Mossack Fonseca: Malta Refuses to Cede Tax Sovereignty

Mossack Fonseca - In response to the European Commission’s (EC) new anti-tax avoidance package that addresses base erosion and profit shifting (BEPS), Malta’s Finance Minister, Edward Scicluna, insists that his country will not cede tax sovereignty to the EC. Malta will resist any attempt by the EC to reduce sovereignty over its own fiscal affairs, he pledged.

BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.

In rebuttal to the EC’s anti-tax avoidance package, Minister Scicluna made the following points:

• Malta is not ready to accept any form of tax harmonisation or any changes to their tax system. He considers this a “red line” that no one will be allowed to cross.
• Malta condemns tax evasion, and is therefore ready to cooperate to reach an agreement that will enhance tax transparency and improve the exchange of tax-related information between EU member states.
• Malta’s relatively low taxation rates in and of themselves shouldn’t be considered an abusive, harmful or unjust practice―there is nothing wrong with better tax planning―which mustn’t be confused with tax evasion.
• Malta won’t be alone in its fight against proposed tax harmonisation―other European countries, including the United Kingdom, share a similar stance.

The Minister went on to say that he has already used the threat of a veto to force the EC to modify certain clauses within the BEPS proposal, including a phrase that proposes “a common but flexible approach”.

Mossack Fonseca on Mauritius: Exchange of Information Delayed 1 Year

A 15 January 2016 press release from the Mauritius Revenue Authority (MRA) announced the delay of the Organization for Economic Cooperation and Development’s (OECD) Common Reporting Standard (CRS) exchanges of information for tax purposes until September 2018. Originally, the exchanges were slated to begin in September 2017.

The MRA also confirmed that the requirement for Mauritian financial institutions to apply due diligence procedures to record the tax residence of clients opening new accounts will take effect from 1 January 2017. The CRS, unlike FATCA, requires information based upon tax residency, not citizenship.

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Mossack Fonseca: Switzerland to Sign Multilateral Pact on Multinationals

Mossack Fonseca - On January 20, 2016, the Swiss Federal Council approved the signing of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports.

Switzerland is to join several other states and territories who will sign the multilateral agreement in Paris on January 27, 2016, reports Taxnews.com.

The multilateral agreement sets out the conditions under which tax authorities will automatically exchange country-by-country (CbC) reports on multinationals in their respective territories. It is based on the Convention on Mutual Administrative Assistance in Tax Matters, which was approved by the Federal Assembly in December 2015.

The Ministry of Finance said: "The aim of country-by-country reports is to give an overview of multinationals' global allocation of income and taxes paid, together with other indicators on the location of economic activity within the group. Country-by-country reports will be exchanged automatically between the tax authorities of the countries where a group entity is present."

"The signing of the multilateral agreement leaves it to Switzerland to choose the countries with which it wishes to automatically exchange country-by-country reports. Switzerland will determine the countries in question at a later date."

The Federal Council is to launch a consultation on the multilateral agreement and the implementing act in the first half of 2016. They will go through the standard approval process before entering into force.

Mossack Fonseca: Brazil says beach apartments tied to corruption scheme

Beach-side apartments in Brazil may have been used as bribes and to launder money for members of the ruling Workers’ Party, police and prosecutors said on Wednesday after ordering six arrests and 15 search warrants.

In the latest phase of Brazil’s largest-ever corruption probe, investigators are looking into whether construction firm OAS SA used apartments in the Solaris complex in Guaruja as bribes in a corruption scheme involving state-run oil firm Petrobras.

Dozens of executives and politicians have been arrested or are under investigation on suspicion of overcharging Petroleo Brasileiro SA, as the company is formally known, and using part of the proceeds to bribe members of President Dilma Rousseff’s ruling coalition.

The apartments were held in the name of front companies, such as Murray Holdings LLC that was registered by Panama-based Mossack Group, prosecutors said at a news conference, adding Mossack has previously helped hide criminal activity offshore.

“There is real evidence of money laundering. We are looking principally at this time at the Vaccari family,” said prosecutor Carlos Fernando dos Santos Lima, referring to Joao Vaccari, the jailed former treasurer of the Workers’ Party.

Vaccari has been convicted and sentenced to just over 15 years in jail.

OAS declined to comment. Mossack Fonseca, a law firm, said in a statement it had been "unjustly and erroneously included in matters with which we have no involvement at all." The firm said it was not under investigation and had not been contacted by police or the judiciary.

