This year results: recent numbers and facts.
December 22th, 2009
Midland Consult is developing
The head of Midland Consult Maxim Stepanov has opened a new office – this time in Hong Kong. According to the Head of this international holding that specializes in consulting, the new office in Hong Kong has become a very important step in the company’s development. Apart from Europe and America, Midland Consult has expanded to Asia. In the middle of December at the presentation of Hong Kong office Maxim Stepanov said that it took him a long time to choose office premises and finally he found a modern office in a splendid skyscraper in Hong Kong historical centre, which is perfectly preserved and illuminated with gas lights of 1875. It’s very important for the work of the representative office that Hong Kong governmental institutions are situated in a 50 meters’ distance from it. Sometime Hong Kong with its two-stored red buses and other traits reminds old England. A plenty of skyscrapers make Hong Kong look like New York and other world business centers. The Head of Midland Consult is sure that the new Hong Kong office will allow the company to offer new services in a high, modern and competitive level. Hong Kong companies unlike many jurisdictions have no tax on income gained abroad. There are also other advantages in working with this jurisdiction.
Hong Kong and Russia
According to the Russian Federation Central Bank, in the third quarter of this year Hong Kong is the second among other far-abroad countries in money transfer from Russia by non-residents. In the general list of countries the former British colony in China is the fifth. From July to September the leader of this list was China where non-residents transferred $712 million. It is followed by Uzbekistan ($373 million), Tajikistan ($313 million) and Ukraine ($223 million). $180 million were transferred to Hong Kong. The Netherlands ($105 million) and Latvia ($22 million) are the first in money transfer made to Russia by natural persons. Non-residents have actively transferred money to Russia from Switzerland ($35 million) and Cyprus ($ 28 million). It is reported that in the first quarter of this year Hong Kong wasn’t in the list of the countries whose operations are important for analyzing cross-board operations made by natural persons. But later the interest to Hong Kong has increased due to the pressure on offshore countries included in “grey” and “black” lists of Organization for Economic Cooperation and Development. Many of these countries have signed agreements on information exchange with other countries. Hong Kong being under the patronage of China, doesn’t hurry to do it.
Some countries insist on bank information disclosure
Ministry of Economy and Ministry of Finance are preparing amendments to the law that would allow using the Russian treaty with the other countries on avoidance of double taxation more electively.
It is supposed that only the companies whose beneficiaries are not Russians would use the right of paying taxes in a country with lower taxation.
According to the Russian federal tax authorities, nowadays Russia has treaties on avoidance of double taxation with 67 far-abroad countries and 9 CIS-countries. If the company is situated in one country and the profit is gained in another, according to the law the company should pay taxes to both countries. Treaty on the avoidance of double taxation allows settling the country of tax payment. Usually the treaty foresees that foreign companies pay taxes in the country where they gain profit and if they have permanent representative offices there. The Russian Federation government wants to limit the use of treaties on the avoidance of double taxation in order to eliminate offshore schemes of tax evasion. The deputy minister of Economy Stanislav Voskresenskij declared that on the first of December. According to the officials, the treaties on avoidance of double taxation shouldn’t work if the beneficiary and the owner of the foreign company are Russians. For this aim the officials want to give a legal definition of “beneficiary”. “In all the countries the Treaty on avoidance of double taxation works only if the beneficiary is not the resident of the country with which the agreement was signed”, said Stanislav Voskresenskij. He explained that unlike the international practice such treaties work in Russia even if a Cyprus company has a Russian beneficiary. “In other countries it doesn’t work, it’s the final beneficiary who is taken into consideration”, he added. At the same time the officials say that there are many official opportunities for tax evasion and it’s important to establish reasonable rules and tariffs in order people pay taxes.
In Great Britain audit and tax paying will be made online
From the 1-st of April, 2010 all GB companies that registered as tax payers and whose annual turnover is more than 100 thousand pounds will make audit and pay taxes only online. In the eve of these novelties GB tax authorities have modernized the electronic system servise for tax payers.
Latin America will drop the dollare
The Latin American countries will not use the dollar for reciprocal payments in external commerce. They will deny the dollar from the 1st of January, 2010. The State Council Chairman of Cuba Raul Castro has declared that opening the alliance summit “Bolivarian alternative for the peoples of our America”. According to Castro, the countries of Bolivarian Alliance will be able to resist crisis uniting efforts and using complementarity of economies. Raul Castro was skeptic about the announcement on the end of the economic crisis. “Many people are unreasonably optimistic about the end of the recession. The only thing we may say without any doubt is that the destructive consequences of the crisis will be continuing for a long time”, he said. According to the present-day Cuban leader, the number of people who will lose jobs this year will decrease 50 million and the number of those who live in beggary “will reach an alarming number of 300 million”.
The countries of the alliance plan to finance commerce and joint economic projects through the bank ALBA established in 2007. The first transaction in a new currency has already been signed – on the 12th of December Cuba and Venezuela have signed an agreement on buying of rice in the sucre – the new Latin-American currency which is to replace the dollar.
Bolivia, Venezuela, Honduras, Cuba, Nicaragua, Ecuador and Caribbean island states – Antigua and Barbuda, San-Vincent and Grenadines and the Common wealth of Dominica are the members of political-economic alliance ALBA.
