will be an agent of the ILP. The law governing ILPs will impose certain obligations upon the general partner of an ILP similar to those applicable to directors of a Jersey company and the general partner will only be liable for those debts and obligations of an ILP that an ILP has failed to discharge.

25 March 2011, the Maltese Minister of Finance, the Economy and Investment issued a legal notice setting out details on a new beneficial tax scheme under which qualifying expatriates may opt for a flat 15% rate of tax on emoluments instead of the standard tax rates.
The scheme, designed to attract further foreign investment to Malta, is industry-specific and focuses on a narrow range of industries comprising the banking, financial, investment and insurance sectors.

The scheme is available to employment income earned by an expatriate under a qualifying contract of employment on or after 1 January 2010. The scheme also applies if the expatriate was in receipt of income earned under a qualifying contract of employment requiring the performance of duties in Malta for a period not exceeding two years before 1 January 2010.

The minimum tax payable under the rules is €11,250 (equivalent to a minimum annual income of €75,000) and the maximum tax payable is €750,000 (equivalent to income of €5 million). Income exceeding €5 million in respect of a qualifying contract of employment is not subject to tax in Malta. Tax on any remaining income is to be calculated at the standard applicable rates.

In the case of EEA (including EU nationals) and Swiss nationals, the rules will apply for a consecutive period of five years, and for third-country nationals, the rules will apply for a consecutive period of up to four years, after which the employment income will be chargeable to tax at the standard rates of tax applicable to the individual.

6 July 2011, the OECD moved Panama to its “white list” of jurisdictions considered to have substantially implemented the standard for exchange of information followed its signing of a tax information exchange agreement (TIEA) with France, which brought Panama’s total number of TIEAs to the minimum international standard of 12.
The OECD said Panama was the 39th jurisdiction to achieve the standard since the OECD issued its first progress report in April 2009. It earlier moved Costa Rica and Vanuatu to its “white list” on 4 July and 20 June respectively.

As a result, the OECD’s “grey list” of countries that have committed to, but not yet substantially implemented, the internationally agreed tax standard comprises three jurisdictions – Montserrat, Nauru and Niue – classified as tax havens, and two jurisdictions – Guatemala and Uruguay – classified as “other financial centres”.

As of 29 July 2011, Montserrat had signed 11 TIEAs and Uruguay had signed nine. The other three jurisdictions had not yet signed any TIEAs. All jurisdictions surveyed by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes have now committed to the internationally agreed tax standard.

29 April 2011, the OECD’s Committee on Fiscal Affairs (CFA) launched a public consultation on the interpretation of the term “beneficial ownership” in double tax treaties.
The term “beneficial owner” appears in the first paragraph of Article 10 of the OECD’s Model Tax Convention, which provides a template for countries to negotiate bilateral tax treaties. Its main function there is to make ensure that the jurisdiction from which a dividend, interest or royalty payment is made (the source state) can refuse treaty tax relief on the payment, even if paid directly to a resident of the other jurisdiction.

The aim is to discourage “treaty shopping”, where payments are made through conduit companies that are resident in a jurisdiction different from that of the source or final destination, in order to exploit tax treaties in a way not intended by the signatory states.

In some common-law jurisdictions, however – particularly those with their own domestic trust law – the term “beneficial owner” has been used in a legal sense that differ from the OECD’s usage, giving rise to different interpretations of tax treaties by different jurisdictions’ courts and tax administrations.

21 June 2011, the Privy Council held that the Cayman Court had jurisdiction to appoint receivers over a judgment debtor’s power of revocation of Cayman Islands-governed trusts of which he was the settlor. The Cayman Court also had jurisdiction to order that the power be assigned or delegated to the receivers.
In Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Company (Cayman) Limited [2011] UKPC 17, the plaintiff (TMSF) had obtained judgment in Turkey personally against the settlor of two Cayman trusts in the sum of US$30 million in 2001. In 2008 it obtained summary judgment in the Cayman Court against the settlor. In the Cayman proceedings it sought an order for the appointment of a receiver over the settlor’s power of revocation of the trusts.

Before the hearings in Cayman the settlor had also been made bankrupt in Turkey, and in the course of the proceedings TMSF undertook to make any assets recovered generally available to creditors. The Grand Court and Court of Appeal had held that the Cayman Court did not have jurisdiction to make such an order.

The Privy Council overturned these decisions and applied the decision of the Court of Appeal in Masri v Consolidated Contractors International (UK) Ltd (No 2) in finding that receivers could be appointed over a settlor’s power of revocation. It held that there was no invariable rule that a power was distinct from ownership of property. A power to revoke carried with it no fiduciary duty; the only discretion was whether to exercise it in the settlor’s own favour.

The settlor could be regarded as having rights tantamount to ownership, such that the interests of justice require that the order to appoint receivers be made in order to make effective the judgment of the Cayman Court.

The discretion to make the order should in this case be exercised in favour of the judgment creditor, since it had undertaken to make the proceeds available to the settlor’s creditors and no serious suggestion had been made that any prejudice to third parties would result.

