Алёна Выдыш, Author at Finance Business Service

The Fifth Anti-Money Laundering Directive Has Been Adopted

Published: Olena Vydysh | 17/05/2018 | blog

After the approval of the agreed text by the Parliament on April 19, 2018, the European Council adopted a Directive on 14 May, 2018, regulating the European rules aimed at preventing money laundering and terrorism funding. These rules are the fifth in a series and the latest update of the European Anti-Money Laundering Directive, for which they have received the name 5AMLD. 5AMLD is aimed at improving the security in Europe by stopping the financing of criminal activities without preventing the normal functioning of payment systems. It is partly a response to the terrorist attacks in Europe in 2016 and introduces such major changes into the directive 2015/849: verification of the client for virtual currencies; public access to information about the real owners of companies; strengthening of transaction checks with the participation of third countries with a high level of risk; cooperation between financial intelligence units; reduction of the threshold for identification of owners of prepaid cards from 250 to 150 Euro; extension of the Directive to all tax advisers, agents, dealers, as well as suppliers of electronic wallets and cryptocurrency...

Offshore for Trading Activities: Is It Necessary

Published: Olena Vydysh | 16/05/2018 | blog

Until recently, offshore companies have been actively used by the Ukrainian entrepreneurs in international trade to reduce the tax burden and keep business confidentiality. We will consider in this blog whether the situation has changed in the conditions of global deoffshorization, and in particular, tightening of the Ukrainian legislation. The field of trade has always been the simplest and most popular for offshore applications. One of the main goals of using offshore schemes in export-import transactions was to regulate the customs value of the goods, and, accordingly, the company’s trading profits. Offshore companies in such schemes were used as intermediaries between the seller and the buyer for the understatement of the value of goods during the export and overstatement - upon import. However, the process of deoffshorization has reached our country. The provisions for the control of transfer pricing started working in the Ukrainian legislation. The Cabinet of Ministers has approved and periodically reviews the list of the countries with preferential taxation (it includes both classic offshores and jurisdictions, the income tax rate for the companies which have 5 or more...

How the rules for LP of England, Wales, Scotland and Northern Ireland will change

Published: Olena Vydysh | 08/05/2018 | blog

Essence of the scandal On April 29, a publication on the use of thousands of SLP in criminal activities appeared in the British newspaper The Times. According to the British officials, SLP was used through shills in complex schemes for money laundering. In particular, by means of the scheme, including more than 100 Scottish Limited Partnerships, about 58 billion pounds sterling, accumulated illegally, was withdrawn from Russia. More than 20 SLP was used in a fraudulent scheme, by means of which about 742 billion pounds sterling was withdrawn from Moldova. There is also a link between SLP and organized criminal groups from Eastern Europe for the purpose of conducting weapon delivery deals. All this became a reason for the announcement of the beginning of struggle against fictitious companies by Britain. And on the next day, April 30, a consultative document was posted on the official website of the British government with a number of proposals on reforming the legislation on limited partnerships to reduce the risks of their use in criminal schemes. Importance of Limited Partnerships It is worth noting that a Limited Partnership (LP), including its Scottish form, continues to...

Сentral database of beneficial owners of companies is created on the BVI

Published: Olena Vydysh | 20/04/2018 | blog

Following the introduction of a public register of persons with significant control for the British companies and LLP (from April 2016), as well as for the Scottish partnerships (since June 2017), some British dependent territories, under pressure from the UK itself, have created similar registers / databases. However, these centralized registers will be closed, and the access to data from them will be available only to the British competent authorities and only upon request. This decision has become a compromise after many years of negotiations and frictions, since the overseas territories, although partially subject to the law of Great Britain, are still self-regulatory. On the one hand, access to these closed registers / databases will enable the UK law enforcement agencies to monitor tax evasion, as well as terrorists and criminals hiding behind the anonymous companies. On the other hand, this will put an end to the requirements for the introduction of open registers of beneficiaries in the countries partially controlled by Great Britain. Among such states are the Cayman Islands, the British Virgin Islands, the Isle of Man, Bermuda, Guernsey, Jersey, and others. As the British...

VAT Regime for Dividends in Cyprus

Published: Olena Vydysh | 13/04/2018 | blog

The Cyprus holding companies are widely used in the context of international business structuring for the optimization of the channels of incoming and outgoing investment in/from the countries that have signed an agreement with Cyprus on avoidance of double taxation. Recently, the Tax Department has published a guide to VAT accounting for holding companies, which is designed to provide clarity with respect to the circumstances under which the Cyprus holding companies can receive taxable income. Definition of taxable activities The common position and practice regarding the regime for levying VAT on dividends remain unchanged. The simple acquisition and ownership of shares in other companies by a Cypriot company does not constitute a taxable business activity in the sense of exploiting assets for income generation. The reason for this approach is that the dividends received from such ownership of shares are considered to arise solely at the expense of ownership of shares, rather than from the form of business activity carried out for the purpose of income generation. Consequently, an enterprise that simply owns shares or a similar form of a stake in another organization is not...

