Archive for August, 2009
The Future Of Offshore Banking Corporations And Foundations
First it needs to be stated that no one has a crystal ball which predicts the future. These thoughts are just opinions and should be taken as such not as legal or tax advice. We will try to show the political positions of the countries that are not in favor of the tax haven offshore jurisdictions and the position of the tax haven countries. The countries most outspoken against offshore banking and offshore corporations are Australia UK and USA.
Today there is a great outcry from these and other countries about the tax saving benefits afforded to citizens of certain countries by going offshore. These countries claim that their constituents are cheating them out of billions of dollars of taxes by going offshore. The offshore jurisdictions that are considered the tax havens say that is a nice allegation but we are not your collection agency and do not ask us to change our bank and corporate privacy laws because your constituents do not want to pay taxes this is your problem not ours. The actual amount of taxes that are avoided unlawfully is a figure that one can only take a guess at. Many people set up offshore structures to do business outside of their home country and are not in violation of any laws the way they conduct their business affairs. Many people live in other countries and need to own offshore bank accounts offshore corporations offshore real estate etc. Many people use offshore privacy to protect themselves from identity theft kidnapping blackmail and possible extortion.
Let me use an analogy to make a point. In Latin America there is an organization of five states called Mercosur. Mercosur consists of Argentina Brazil Paraguay Venezuela and Uruguay. Mercosur also has associate members which are as follows: Chile Bolivia Peru Columbia and Ecuador. The Mercosur countries engage in free trade and easy border controls with no passports just national identity cards for border crossings. Mercosur recently issued a statement that they would in the future strive to resist any further attempts to get them to spend more resources on narcotics enforcement that stems from the UN. The UN says its member countries must enact certain kinds of laws to control narcotics and states these laws and insists on enforcement policies. The Mercosur spokesperson stated that this was an irrational policy since it has not worked for over a quarter of a century and it was severely draining the resources of their countries. Essentially they said they were sick and tired of the United States which is the nation driving these policies through the UN making their problems the problems of other countries and they were going to collectively attempt to legalize narcotics in their own nations to free themselves from this heavy burden of narcotics enforcement. This has already begun to happen in Bolivia Paraguay Argentina and Venezuela with the abundant legal availability of cocoa leaf. The cocoa leaf has cocaine alkaloids real cocaine and is commonly used as a chew like chewing tobacco leaf or made into tea leaves. Street cocaine is perhaps 30 times as potent and is diluted with harmful substances like turpentine ether etc. Cocoa leaf is a natural plant product used for centuries as a stimulant by people living in the high altitudes of Bolivia farm workers etc. One can now see coca tea being sold freely on the internet but I would strongly advice you not to order any because you may get charged with narcotics importation seriously because it can be lab tested to contain cocaine. So my point is a lot of countries have said ok enough is enough when it comes to narcotics. It is not working leave us alone take care of your own problem. So Mercosur countries are now worrying about their own problems more and less about the narcotics issues in the USA and other nations. I think you will see more of the same type of thinking when it comes to offshore banking offshore corporations offshore foundations offshore stock brokerage accounts etc.
Offshore jurisdictions have to go through all sorts of compliance that is not needed in say the USA or the UK. One offshore formation agent went to the USA and was able to open eight USA bank accounts in one day. In Panama a bank account can take five days after you collect and submit the reference letters and documents. In the USA and UK no bank reference letters are required to open a bank account neither are any professional references required. In the USA and UK they do enforce money laundering protective measures strictly. One can buy USA corporations or UK corporations without any of the due diligence requirements that are required from offshore jurisdictions. So the playing field is not exactly level yet these countries are screaming for more controls not on themselves but on other countries. It seems that the offshore jurisdictions will scream enough is enough if any further controls are imposed on them and resist them. Of course one wonders what further controls they could come up with that they haven’t already imposed.
