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Corporate Services News

Chesterfield Group Corporate Newsletter November 2012


British Virgin Islands Business Companies Act Amendment
The BVI Business Companies (Amendment) Act 2012 and the BVI Business Companies Regulations 2012 were introduced to the BVI’s Parliament in May and June 2012 and have now come into effect as of 15 October 2012.

The Bill represents the first major review of the Act since its enactment in 2004. There have been a total of around 82 amendments made through the Act, the majority of which is merely correcting the Act after certain oversights have come to light, However there are also significant amendments as per market forces and industry feedback to make the BVI even more attractive for businesses and to resolve several issues which have become apparent through practice of the existing laws.

Some of the amendments that vary significantly from the previous laws include;
- It is now possible to register a company under a name that is similar to an existing company providing that both companies are affiliates
- New rules have been introduced regarding foreign character names on the registry
- The Act now allows for the reuse of names that were previously used
- If at any time the company does not have a registered agent this can be appointed by resolution of the members or directors
- The Act now allows for bulk changes should a registered office change its name or address whereas it has introduced a fee payable by the registered agent dependant on the amount of companies it manages so that it is significantly less than would be charged on a company by company basis.
- Whereas Listed Companies and Mutual Funds could not comply with all the previous record keeping requirements there has now been amendments that modify the record keeping for these.
- It has made some clarifications regarding the appointment of alternative directors
- There have been changes to the registration of charges which could previously be done by anyone authorized to act for the company, but now has to be a BVI Registered Agent or Legal Practitioner in the BVI
- The period for Strike Off has been reduced from 10 to 7 years
- There have been various amendments concerning segregated portfolios
- New laws have been introduced to enable the restoration of a dissolved company
- A membership can now be terminated if a member is absent from three consecutive meetings without a valid excuse
- It now allows the Registrar to establish systems to enable electronic filing of documents and issuing of documentation in electronic form
- The Registrar may now refuse to issue a certificate of Goodstanding if it is not in the public interest to do so
The British Virgin Islands is obviously striving to keep its position as possibly the most popular choice for offshore registration by ensuring that through review of existing laws it can remedy any shortcomings.

Mexico Sign Tax Treaty with Hong Kong

On the 18 June 2012 Mexico became the first North American country to sign a tax treaty with Hong Kong.

This has allowed for reduced rates of withholding tax on payments of dividends. The withholding rate for both countries on payment of dividends being 0% and Mexico's withholding tax for Hong Kong residents receiving interest from Mexico will be capped at 10% with royalties also set at 10%. This is significantly lower than the previous rates which varied from 4.9%-28% for interest and 25%-40% for royalties.

It should be noted that 0% on the interest is applicable only to financial establishments or Government bodies of Hong Kong, whilst 4.9% is applicable only for banks. All other establishments will be at 10% interest.

These provisions will come into force in Hong Kong on or after 1 April 2013 for an assessment year.
This makes the 25th income tax treaty for Hong Kong.

Unexpected drop in Tax collections in the UK

A recent report by the Office for National Statistics showed that tax collections in the UK fell by 0.8% in the month of July when compared to 2011.
They have attributed this drop to a 19.3% reduction in collections of corporate income taxes.

When combined with a 5.1% increase in government spending this has lead to a budget shortfall of GBP 557 million for the month.
Traditionally July has always been a strong month for tax collections with this being only the third time since 1997 that there has not been a budgetary surplus for the month.
Unsurprisingly the government has been forced to increase borrowing.

The fall in tax collections has fed criticisms of the government’s policies with some claiming that they are actually slowing down economic growth in the country.
Corporation Tax and Bank Levy’s for August and September 2012 according to the HM Revenue and Customs monthly and Annual Historical record appear to be on par with 2011.

Seychelles successfully passes Phase 1 Peer Review

In January 2011 the Seychelles underwent a Phase 1 Peer review by the Global Forum who are responsible for in-depth monitoring and review of the standards of transparency and exchange of information for tax purposes. This review found the Seychelles wanting citing that their legislation does not allow for reliable accounting records or documentation, it also cited that their secrecy provision restricts the access to information held by offshore banks by competent authorities and recommended that the Seychelles ensure that these authorities have the power to obtain information subject to request from any bank within their territorial jurisdiction. It also referred to its treaties which did not allow for effective exchange of information.

Whilst this review did state that the Seychelles were in the process of substantial legislative changes to conform with the principals of transparency it was not favorable for the Seychelles.
However, the Global Forum have re-assessed the Seychelles following their legislative changes introduced in 2011 and the AML Regulations issued in April of this year and have concluded that the Seychelles have remedied all deficiencies highlighted in their previous report.

The Seychelles are now ready to move into Phase 2 and will be reviewed by the Global Forum for this in 2013.

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