Implications of Brexit for Customs and VAT Rules

Published: Olena Vydysh | 19/03/2018 | blog

In a press release of January 29, 2018, the Council of Europe announced the second set of additional directives on the negotiations detailing the position of the EU-27 (27 EU Members without the UK) regarding the transition period with respect to Brexit. These directives give the Commission the authority to initiate discussions with the UK on the terms of Brexit and establish a transition period, no longer than until December 31, 2020. During the transition period in the UK, full and constant application of the EU legislation is provided. However, the state will no longer participate in the EU administration and the decision-making process. On January 30, 2018, the EU Commission published a document warning the companies of the key challenges in the customs and VAT that they will have to be overcome when the United Kingdom is not a Member of the EU. If no other transition period is agreed between the EU and the UK, the European Customs and VAT regulations in the UK will no longer apply from March 30, 2019, as the UK officially announced its intention to leave the EU on March 29, 2017. This document provides a brief overview of the customs and VAT implications that will arise...

Reforming VAT Rules for Online Sales in the EU

Published: Olena Vydysh | 02/03/2018 | blog

On December 5, 2017, the European Council adopted amendments to the legislation regulating VAT rules for online sales of goods and services in Europe, developed by the European Commission a year ago. These legislative changes were adopted within the framework of the strategy of “single digital market” and aimed at simplification of the payment of VAT on purchases of goods and services on the Internet by the European consumers. The changes assume: simplification of the current Mini One Stop Shop (MOSS) mode for cross-border telecommunications, broadcasting and electronic services transition to taxation at the place of destination (location of the recipient) and simplified reporting through MOSS for remote sales of goods introduction of an obligation to pay VAT for electronic interfaces (for example, platforms) that facilitates the delivery of low-value goods imported or sold in the EU by the suppliers from outside the EU Since the new legislation consists of a two-tiered package of measures, it comes into force in two phases: in 2019 and 2021. From 2019, the changes will touch the MOSS system. There is an exception that allows micro-enterprises of the EU to pay for...

European VAT on Provision of Electronic, Telecommunications Services, as well as Television and Radio Broadcasting Services

Published: Olena Vydysh | 19/02/2018 | blog

The format and methods of delivery of many goods refer them to the category of services, especially if they are transmitted over the Internet, such as e-books, music downloads, streaming of content. The regime of VAT for this particular subcategory of services provided electronically has undergone significant changes lately. In this blog, we will consider the requirements of the current European legislation, and we will try to cover the coming changes in this area in the next ones. In accordance with the European legislation, came into effect from January 1, 2015, telecommunications, television and radio broadcasting, as well as electronic services, are subject to VAT at the location of the client, whether it is a business or a consumer, located in or outside the EU . However, in order to ensure the correct taxation of these services, the supplier needs to determine the status of his client (whether he is a VAT payer), as well as his location. The easiest and most reliable way to define whether a customer is a business or a consumer is to ask him for a VAT number. Suppliers can check the VAT numbers of their customers using the website of the VAT Information Exchange System...

Verkhovna Rada Adopted the Law “On Limited Liability Companies and Additional Liability Companies”

Published: Olena Vydysh | 14/02/2018 | news

The Verkhovna Rada supported on second reading and in general the law “On Limited Liability Companies and Additional Liability Companies” (No. 4666) with technical and legal amendments. According to the Interfax-Ukraine Agency, 285 people’s deputies voted for the document. As the Chairman of the Verkhovna Rada Committee on Economic Policy Andrey Ivanchuk (the fraction “People’s Front”) has noted, presenting the law in the parliament, now this issue is regulated by the legislation adopted back in 1991. At the same time, according to the words of the official, limited liability company is the most popular type of Ukrainian companies, and today there are more than half a million of them. Andrey Ivanchuk also added that regarding the law No. 4666, they received 503 amendments on second reading, 360 of which were taken into account. The law provides that the value of the LLC’s share is established as of the day before the meeting of the LLC members, at which the decision to exclude the member from the LLC was made. The transitional provisions of the document also contain the provisions for the compulsory acquisition of a share by a...

Hong Kong Intends to Join the OECD’s Multilateral Competent Authority Agreement

Published: Olena Vydysh | 09/02/2018 | news

On February 2, 2018, the Hong Kong Special Administrative Region officially formalized the process of ratifying the OECD’s Multilateral Competent Authority Agreement (MCAA). That means that the jurisdiction will join soon the existing multilateral network of data exchange between the tax authorities of many countries and territories around the world. The Hong Kong Tax and Fees Department introduced the Ordinance on Automatic Exchange of Information on Financial Accounts (AEOI), which will optimize the process of obtaining information by the countries with which the jurisdiction agrees to exchange. This refers to the exchange both under the Common Reporting Standard (CRS) and the intercountry reporting exchange under the BEPS Plan. After joining of Hong Kong the Multilateral Agreement, the authorities of the country will be able to pass a rather formal procedure for finalizing the relations with other participants through the OECD secretariat. If we compare this process with the conclusion of separate bilateral agreements with a number of the countries, it is much faster and easier. It is important to note that until the end of this year, the old (bilateral) rules for...

Author: Алёна Выдыш