HMRC unveils offshore tax evasion crackdown
A new strategy that will see HM Revenue & Customs cracking down on offshore tax evasion has been published. In his Spring Statement, Chancellor Philip Hammond unveiled the new strategy entitled ‘No Safe Havens 2019’.The Chancellor said: “We will pursue relentlessly enablers who design, sell or enable the use of tax avoidance arrangements which HMRC later defeats. We will, similarly, impose new civil penalties on those who deliberately enable another person’s non-compliance or offshore evasion.”
In 2018, HMRC collected data on the offshore financial interests of 5.67 million UK residents. The tax organisation is now sifting through the data to find possible non-compliance and will pursue actively enablers who ‘facilitate cross-border tax fraud and money-laundering’.
UK reveals new ‘Golden Visa’ details
The UK government has unveiled plans to tighten its ‘Golden Visa’ system which is aimed at attracting wealthy investors to the country. Now applicants will need to prove that they have £2 million for two years, rather than the current 90 days, and they must provide evidence of where the funds come from.
The Golden Visa scheme, known as the Tier 1 (Investor) schem,e has proved to be popular, particularly with Russian and Chinese investors looking to settle in the UK.
However, deteriorating relations with Russia have led to a fall in the number of T1 visas being granted to the lowest number since 2008. Last year, 29 visas were granted, while in the year before 46 applicants had their visas approved.
The reformed T1 scheme started on 29 March, when two new visa offerings were also rolled out: the innovator and start-up visas. The latter will be offered to entrepreneurs starting a business for the first time and replaces the Tier 1 (Graduate Entrepreneur) visa. Applicants can now be from any background, not just university graduates, and they will have two years to make a success of their business before having to make another application.
Experienced expats looking to move to the UK and having £50,000 to invest in their business can use the Innovator route, which previously had a £200,000 requirement.
The immigration minister, Caroline Nokes, said: “We want to ensure that talented business people see the UK as an attractive destination for developing their business.”
A spokeswoman for a firm that specialises in business immigration, Charles Russell Speechlys, said that for high net worth and corporate clients they would welcome the changes made to the investor route.
Applications to US citizenship scheme rocket
A US scheme that grants citizenship has seen applications from the GCC rocketing nearly sixfold.
The ‘Citizenship for Investment’ scheme saw the number of approved applications reach 9,602 last year, up from 2010’s figure of 1,369.
The EB-5 visa scheme is aimed at encouraging foreign investment in a range of projects across the US, with investors needing at least $500,000 to apply, which can then lead to a green card and the potential, after five years, of full US citizenship.
However, Chinese investors dominate the list and account for 40% of the total, with 54 United Arab Emirates citizens being approved last year.
Half of expats in the UAE save 5% or less
It’s been revealed that 49% of expats in the UAE are saving 5% or less of their monthly income.
In a survey looking at financial planning, the findings reveal that just 16% of expats said that planning for their retirement is a financial priority. One of the issues is that employers there are employing cheaper and fewer expats, so increasing numbers are finding it a struggle to save.
The results have been published in a report focusing on the financial advisory landscape in the country. The work was carried out by Insight Discovery and its chief executive, Nigel Sillitoe, said:
"Saving rates are higher in other parts of the world, particularly in developed countries; Switzerland, for example, will see its household saving rate reach 17.8% this year."
28% of expats say their main priority is to save money for non-specific uses; 16% said they were saving for retirement; and 11% said they were saving for school fees. Expats also said they wanted more transparency on commissions and fees and a tougher stance from local regulators concerning scams and monitoring of unregulated firms.
A recent survey from Hoxton Capital Management also highlighted that most expats in the GCC are currently not saving and many of them will leave with less money than when they arrived.
The world's wealthiest cities revealed
London is the world’s number one city for wealthy people, a new index measuring wealth reveals. The findings from real estate firm Knight Frank found that London has the highest number of ultra-high net worth individuals (UHNWI) who have assets of at least $30 million.
Over the past five years, there’s been an increase in UHNWI numbers of 582 to reach 4,944. The city with the highest number of the dollar billionaires is New York with 94.
The firm’s report also highlights the cities that will support wealth creation in the future and offer potential property investment opportunities. They include Cambridge in the UK, Stockholm in Sweden, Boston in the US, the Indian city of Bengaluru and China’s Hangzhou.
The top five cities for both wealth and opportunity overall are London, New York, Hong Kong, Singapore and Los Angeles. For ultra-high net worth individuals, the best cities for lifestyle are London, Singapore, New York, Hong Kong and Tokyo.
Wages for expats in GCC show mixed picture
The number of expats working in the GCC is in decline but they are not necessarily earning less, a survey reveals.
Bayt.com says that the average expat salary has fallen but this is down to more low-wage jobs being created. The average expat monthly salary in the GCC is down 26% from the year before to $8,083 (£6,079) per month.
Expat numbers fell by 27.7% in Kuwait, in Saudi Arabia they dropped by 34.2%, and in the UAE expat numbers fell by 26.7%. Expat average salaries also fell in Bahrain and Oman by 25%.
