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©2018 by Darwin Tax.

Offshore massive changes

Under the OECD’s Base Erosion and Profit Shifting (BEPS) dozens of tax haven jurisdictions had to revise their tax regimes.  Most of amended tax regimes remain beneficial for foreign investors, given the companies meet substance and other criteria.

Below we reviewed in short some popular offshore jurisdictions which face legislative changes in 2018-2019:

Belize

  • Belize IBCs are now allowed to do business with Belize residents, own land in Belize, hold shares in Belize domestic companies and can be owned by Belize residents;

  •  Belize IBCs are now within Belize’s domestic tax regime, subject to physical presence and tax residency status; the rate of tax under the domestic tax regime is tied to the type of income;

  • Physical presence and tax residency in Belize is optional, contingent upon evidence of economic substance elsewhere (except for IFSC licensed companies which must be physically present and tax resident in Belize), and physical presence requirements in Belize may be achieved via a managing agent;

  • Grandfathering provisions up to 30th June, 2021.

Seychelles

  • The Business Tax (Amendment) Act, 2018 will move Seychelles to a Territorial Tax System as of 1st January 2019.

  • The International Business Companies (Amendment) Act, 2018 will allow IBCs to carry on business in Seychelles. In line with amendments in the Business Tax Act, the tax exemption clause under the IBC Act has been removed. Only IBCs deriving “Assessable Income” in Seychelles will be required to submit Annual Returns and Audited Accounts (in line with the Companies Ordinance 1972) to the FSA.

  • The Companies (Special Licences) (Amendment) Act, 2018 removes the 1.5% business tax concession and withholding tax exemptions. CSLs incorporated on or before 16th October 2017 may still be able to enjoy these tax concessions and exemption until 30th June 2021 (other limitations apply).

St. Vincent & the Grenadines

  • Effective January 1, 2019 all new IBCs incorporated will be taxed at a rate of 30% on worldwide income (i.e. income earned in St. Vincent & the Grenadines and outside of St. Vincent & the Grenadines).   

  • IBCs incorporated prior to January 1, 2019 will continue to be tax exempt until 2021.

Commonwealth of Dominica

  • All International Business Companies (IBCs) registered before 31st December 2018 become liable to pay 30 % corporate tax on their worldwide income starting from 31st December 2021

  • All IBCs registered after 1st January 2019 become liable to pay 30% corporate tax from 31st December 2019

  • The laws as of 21st March 2019 do not require IBCs to maintain any substantial presence in Dominica

  • The laws do not stipulate at this time to file any annual return with the Inland Revenue Department (IRD) or the Registrar of Companies

  • We believe that by the end of 2019, there will be tabled more amendments to the laws, requiring IBCs to: 1) prepare an audited financial report irrespective of the size of balance sheet 2) submit Annual Accounts to the Registrar’s office 3) submit Annual Returns to the IRD and pay 30% corporate tax

British Virgin Islands

  • BVI companies have to meet substance requirement now.

  • Existing BVI companies must  comply with the economic substance requirements under the Act by 30 June 2019 and to meet reporting obligations under Beneficial Ownership Secure Search System Act by 30 June 2020.

  • New companies registered after 1 January 2019 must comply with the economic substance requirements immediately

Nevis

  • Nevis Business Corporations and Limited Liability Companies (LLCs) formed on or before 31 December 2018 will continue to benefit from the full tax exemptions until 30 June 2021, provided they do not carry out business in Nevis.

  • Engaging in one or more of the following activities will not be considered as carrying on business in Nevis: i) holding a bank account in Nevis; ii) signing directors’ resolutions in Nevis; iii) maintaining bookkeeping in Nevis; iv) having administrative office in Nevis and some other.

  • Further amendments for a local territorial tax regime are expected for corporations and LLCs established from 1 January 2019.

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