Let’s look at history a little to see how things deteriorated in the past regarding offshore privacy and offshore banking. Most of the older offshore tax havens are also tourist destinations such as Cayman Islands Nassau Bermuda Grenada Belize etc. These countries usually have little if any natural resources and need to bring in everything they consume. While some of them avoid income taxes instead they impose taxes on goods imported. These countries got heavily involved in tourism as a way to keep their economies moving. A cruise ship docking at these ports usually carries 2500 people. Each person probably spends an average of 100 a day when in this ports buying tshirts duty free liquor tobacco jewelry etc. many spend a good deal more. That is 250000 per cruise ship. These jurisdictions get from 3 ships per week to 40 ships per week docking there. The money from the cruise ships exceeds what would be earned from their previous offshore banking and incorporation activities. Remember a bank that controls hundreds of millions of dollars of deposits can only have 50 or so employees. A thriving cruise ship port can have thousands of employees working in the shops restaurants as tour guides taxi drivers etc. So more jobs are at stake in the tourism business. We also have to take into account the resorts these countries have which create even more jobs and generate revenue in the form of a hotel room tax built into the rates. These countries also charge a head tax on every person coming into their country. Bottom line is there is much more money in the tourism business than there is the offshore business for the government of these jurisdictions. The governments of these countries don’t make much off of a bank account for instance actually nothing. They have no income or capital gains tax. The offshore corporations would pay a few hundred dollars a year in taxes but that was it. The banks would pay a few thousand dollars a year for their licenses. So these countries sold out on offshore privacy to protect their tourism. If they did not do so the countries allowing tax free importation from these countries of tourist bought items might go away. Tourists returning from these countries by ship or air might find themselves stuck in long lines while they are searched and interrogated by authorities of various affected countries which would quickly and seriously discourage tourism to these countries. Other countries like Switzerland Lichtenstein and Luxembourg sold out due to pressure from the EU. But now we are seeing a reversal in position regarding the EU not much of a reversal but at least a sigh of OK enough is enough.
In recent months the USA was exposed by the New York Times Newspaper in a scandal whereby they were monitoring SWIFT wire transactions for some years. SWIFT is a private company that enables banks to communicate with each other securely including sending wire transfers. SWIFT machines require a separate terminal and line so as to make them most secure. The USA served a court order on the SWIFT people in New York to turn over all the data they requested and gag ordered them to not mention what was going on. It went on for two years. This got the EU nations most upset. While they have not actually prosecuted the SWIFT people for violating the banking laws of the various European nations affected there was serious talk of it. Whether or not obeying a USA court order to violate the banking laws of other nations is a viable defense has never been tested in any court yet anyway. The EU position on this was they must get the USA to understand their banking laws call for privacy. This of course is not exactly giving ground for more privacy invasive laws which is what we mean by a reversal.
Today the most privacy oriented jurisdiction in the world is Panama. Panama has 400000 corporations registered there. Panama requires corporation formation agents to be lawyers and their know your client rules are strict and call for criminal penalties if not followed. Panama banks follow tight antimoney laundering laws as well as know your customer laws. Panama does still allow for anonymous bearer share corporations which do not require the entry into any registry of any ownership names or identities. The anonymous bearer share corporations combined with Panama bank secrecy laws make for the best privacy in the world today. Panama foundations are also anonymous with no owners beneficiaries or protectors names appearing in any registry or database. Panama is also in no tax treaty with any other country and is fairly unique in this regards. Of course one can ask the question if Panama can sustain their practices under pressure from other nations.
First off Panama does follow the FATF Financial Action Task Force practices. Secondly Panama does not exactly have a lot of tourism actually it has quite a small amount of tourism and most of their tourism comes from Latin America not the EU or USA. This means there is no meaningful tourism that can be taken away. Panama is a small country and 15 to 20 of the workforce is employed by the international banks. Panama has 400000 corporation registered there who each pay 300 in annual corporate taxes. This comes to 120000000 dollars and this is for a country of 2.9 million people. Also consider these corporations are paying for resident agents nominee directors etc. Then we get into Panama Foundations which also collect 300 in annual taxes each year plus nominee council member fees. Panama will and has resisted attempts to compromise banking secrecy and corporate secrecy.
Again let us look towards history to see what we can learn this time focusing on anonymous bearer share corporations. The issue with anonymous bearer share corporations is that when the international wires are monitored it is impossible to tell who the natural persons are behind the bearer share corporations sending or receiving the wires. The British Virgin Islands used to offer anonymous bearer share corporations. A few years ago they gave in to pressure from the UK and stopped issuing new bearer share corporations but they did make allowances for the existing bearer share corporations to remain anonymous for 10 years. After that time they would need to dissolve or operate in a nonanonymous mode. If we want to look on the dark side we can consider Panama doing the same if international pressure ever built up sufficiently to force a change. So of course those owning an existing bearer share corporation would be unaffected for ten years and these corporations would probably go up significantly in value on the secondary market. We have absolutely no indications subtle or otherwise that anything is going to change in Panama.