The Cayman Court therefore does has the power effectively to unwind a revocable trust in circumstances where there is a judgment debt against the settlor, by means of the imposition of a receiver over the settlor’s power of revocation, coupled with an order that the settlor delegate his power to the receiver – in default of which the Court can order the revocation.

20 June 2011, the Bombay Stock Exchange Sensex dropped by 3.1% in early trading after the Indian government announced that it was to resume treaty revision talks with Mauritius. A clarification by Finance Ministry that no timeline on the talks had yet been agreed led to a partial recovery in the index.
Under the existing 1982 treaty, Mauritius-based investors do not pay capital gains tax either in India or in Mauritius. As much as 35% of India’s FDI (foreign direct investment) and FII (foreign institutional investors) inflows are routed through Mauritius and the Indian Finance Ministry has said it believes many third country investors are misusing the treaty.

In the revised tax treaty with Mauritius, which has been under discussion between the two countries for several years, the Finance Ministry wants to include an article on exchange of banking information and assistance in collection of taxes.

7 July 2011, the UK Supreme Court heard the final appeal of Robert Gaines-Cooper, a Seychelles-based businessman who has not lived in the UK since 1976, against an HM Revenue & Customs’ ruling that he is liable to pay an estimated £30m in UK income tax.
Gaines-Cooper, whose own father had been an Inland Revenue tax inspector, is appealing against tax demands from 1992 to 2004, having moved to the Seychelles in the 1970s after deciding that the UK tax regime was not conducive to entrepreneurship.

HMRC decided that Gaines-Cooper’s attachment to English life, including his love of shooting and attendance at Royal Ascot, his homes in the UK, his wife’s presence in the UK, and his British citizenship, all indicated he was domiciled in England, resident and ordinarily resident for the years concerned. Tax tribunals and the civil courts have supported this opinion.

Gaines-Cooper’s case is that HMRC retrospectively and unlawfully changed its own IR20 residence guidance in the mid-2000s without any basis in law. In February 2010 the Court of Appeal ruled that there was insufficient evidence that HMRC had secretly changed its rules, but granted leave to appeal to the Supreme Court.

Gaines-Cooper says he is seeking “fairness and the right to rely on published guidance from HMRC when planning my tax affairs.” He argues that he relied upon paid-for professional advice, which in turn had relied on practice statements published by HMRC.

Lords Clarke, Hope, Mance, Walker and Wilson sat for the Supreme Court hearing. They are not expected to deliver judgment before the autumn.

The UK Treasury released, on 17 June 2011, two major consultation documents: one proposing the establishment, for the first time, of a statutory residence test (SRT) for tax purposes; the other, proposing an increase in the annual tax charge for long term non-domiciled individuals that are resident in the UK.
The aim of the consultations is to provide “clear or specific principles that are applicable to all taxpayers”, and create a new test that is “transparent, objective and simple to use”, the Treasury said.

The residency consultation has been eagerly awaited to replace current rules that even the UK Treasury admitted were “vague, complicated and subjective”, particularly in view of recent high-profile court cases involving Robert Gaines-Cooper, a Seychelles-based businessman, and Lyle Grace, an airline pilot.

The key proposals include a minimum stay qualification. Anyone present for less than a proposed minimum of 45 days cannot be resident, or 10 days if the individual was resident in the preceding three years. A full-time working abroad exemption will be maintained with a clearer statutory definition, which includes being present in UK for less than 90 days, with up to 20 days working in UK per year.

The proposed SRT classifies migrant individuals as “arrivers” (those who have recently come to the UK), “leavers” (who have recently left the UK). To these individuals it applies three sub-tests. Part A will test whether an individual is conclusively resident outside of the UK and Part B sets out a test that will provide that an individual is conclusively resident in the UK.

If these tests are inconclusive, Part C will balance day counts against “connecting factors” in the UK, such as family, employment and accessible accommodation. HMRC has set out a sliding scale to determine for each class of taxpayer whether they are resident, based on their day counts and the number of other factors that they do or do not satisfy.

The second consultation involves a proposed reform of the UK’s non-dom tax structure, which was flagged up in the most recent UK Budget. This will increase the remittance basis charge for those non-doms who have been in the UK for at least 12 of the last 14 tax years to £50,000 annually, from £30,000, beginning from 6 April 2012.

It also proposes a remittance exemption to encourage foreign individuals to invest in UK enterprises. The new regime will permit non-doms to bring funds into the UK tax-free, if they are then invested in qualifying businesses, which include trading companies (or holding companies of trading companies), or businesses that let commercial property. There will be no upper or lower limit on the size of the investment.

There will be associated anti-avoidance provisions such that capital realised on exit from an investment must be removed from the UK within two weeks of being realized or it will be treated as remitted to the UK at that point, and taxed.

Assets brought to the UK and immediately sold – such as through art auctions – will be exempt from tax if the proceeds are immediately removed. The rules will also abolish CGT on gains in foreign bank accounts due to exchange rate fluctuations.