Developments in Key Locations
A lot has been happening in the offshore world of late. Discussed below are some of the key developments from some of the movers and shakers of the offshore dimension:
Luxembourg Passes New Law Establishing a Register of Beneficial Owners
The Luxembourg Government has enacted legislation that requires all entities registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés, or RCS), to obtain and hold information on their ultimate beneficial owner(s) and provide this information to a new register of beneficial owners that will be maintained by the RCS. The law enters into force on 1 March 2019 and affected entities will then have until 1 September 2019 to
comply with its requirements.
The following information on each beneficial owner of an entity will need to be held at its registered office and also submitted electronically to the register:
- first and last name
- date and place of birth
- country of residency
- private or professional address
- identification number and
- the nature and scope of the effective interest held
Luxembourg national authorities will have unrestricted access to the information held on register. Members of the public will also be able to access the information on the register, except for addresses and identification numbers, which will remain restricted to competent authorities. In exceptional circumstances, where granting access would expose the beneficial owner to a disproportionate risk (e.g. kidnapping) or where the beneficial owner is a minor or otherwise incapable, an entity or beneficial owner may request that their information on the register is not made accessible to the public.
Criminal fines for non-compliance, ranging from €1,250 to €1,250,000, can be imposed on both entities and their beneficial owners.
EU Warns Six States On ‘Harmful’ Tax Regimes
The EU Code of Conduct Group (Business Taxation) has notified authorities in Barbados, Belize, Curacao, Mauritius, Saint Lucia, and Seychelles that the group considers further changes are needed to their tax regimes to bring them into line with international standards.
The Code Group has released the content of letters sent to authorities in each territory, which explain the reasoning for challenging the entirety or elements of tax regimes in the territories. Many have already made substantial changes to their tax regimes, in response to EU concerns that very low or zero rates of tax are available to entities that lack economic substance in their territories, or that they offer preferential arrangements for offshore entities that are significantly more beneficial than for onshore structures.
Information held on the central database will not be public and will only be accessible by a small number of designated officials in a limited number of Isle of Man authorities and, on request to the island’s Financial Intelligence Unit, by the intelligence and law enforcement agencies of countries with which the Isle of Man has a beneficial ownership sharing agreement (currently only the UK).
A “beneficial owner” is defined as a natural person who ultimately owns or controls more than 25 percent of a legal entity, in whole or in part, through direct or indirect ownership or control of shares, voting rights, or other ownership interests in that entity, or who exercises control via other means.
The Act requires details of any registrable beneficial owner to be submitted electronically to the Isle of Man’s central database of beneficial ownership by an entity’s nominated officer or relevant corporate service provider. Access to the database is restricted.
Seychelles toes the line
The Seychelles International Business Companies Bill, 2016 was passed by the Legislature of Seychelles in October 2016 to reform and modernize Seychelles International Business companies law as per best international standards, FATF and OECD.
The International Business Companies Act, 2016 came into operation on 1st December 2016 to keep its Register of Directors at its Registered Office in Seychelles and file a copy of such register with the Registrar of Companies as well. Under the IBC Act, the new IBCs which incorporate on or after the Commencement Date are required to file a copy of the Register of Directors with the Registrar of Companies within 30 days of the appointment of the First Directors. Any subsequent change shall be filed with the Registrar within 30 days of the change. For the pre-existing companies incorporated prior to the Commencement Date, a copy of the Register of Directors shall be filed within 12 months of the Commencement Date, i.e. by 1 December 2017.
Except for listed IBCs and their subsidiaries, all IBCs are also required to keep a Beneficial Owners Register at its registered office address.
This is just the beginning and it is anticipated that to fall in line with the global trend to try and ensure 100% transparency, the age-old concept of offshore ‘secrecy’ will soon be a thing of the past. The rumblings across the offshore world are meant to create a tectonic shift in the way the world sees ‘tax havens’ and definitely pave the way for a brave new world where shady business dealings and opaque structures and holdings will be relegated to being just unproved urban legends.
(This article is compiled by Chaitanya G. Kirtikar, Senior Manager, Offshore and Free Zone Department)