Local paper O Globo said former President Luiz Inacio Lula da Silva also had an apartment held under another name in the complex. Lima did not confirm this.

"If there was an apartment that was in his name ... or someone in his family, we will investigate it like any other," Lima said. Police said all the apartments in the complex were under investigation.

A statement on the website for Lula's office said the former president repudiates attempts to link his name with the corruption scandal. The statement reiterated that Lula's family bought an option for an apartment in the complex but later decided not to go through with the purchase. Lula has previously threatened to prosecute journalists for smearing his name in connection with the Petrobras case.

Neither Lula nor Rousseff is under investigation, though Rousseff's approval rating has suffered from the accusations against her political party.

Police only gave the name of one person that had been arrested, publicist Nelci Warken.

Mossack Fonseca on Singapore Joins OECD Multilateral Tax Convention

On January 20, 2016, Singapore deposited with the Organization for Economic Cooperation and Development (OECD) its instrument of ratification for the Convention on Mutual Administrative Assistance in Tax Matters, reports Lowtax.net.

With this development, Singapore became the 93rd jurisdiction to join the pact, touted by the OECD as the world's leading instrument for boosting transparency and combating offshore tax evasion.

The Convention provides for all forms of administrative assistance in tax matters: exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations, and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights.

Ratifying the Convention will expand Singapore's network of partners for the exchange of information on request by 34 jurisdictions. This is part of a series of changes that Singapore has made in recent years to combat cross-border tax evasion, following Singapore's adoption of the internationally agreed standard for exchange of information on request in 2009, Singapore's Ministry of Finance said.

Minister for Finance, Heng Swee Keat, said: "Ratifying the Convention reflects Singapore's commitment to effective exchange of information based on international standards, but the standards can only work if all financial centres, such as Switzerland, Luxembourg, Singapore, and Hong Kong, move together. We will continue to work with our international partners to achieve this and prevent regulatory arbitrage."

The Convention was developed jointly by the OECD and the Council of Europe in 1988. It was amended in 2010 to respond to a call by the Group of Twenty (G-20) nations that it be aligned to the new international standard on the automatic exchange of information and that it be opened up to all countries.

The Convention is now seen as the instrument for swift implementation of the new Standard for Automatic Exchange of Financial Account Information in Tax Matters developed by the OECD. It will also be critical for the automatic exchange of country-by-country reports, proposed in the OECD's base erosion and profit shifting project.

Mossack Fonseca: Switzerland Agrees to AEOI with Five More Territories

Switzerland has signed joint declarations to automatically exchange tax information (AEOI) with Jersey, Guernsey, the Isle of Man, Iceland, and Norway, reports lowtax.net.

The Swiss Federal Council said that data collection will commence in 2017 and the first exchanges will take place in 2018. The exchanges will be based on the standards set out in the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA).

The bilateral declarations specify that the jurisdictions are satisfied with the confidentiality rules provided for in the other jurisdiction with regard to tax. The Council said that countries have also established regulatory procedures that allow taxpayers to regularize their tax affairs on favourable terms. The Council added that Iceland and Norway have reiterated their intention to hold talks on market access for Swiss financial services providers.

Switzerland's Federal Department of Finance will now hold consultations on the implementation of the declarations. The corresponding federal decrees will then be submitted to Parliament for approval.

Switzerland has signed a similar joint declaration with Australia, and an automatic exchange of information agreement has been concluded with the European Union.

Panama Jazz Festival 2016 on Mossack Fonseca

Mossack Fonseca apoyando al talento nacional mediante nuestro patrocinio a la Fundación Danilo Pérez, se hizo presente en el concierto de clausura de la semana del Panama Jazz Festival con un puesto en Ciudad del Saber.

Con cientos de visitas, nuestro “stand” fue todo un éxito. En el mismo ofreciamos a todos los clientes, amigos y familiares que se detenían para compartir con nosotros, tomarse un selfie y disfrutar de una botella de agua, bebidas rehidratantes o incluso llevarse uno de los exclusivos abanicos personalizados con nuestro logo para combatir el radiante sol de verano. Nuestros amigos de MIPS tambíen dijeron presente en este evento con sus familias.
Agradecemos en especial a todos los voluntarios que con su esfuerzo hicieron esto posible.