News Review – 18 January
Despite economic predictions casting gloomy shadows on 2012, investors shrugged off S&P’s latest debt downgrades. France and Italy were amongst the countries whose ratings were slashed, but this did not do much to trouble markets. Indeed, France saw its CAC rise 0.9%, while Germany’s DAX rose 1.3% to close at 6,220.01.
In Singapore, strong year-on-year retail growth sales data in November saw markets make positive moves, despite the fact that growth did not meet expectations. Read more on Channel News Asia.
Much of the good news is due to the attention investors are paying to Greece’s debt restructuring. The country’s government is currently in talks with private creditors over potential write offs to Greek debt. The deal, aimed to swap current debt for new, lower obligations are part of the country’s current restructuring efforts. The deal is important as Greece’s seventh tranche of funds are dependant its success. Visit abcnews.com to learn more.
In other news, the war against illegitimate tax havens has reached new heights as the head of Britain’s Labour party, David Miliband, called for all tax loopholes to be closed. The Australian Taxation Office is also in the news, reporting that it would seek out tax evaders as the Australian government looks to recover growing amounts of tax debt. Previous calls over the last 10 years have revealed in excess of AUS$1 billion in withheld assets. These calls come on the heels of similar sentiments voiced last week by the US IRS. Such efforts have placed increasing pressure on governments around the world to co-operate in reigning in fraudulent assets. See relevant article in the Australian regarding this.
This is not the first fight against tax evasion waged by the UK and Australia governments. Neither are the initiatives by the OECD and the US tax department aimed at those using offshore banking and offshore companies as a means of engaging in illegal activities something new. Nevertheless, as we have outlined in other articles, the practice of setting up offshore bank accounts and offshore company registration is not illegal, if structured properly.
And finally, Hong Kong is still hailed as the world’s freest economy according to the latest edition of the Heritage Foundation’s doing business survey. The research praised the former British colony for handing excess tax revenue back to its citizens in the form of a rebate. Singapore was placed second on the list, while Australia, New Zealand and Switzerland rounded out the top five.
Hong Kong, however, continues to see property prices sliding. This week government officials withdrew a tender for a property development and also received less than the expected amount during a property auction. Rumors are abound that property prices will continue to drop, following the trend since 2009. Analysts cite increased borrowing costs and higher taxes as well as government land auctions for the drop in demand.
More information about offshore incorporation and offshore banking can be found on Healy Consultants website. Or send us an email with some details about your business and investments to see how our firm can assist.
Healy Consultants blog
The Fight Against Improper Use Of Offshore Banking
The United States Internal Revenue Service (IRS) is again starting a ‘voluntary disclosure program’ intended to reveal hidden offshore bank accounts and assets. Those who chose to participate in the program will be asked to pay as much as 27.5% in taxes. Interesting that the tax rate has increased from 22.5% in 2009 to 25% in 2011 and now the 27.5%.
On the previous occasions, the program yielded US$3.9 billion and US$1 billion, respectively, with more than 33,000 disclosures being made.
The program is part of the IRS’s ongoing efforts to reduce and prevent tax evasion. The government agency has also prosecuted clients of banks and financial institutions such as UBS and HSBC, and charged bankers and advisors who helped clients conceal their assets.
This program of fighting tax evasion is not new and is also a goal of the Organisation for Economic Cooperation and Development (OECD). The OECD promotes policies aimed at being universally recognized and implemented globally and hence contribute to improvements in fairness and social wellbeing of people around the world.
One such policy is related to the disclosure of financial and bank account information. The OECD has been successful in encouraging jurisdictions around the world to agree to implement the internationally recognized guidelines for disclosure of information related to financial accounts. Due to their efforts, there are now no jurisdictions on the OECD ‘black list’ that once included a number of traditional tax haven markets.
Despite the publicity gained through such initiatives by the OECD and the US government, illegal activity via the use of offshore banking and offshore companies is few and far between. The practice of setting up offshore bank accounts and offshore company registration is not illegal. If structured properly and all laws of the home jurisdiction as well as the jurisdiction where the account/company is set up are followed, offshore investment strategies can be an effective way to grow personal assets and expand business operations.
More information about offshore incorporation and offshore banking can be found on Healy Consultants website. Or send us an email with some details about your business and investments to see how our firm can assist.
Healy Consultants blog
News Review – 5 January
Ireland hits 2011 budget target
Good news for Ireland as the EU/IMF praised the nation for reducing its budget targets despite a drop in revenues generated from sales tax.