For expat managing directors and chief executives of a multinational company, their salaries rose by nearly 3% to $34,990 (£26,316) per month. The average salary for the managing director of a local firm increased to $24,950 – a rise of 13.25%.
The average salary for expats in Saudi Arabia is $8,560 per month, which is 2.9% more than the UAE and 8.4% more than expats earn in Bahrain.
A spokesman for Bayt.com said:
"The Middle East remains an attractive option for career minded expats, particularly in construction, banking and real estate. In addition, the quality of life remains high, with safety, world-class schools, healthcare and domestic help and the proximity for world travel all big advantages."
Beneficial ownerships register is resisted
Plans by the UK government to introduce a public register of company beneficial ownerships for its Crown Dependencies has been opposed by the Isle of Man, Guernsey and Jersey.
The move would see British Overseas Territories and Crown Dependencies opening up their beneficial ownership registers to reveal who owns assets there. Now the three chief ministers have issued a statement which condemns the proposal as being ‘contrary to the established constitutional relationships’ and they say they will be meeting with government ministers to discuss what happens next.
Improved end of service benefits mooted in UAE
A new system is being considered in the UAE to help expats retire by delivering better end of service benefits which could see an enhanced gratuity system being introduced. The country’s Human Resources Ministry also says that the UAE needs to create investment funds for this purpose and to help retain talent in the country for boosting the economy.
Saving schemes are growing in popularity with various UAE organisations, including the Emirates airline. One of the big issues, according to one survey carried out last year, is that 88% of firms in the GCC have no plans in place to fund any gratuities that may fall due.
EU blacklists more tax havens
A plan to add Saudi Arabia to a list of blacklisted countries suspected of being lax on money laundering has been rejected by the European Union. The plan from the European Commission led to pressure from Saudi Arabia, the US and many European capitals, who warned that the Kingdom’s inclusion on a blacklist would make trade and investment difficult between Europe and Saudi Arabia.
However, EU finance ministers have now approved 10 countries to be added to the blacklist, including the United Arab Emirates, Belize, Bermuda, Oman and the Marshall Islands.
The blacklist was created in December 2017 with the aim of encouraging transparency and fair competition on tax issues and prevent tax fraud and avoidance.
The UAE says that the decision to include it on the European Union’s list of non-cooperative jurisdictions is ‘regrettable’, particularly since they have worked closely with the EU to meet the EU’s requirements. The Prime Minister of Bermuda, David Burt, also expressed his disappointment and surprise at the island’s inclusion since, he said, they have worked hard to create a tax regime that meets the relevant international standards.
In other news…
Bangladeshi expats living in the UK are being urged to invest in their home country, particularly in the food processing sector. The Prime Minister says that investment will help the country develop.
Working overseas can be expensive when it comes to paying for mobile data, says one firm. Cable.co.uk says that 1 GB of data costs $6.66 (£5) in the UK, but $.26 (20p) in India. In the US, the average cost is $12.37 (£9.30) with the firm saying that the results of their survey are ‘disappointing’. Researchers looked at mobile data prices in every country and found the global average for 1 GB was $8.53. The cheapest in Europe is Finland, which costs $1.16 – though the most expensive price is in Zimbabwe, where expats will be paying $75.20 (£56.55).
In Oman, the falling number of expats is affecting the rents that landlords can ask for on properties, media outlets report. There’s also an oversupply problem, particularly for apartments, and growing numbers of expats are leaving. The media reports highlight that the fall in demand is between 30% and 40%. However, the National Centre for Statistics and Information says that the number of expats last year fell by 3.7% to 1.78 million.
Wealthy expats in China will soon have access to more providers in the wealth management industry, says a Reuters report. The $20 trillion industry will have tighter controls and more regulatory oversight with more banks setting up wealth management units under the new regime.
Ultra-high net worth individuals in Malaysia are being targeted by the Bank of China as part of a push targeting its wealth management operation with specialist wealth advice and special interest rates. The bank says it will be offering new products and a high level of customer service for UHNWI to enjoy.
The South African government has confirmed that its plans for an expat tax will commence from March 2020. The South African Income Tax Act will see South Africans who work overseas for more than 183 days, of which 60 days will be consecutive, having to pay tax of up to 45% on their foreign income if it is over R1 million (£52,201/$69,406).
Farringdon Wealth has launched in Singapore with the aim of targeting ultra-high net worth clients, as well as high net worth individuals, who are based in Asia. The subsidiary of Farringdon Asset Management is based in Singapore to offer advice on insurance, wrapped investments and trusts for wealthy individuals wanting to pass assets onto the next generation.
Singapore’s Not Ordinarily Resident (NOR) tax relief scheme which was introduced in 2002 to attract expat senior managers of global firms will end next year. The scheme delivers tax concessions to expat employees, including better tax treatment for overseas pension fund contributions and tax exemptions for the number of days an expat spends outside Singapore. The government says it is looking to reduce its reliance on expat workers of all skill levels.