For many years’ countries around the world have been engaging in the automatic exchange of information in order to tackle offshore tax evasion and other forms of non- compliance. After the OECD report to the G20 in Los Gabos CRS is widely practiced and is very effective tool to counter tax evasion and to increase voluntary tax compliance.
CRS can compare as FATCA of other countries than USA. For this reason if you are not USA citizen or you are not USA tax payer, offshore USA company ( ex-Delaware) will be very attractive. Please note that the Law is new to everyone and we do speculations to the Law. My decision was based on the table I state below.
How is work:
The reciprocal automatic exchange framework:
Which companies and What is Reportable:
For Cyprus Companies with bank accounts in Cyprus (reporting institution Cyprus Banks):
Companies with Active Income are NOT reportable. The definition of the active income has to do with regular business activities than the ones but not limited to Passive Incomes.
Companies with Passive Income are reportable. Passive Income are Dividends received, Bank Interest received, Rent Income Received, Royalties
From Wikipedia the definition of the Passive income is as follows:
Some examples of passive income are:
In Cyprus if the company has as business trading of shares and stocks then such income does not qualify as Passive. The same applies for companies that loan and receive loans. Also for companies that Royalties is the main income does not qualify as passive income.
Cyprus government amends the tax legislation in a way to attract International Businesses and High Net Worth individuals.
For Cyprus Companies
Summary of Changes
For Cyprus Companies
Introduction of National Interest Deduction (NID) or Equity.
With retrospective effect from 1 January 2015, Cyprus tax resident companies that create ‘’new equity’’ will be able to clearing NID of up to 80% of their taxable income reducing the overall effective tax rate to as low as 2.5% from 12.5% regular rate. The NID will remove any distortions between equity and debt financing by bringing equity and debt into acceptable levels of other Tax Jurisdiction Parties. For example in Russian tax authorities not accepting the concept of Back to back loan and tax request with holdings interest paid to Cyprus Company. The Russian Tax office will consider that CyCo is not the final receiver of the interest and not accept that interest paid applies based on DTT. NID is a good vehicle to escape for such structure and received the same advantage.
Cyprus introduced new rules on taxation of income from intangible assets which are commonly referred as “Intellectual Property (IP)”. These rules are effective as of 1 January 2012.
Cyprus as an EU Member State has domestic laws which govern IP and are based on English Law. Furthermore, any European Laws related to IP are applicable. Cyprus is signatory of various international conventions – such as the Paris Convention for the protection of Industrial Property – as it has ratified the Treaty and Regulations of the World Intellectuals Property Organization (WIPO), Trademark Law Treaty etc.
There are various ways that a non-Cypriot citizen can acquire Cyprus citizenship as per the new regulations that have been issued by the Council of Ministers on 19-3-14. A person, who meets, among others, one of the following economic criteria, either personally or through a company/ companies in which he/ she participates as a shareholder – proportionally based on the percentage of participation, or even as a high-ranking senior manager of a company/ companies that meets one of economic criteria, may apply for the acquisition of the Cypriot citizenship through Naturalization by exception.
At the end of each month the following payments must be made
As from January 2014 there are three major amendments to Social Insurance, Special Contribution Tax and VAT Law. More detailed the changes for each government sector are as below:
As of 1stof January 2014 the rates of Social Insurance for employees, employers and self-employees are increasing.
For employees and employers the rate of Social Insurance contributions is increasing by 2% and from 13.6% that was contributed from both parties equally until December 2013 (6.8% deducted from employee and 6.8% contributed from employer) the rate is modified to 15.6% (7.8% deducted from employee and 7.8% contributed from employer). The new rate is applicable until December 2018. Read more
As of 27th of December 2011 all Seychelles companies are required to keep proper accounting records:
In November 2012 the BVI enacted new record-keeping requirements for BVI Business Companies and Partnerships to comply with OECD recommendations. These new requirements are in addition to existing record-keeping obligations contained in the BVI Business Companies Act, 2004 (“BCA”) and effects ALL companiesalready registered under the BCA, as well as new companies.
BVI companies are now required to maintain and keep records and underlying documentation for a period of at least 5 years from the date of completion of the transaction or the termination of the business relationship to which they relate. Read more