Fiscal targets were met as the government reigned in expenditures, which dropped 1% below the budget.
Overall, the government’s budget shortfall actually increased to 24.9 billion Euros from 18.7 billion, but this was largely due to a 11 billion capital injection intended to boost a sagging domestic economy.
The IMF dictates that Ireland ought to shrink its deficit to 8.6% of GDP this year, but this is expected to be a challenge given the prospect of a looming European recession. Read more about Ireland’s budget results on reuters.com
While Ireland will face the challenges that the rest of the European region will face, this jurisdiction has some advantages for entrepreneurs wanting to set up a company in a tax efficient jurisdiction within Europe. Ireland has one of the lowest corporate tax rates in the European Union (EU) at 12.5%. There are also tax exemptions based on meeting certain criteria.
Read more about the advantages of Ireland company formation
Healy Consultants blog
News Review – 4 January
Japan, China Deepen Financial Ties
From WSJ.com
China and Japan, the world’s second and third largest economies, recently introduced a series of financial measures to strengthen economic and political ties.
The initiatives, which include allowing Japanese government backed entities to sell bonds in China and allowing companies to convert yen into yuan without the use of an intermediary currency, promise to help the Chinese in their bid to turn the yuan into international currency, and aid Japanese companies looking to do business in china. The agreement also eases political tensions that gripped the two nations as early as last year.
The measures, however, remain symbolic for the time being with no agreed timetable for implementation.
Read more of the article here - WSJ.com
Office Rents in Singapore’s Raffles Place Flat on Eurozone Concerns
From Biz Daily
Office rents in Singapore’s prime business district of Raffles Place remained flat (S$9.80 per square foot per month) over the last quarter of 2011, despite being up 3.3% and 5.4% over the first and second quarters.
Analysts agree that much of this resulted from an increase in the supply and a decline in demand for office spaces in the Singapore Marina Bay area.
Read more of the article here – Biz Daily
India's Slowing Growth Will Test Banks' Resilience
From WSJ.com
India’s slowing growth, prompted by a slump in demand from Europe and a slow recovery in the United Stated, could test local banks in 2012.
After the peak of the financial crisis in 2009, Indian banks loaned millions to already over-leveraged companies. However, a drop in output and revenue, as predicted in the coming year, should reduce the ability for companies to repay the debts they have accumulated, thus jeopardizing the position of many lenders around the country.
Read more of the article here - WSJ.com
Asian Stocks Decline as Euro Weakens on Growth, Europe Concern
From businessweek.com
Stocks across Asian markets have declined on concerns that the European debt crisis will slow global economic recovery.
Stock and commodity indexes had the worst yearly returns since 2008.
South Korea’s export growth is predicted to slow down to 6.7% from 19.6%, while Singapore’s GDP did not meet government forecasts.
Read more of the article here - businessweek.com
Healy Consultants blog
How Small Businesses Gain A Competitive Advantage With Outsourcing
If you own a small business, you know how difficult the task of organizing your company's day-to-day activities can be. Keeping on top of accounting, inventory management and the tasks that are required to keep your business afloat can be a daunting task. Outsourcing can be a huge benefit for small companies looking to focus on their core tasks.
First, we must establish the difference between outsourcing and offshoring. The word ‘outsourcing’ is looked down upon by many, its assumed meaning is that jobs are leaving the national economy and being exported to a foreign economy like India or Mexico. This actually describes offshore outsourcing or “offshoring.” There are many companies within the United States that will freelance or take on outsourced work.
You probably wouldn't let an accountant design your business' logo, just like you shouldn't expect someone with no accounting or inventory management experience to handle your books or manage your warehouse.
Outsourcing jobs will have a few direct benefits for your company. First, it will reduce your HR costs. Hiring and training a new employee is costly and there is always the chance that the employee will not meet your standards. Hiring a job like accounting out to another firm means you will not have to manage another employee and won't have to pay their salary and benefits.
If your firm is relatively new, it is important that you and your team are able to focus on your core tasks, such as attracting clients and delivering your goods and services. Outsourcing is a great way of guaranteeing that you will remain focused on the task at hand without being distracted by the day-to-day tasks like bookkeeping or tech support.
Large companies are able to utilize economies of scale to be more competitive than smaller companies. By outsourcing, small businesses can enjoy those same economies of scale and lower the costs that they end up passing on to consumers.
Once your firm becomes a Fortune 500 company, you can think about doing everything in-house. Until then, outsourcing is a great option.
Contributed by Brett Thorne, who writes about small business, new software, inventory management and time management.