It is also a possibility that some other nations may enter into the bank secrecy arena in the near future and some other nations may return to bank secrecy as well. Only time will tell. Nothing we see gives any inkling of an idea that Panama will reverse on its position of bank and corporate privacy and it appears that things may have already sunk to an all time low and offshore banking and corporate privacy may actually soon start to improve first with the wire transfer system and later on in other areas.
For more information please visit:
http://www.panamalaw.org
email at: panamalegalhush.com
About the writer:nbsp;nbsp;The author is a researcher with years of experience in finances and real estate.
For more information please visit:
http://www.panamalaw.org
email at: panamalegalhush.com
The Answers To Top Self Employed Tax Questions That Save Money
HMRC enquire into approximately 75000 self assessment tax returns each year which often results in extra tax being payable because business turnover has been understated or non allowable business expenses have been claimed resulting in interest and penalties on the extra tax for that year and sometimes previous years.
What is Business turnover?
Sales turnover is the amount the business earns before deducting business expenses including receipts of any kind for goods sold or work done such as commission tips payments in kind fees and insurance proceeds. The turnover to be included in your financial accounts is the date it was invoiced or earned and not the date it was received.
What is excluded from Business Turnover?
Sales turnover excludes sales of fixed assets such as premises vehicles and plant and equipment. Also exclude business start up allowances which are entered separately on the self assessment tax return. Money introduced to the business is excluded being capital introduced and not sales turnover.
What business expenses are allowable?
All running costs incurred solely for the purpose of the business may be deducted as allowable business expenses including goods bought for resale employee wages premises rent and overheads administration costs vehicle running costs. Interest on loans and overdrafts can be claimed as business expenses excluding the capital element of repayments. Higher business expense levels accurately recorded can keep taxable profit below the higher tax rate.
Can the cost of buying and repairing plant and machinery be claimed?
Repairs and maintenance costs are allowable business expenses. The purchase cost including improvements and replacement costs are not allowable business expenses these costs being subject instead to capital allowances. Depreciation is not allowed and replaced by Capital Allowances for the purposes of calculating the tax payable.
What are Capital Allowances?
Capital allowances are designed to write off the cost of purchasing a fixed asset over the life of the asset rather than in the financial year in which it was purchased. Capital allowances on the majority of assets are based upon a higher rate of allowance in the year of purchase First Year Allowance with the balance of the cost being written off at a lower rate Writing Down Allowance. The full cost of any asset may be claimed as an expense in the year it is sold or scrapped less the total of accumulated capital allowances that have been claimed against taxable profits. Any sales proceeds over and above the written down value after Capital Allowances is added back to net profits and becomes taxable. Cars are subject to writing down allowances but not First Year Allowances unless they are classed as commercial vehicles. DIY Accounting has small business software templates that automate the calculation of capital tax allowances.
Can expenses incurred for both business and personal purposes be claimed?
No. HMRC only allow such expenses if the business expenses element of the cost can be separated from the personal element. If you claim the travelling expenses to buy business goods they can be claimed for tax purposes but would be disallowed if you also showed evidence of personal items being purchased on the same journey. Using your home phone is an allowable business expense if you claim specific identified business calls in which case you would also be able to claim a similar proportion of the rental cost.
Can vehicle costs be claimed when that vehicle is also used for personal use?
Vehicle running costs and expenses such as fuel excise duty insurance repairs and breakdown membership may be claimed as business expenses if the vehicle is used solely for business purposes. Travel from home to work is not business use and disallowed. Vehicle running costs and capital allowances on vehicles are split between claimable costs and a disallowed cost depending on the proportion the vehicle is used for business and personal use. Parking fees for business purposes may be claimed parking fines and penalties for motoring expenses are not claimable as business expenses for tax purposes. An alternative to claiming vehicle running costs and vehicle capital allowances would be to claim mileage allowances which at the time of writing are 40p for the first 10000 miles and 25p per mile thereafter a feature of which the DIY Accounting small business software automates
Can Business trips be claimed?
Travelling expenses and modest lunch expenses may be claimed. Hotel and reasonable costs of subsistence may also be claimed. A subsistence allowance can be claimed if staying with friends or family as an alternative to an hotel. The cost of lunch may not be allowed when staying away overnight. Lunch with clients is regarded as entertainment and is not allowed. If you are accompanied on a business trip by family only your cost is allowable and specifically only if the trip was purely for business purposes. Expenses on combined business and personal trips are not allowed to be deducted as business expenses on tax returns.
Can home costs be claimed?
