This Week in Taxation: Channel Islands Issue Russia Sanctions Warning

Regulators in the Channel Islands have warned financial institutions to maintain UK sanctions against 18 specific Russian individuals and companies with stakes in those jurisdictions. This is in addition to hundreds of other people and companies hit by sanctions dating back to 2014.

The Crown Dependencies have always stressed that they will apply all UK sanctions, alongside EU and UN sanctions. However, the British government was criticized by the opposition that it was not going far enough in response to the invasion of Ukraine.

Low-tax jurisdictions such as Guernsey, the Isle of Man and Jersey have long been key offshore centers for businesses and individuals. After the collapse of the Soviet Union, Russian individuals and companies amassed a huge amount of wealth abroad.

A 2018 Global Witness report revealed that Russian oligarchs have an estimated £34 billion ($45.5 billion) held in UK tax havens. However, the wealth is not only held in the three Crown dependencies. The report found the British Virgin Islands (BVI) to be the second most popular destination for capital leaving Russia, just behind Cyprus.

The British government won the support of all three Crown dependencies and 14 overseas territories, including the BVI, to enforce its sanctions ahead of the invasion.

However, sanctions targeting specific individuals and companies are limited in scope. Additionally, entities in these jurisdictions are not easily traced back to their owners, so it is possible that Russian oligarchs and banks may be able to game the system. RTI will monitor tougher measures.

India’s Crypto Tax Policy Lacks ‘Nuance’

India’s digital asset tax announced in the 2022 budget provides certainty for market participants, but tax directors are asking for more clarity on the treatment of losses, as well as the treatment of withholding tax (TDS) and the definition virtual digital assets (VDAs). The tax framework could also impose unfair tax treatment on cryptocurrency investors.

“A framework that taxes any asset at 30%, prohibits any deduction outside of acquisition cost, and prohibits offsetting or carrying forward of losses is not designed to provide fair treatment to players in this segment,” Yeesha said. Shriyan, researcher at the Vidhi Center for Legal Policy.

“It will affect people engaged in short-term trading reserving small percentages of profits, arbitrage traders, developers and freelancers working for overseas employers who received their salaries in cryptocurrency will also be affected,” he said. she added.

This year’s budget – announced on February 1 by Finance Minister Nirmala Sitharaman – introduced key tax reforms, including the taxation of digital assets such as non-fungible tokens (NFTs) and crypto.

As part of the change, gains obtained from the transfer of these assets will be taxed at 30% with a withholding tax of 1% above the monetary threshold. No deduction will be allowed and investors suffering a loss will not be able to offset it with other income.

The tax on income from the disposal of digital assets will come into force on July 1. The withholding tax regime will be effective from July 1. However, tax directors have argued that the reform could present a significant disadvantage to taxpayers despite more certainty.

Read the full article here

MP Margaret Hodge calls for decisive action to tackle illicit funds in the UK

The UK already has Magnitsky-type sanctions regimes in place, including the Sanctions and Anti-Money Laundering Bill, which aimed to ensure compliance with international obligations. However, the British Overseas Territories (BOTs) have not yet implemented the legislation, which would allow them to obtain more information about registered companies.

Although the UK has approved a number of financial crime bills, it is still considered a top hub for money launderers due to lack of enforcement and resources. given to regulatory bodies. MP Hodge recounts RTI transparency needs to be enhanced to prevent illicit funds from entering the UK.

In January, the British government denied accusations that it had halted the implementation of the Economic Crime Bill following criticism of the bill by MPs. This refusal was good news for supporters of stricter anti-money laundering regulations. Yet, the Register of Beneficial Owners (RBO) has still not been adopted by BOTs and Crown Dependencies, and there remains a critical loophole that needs to be closed.

A House of Commons Committee Report, published on February 2, claimed that economic crime was not a priority for law enforcement. The report also cites disappointment that the Foreign Entity Registration Bill has not been introduced, more than five years after it was promised by the government.

RTILeanna Reeves sat down with MP Margaret Hodge to discuss how the UK must act against the growing flow of dirty money entering the country’s economy.

Read the full article here

Next week at ITR

RTI review EU policy on non-cooperative tax jurisdictions. The European Union has begun screening several jurisdictions for its black and gray lists, including Israel, Russia and Vietnam.

Israel and Vietnam are reviewing how they will comply with the Inclusive Framework’s recommendations from October 2021. Meanwhile, Russia is being reviewed in its special administrative regions.

At the same time, RTI will continue its Global Tax 50 series with a portrait of German Chancellor Olaf Scholz. The Social Democratic Party (SPD) is in power for the first time in almost two decades. Germany is on the verge of adopting a digital tax reform and increasing carbon taxes, but the energy crisis is a difficult obstacle.

Readers can expect these stories and more next week. Don’t miss the main developments. Sign up for a free trial for RTI.

The content of this site is intended for financial institutions, professional investors and their professional advisers. It is only for information. Please read our terms and conditions and privacy policy before using the site. All material is subject to strictly enforced copyright laws.

© 2021 Euromoney Institutional Investor PLC. For help, please see our FAQ.

About Lillian Coomer

Check Also

City Overview: Regional REIT; Supreme; Kape Technologies

Real estate company Regional REIT today announced better interim revenue and earnings for the six …