The tax system in the United Arab Emirates is unique in the world. In the Free Zones, which drive the economy, there is no corporation tax, while the country’s residents are not subject to personal income tax.
On January 1st, 2016 the first phase of the global automatic exchange of information on tax matters, whereby the countries which have signed up to the agreement will exchange information on tax issues from 2017 (or in some cases 2018), began.
International Trusts, established primarily for asset protection purposes, can not be considered as companies, since they do not have separate legal personality. In reality, the Trust is a private legal agreement between the Settlor and the Trustee, on the basis of which the Trustee takes possession and control of the assets for the benefit of the Beneficiaries.
The tax changes introduced from July 16th, 2015 have revolutionised Cypriot tax laws. This is beneficial primarily to those coming under the “resident, but not domiciled” status and who draw income from capital accumulated earlier or still to be accumulated. The majority of foreigners who move to the island and become resident – and tax resident – fall into this category.
We introduced this topic in the previous issue of the LAVECO Newsletter, reporting on where the signing of information exchange agreements currently stands. The last quarter has seen further agreements signed between the 90 or so countries which have signed up, or agreed to sign up to the system. You can follow the exact list of countries on the dedicated blog dealing specifically with this topic on the laveco.com website.
The automatic exchange of information regulations also apply to private foundations for the protection of assets. Although such foundations do not have owners, the details of the beneficiaries are set down in the foundation deeds. When opening bank accounts, the banks either request these documents, or record the personal details of the beneficiaries on a separate declaration. In this way, the banks are obliged to report on foundations as if they were normal companies.