If part of your home is identifiable as solely for business purposes then running costs can be claimed. The cost allowed is the proportion of the total area of the home the business area occupies. For example excluding shared facilities of kitchen and toilet if the home has three bedrooms living and dining room and one bedroom is used solely as an office then 1/5 of home costs could be claimed. The costs to claim would be heat and light insurance general and water rates and mortgage interest excluding repayment amounts. Where mortgage interest is claimed the revenue might also claim as a capital gain the increase in value of that proportion of the home such Capital Gains Tax being subject to tapering relief over time.
How do I treat business goods taken for my own use?
Any business goods taken for personal use should be added to sales at normal selling prices including items supplied to family and friends at less than normal prices. He cost of providing services for family and friends is not allowable as a business expense.
Can I deduct my salary or drawings as a business expense?
You cannot deduct your own wages personal national insurance or drawings from the business as a business expense as these are distributions of the business income after net taxable profit has been calculated and not allowable expenses before tax..
Can I deduct my partners wages?
Yes partners wages can be deducted as a business expense although there are rules which would be applied in such circumstances to ensure the amount paid is both real and reasonable. The business would need to operate a PAYE scheme for that employee deducting income tax and national insurance the work carried out must be real not invented and the rate paid reasonable for the nature of the work and the time spent. Evidence may also be required that the amounts were actually physically paid to that partner for example in the form of a cheque.
Should Tax Credits be included?
No these are excluded from business profits although the level of credit received may subsequently be changed in the light of the actual business profit earned compared with the amount declared when the Tax Credit was applied for. HMRC do check that the net taxable profit shown on the tax return is the same as that declared when the Tax Credit was claimed.
Can I claim expenditure incurred prior to trading commencing?
Yes business expenses incurred up to seven years prior to trading commencing can be claimed. The actual date of the expenditure should be recorded although all pretrading expenditure is treated as having been incurred on the first day of trading.
Are pool cars taxable?
Company cars are taxable as a taxable benefit while pool cars are not taxable. To qualify as a pool car private use should be incidental to business use the vehicle should not normally be kept at the employee home and the vehicle must be available and used by more than one employee.
About the writer: Terry Cartwright qualified accountant designs Accounting Software that automates the self assessment tax return for self employed as an essential part of Small Business Software and Payroll Software that automates the revenue payroll tax returns
Surveys For Cash – How To Find The Right Survey Sites Which Actually Pay Well
If you are going to work at home completing surveys for cash is one of the best ways to earn a substantial and easy income. You don’t need to worry about paying a large financial investment in order to get started. You just have to have the willingness to go out and find the survey jobs that you need in order to meet your income target. Spending time to learn the tips and tricks of the industry may seem difficult at first but soon you will be locating and completing profitable surveys regularly. Here are some places to look for surveys that can be completed in return for cash.
Online Listing Sites
The easiest and most obvious place to look in order to find surveys for cash is at one or more of the many online listing sites. These sites may require payment of a subscription fee in order to provide the latest and most comprehensive information or they may be totally free and gain their financial support by advertising or by assessing the businesses listing the surveys a listing fee. Either way you gain the benefit of numerous potential jobs in one location online. This allows you to find the ones that work best for you.
Television or Radio Ads
Occasionally there are ads placed on television or radio to ask for people who are willing to complete surveys for cash. These surveys are usually completed in conjunction with health or illness related projects and may include testing of drugs treatment methods or other modalities. For example studies on depression obesity or diabetes may be looking for people to participate in the programs or projects. Payment may include compensation for time spent travel expenses free medications or placebos counseling or other benefits. People participate for the cash they receive but it may also be a way to get treatment for certain kinds of disorders.
College or University Bulletin Boards
Another way to find out about surveys for cash is to look on college or university bulletin boards. This type of survey is often connected with a research project of a student or faculty member. Grants fellowships and scholarships at many educational facilities may depend on published research projects by the student or professor. In other instances the project may be commenced simply because the person wants to test a theory or find out more about a favorite subject. Notices asking for those who are interested in participating can be found online or at physical bulletin boards.
Contact Businesses
In order to find and complete surveys for cash you may be successful in locating options by contacting businesses directly either online or by telephone. Some business web sites make it easy for you to contact their company for queries such as this. It is helpful to have the name or at least the title of the correct contact person. Alternatively you may want to contact the marketing or customer satisfaction unit of the company for information about completing surveys about their products.
About the writer: One of the best all around internet sources for information on finding Surveys For Cash can be found at http://www.goodinternetmoney.com/MakeMoneyTakingSurvey.php. Here you can find some of the best free to join survey sites and start making money!