The Cyprus real estate market is on the eve of the revival
For the first time in many years the foreigners have yielded the palm to the Cyprians who made a start of the real estate market revival on this island in autumn. From January to September the foreigners bought 1363 real estate objects, and during the same period of the last year 5622 objects. It makes a more that 4-times decrease. In general, the Cyprian real estate prices have decreased very little in comparison with the competitors’ real estate. The decrease was of 10-15%. The analysts don’t expect that there would be another radical price decrease. The most probable script is the following: traditional reduction of prices in December-January, short period of stabilization and then by the spring 2010 – the beginning of a new increase.
According to the recent statistics, one of six persons living in Cyprus is a foreigner. In comparative data of Eurostat Cyprus is the fourth in the list of the countries with high number of foreigners. The first are Luxembourg, Latvia and Estonia. In 2008 the number of foreigners living in Cyprus has reached 125 thousand that makes 12.5% of all the population.
China is open for foreign business
China believes in coming of rich and progressive foreigners. Therefore, from March 2010 foreign companies and natural persons will be able to found LLP. At present moment only Chinese investors may found LLPs and use tax privileges granted by the government to this form of the company. According to the new governmental act, from March, 2010 a LLP in China may be registered by two or more foreigners (juridical or natural persons) or may be registered as a joint companies of foreign and Chinese founders. Such companies’ registration will be made by registers without any necessity of confirmation from the part of Ministry of Commerce. The founders of the company may be juridical and natural persons from Hong Kong, Macao and Taiwan. The Chinese government has announced that the changes will be introduced to attract foreign investors with high-tech and managing experience to the service industry.
China also successfully resolves the problem of gas supplies. While Russian Gazprom was acting slowly, the Chinese Bank of Development gave credit to Turkmenistan that built a 4500 km pipeline through the territory of China to Xinjiang-Uygur Autonomous District. The new pipeline will in prospective allow supplying at least 30 billion cubic meters of Turkmen gas to China. Uzbekistan and Kazakhstan may supply 10 billion cubic meters after the introduction of the second web of pipelines planned for the end of the following year. It’s the first time when such a significant gas flow will go from Central Asia in circumvention of Russia. According to Turkmen President Gurbanguly Berdymukhamedov, the new pipeline has not only commercial and economic but also political significance. It’s a new page in the history of relations between china and Central Asian countries. And Turkmenistan which is the second producer of gas (after Russia) among the CIS countries is increasing the number of contracts with foreign companies on gas explorations.
Citizens of Russia are willing to receive «grey» salaries
For eight safe years the Russian authorities haven’t managed to achieve legalization of salaries or at least negative atitude to nontaxable payments in envelopes. About 45 % of Russians will not refuse the “grey” salary when getting employed – according to a poll conducted by one of the research centers. Experts explain the loyal attitude of Russians to such salary schemes not only by crisis consequences, but also by general injustice of the tax systems .
Despite hypothetical danger of criminal prosecution for tax legislation infringements, almost half of Russians – about 45 % – agree to work for illegal salary without paying income tax and insurance premiums to the pension system. These results have been published in December. Earlier mass-media published an information that since 2010 the Russian internal revenue services will call average employees to the so-called salary commissions. Before such practice referred only to employers who paid taxes from suspiciously low salaries.
Citizens who are loyal to “grey” salaries refer to the crisis and difficulty of searching for a job with completely transparent accounts.
Only 23 % of Russians are firm in refusing illegal salary schemes. About one third of Russians (32 %) hesitate with the answer. The deputy director of Institute of economic and the international relations (IMEMO) of the Russian Academy of Sciences Mr. Evgeniy Gontmakher explains the survivability of “grey” schemes by a difficult situation not only from the point of view of the employment, but also from the point of view of profitability of business. «Probably these 45 % are employed in small and medium business for whom the tax dodging is a question of a survival of the enterprise», –the economist notes.
Danes require corporate tax decrease
It is obvious that Danes are analyzing plans of Germany to lower corporate tax from 30 % to 15 %. It did not remain unnoticed in Copenhagen. The confederation of manufacturers of Denmark has required the government a decrease of 25 % of corporate tax. Such step is explained by the danger of tax competitiveness from Germany which plans to lower the income tax of the companies twice. In this case, there is a high probability that many Danish companies charged with higher corporate tax and new requirements on ecology, will prefer to transfer the business to the neighbor Germany.
The ruble becomes converted
Bonds nominated in rubles appeared on the European capital market . They were issued in the end of the past December week by two foreign financial institutions - the European bank for Reconstruction and Development and German state agency KfW. Though the total sum of the sold securities does not exceed 4 billion rubles, analysts mark the growing authority of the Russian currency.
Australia absolves offshore sins
In Australia tax amnesty is declared. The country internal revenue service declared tax amnesty for citizens who receive incomes, but regularly forget to declare them. Now, since November, 30th 2009 till June, 30th 2010, the Australian tax bearers, having paid only 10 % of the fine, can facilitate conscience and prevent risk of prosecution for tax evasion by the authorities.
Bahrain leads the list of the best places on the planet
A research conducted by HSBC bank has absolutely unexpectedly introduced Bahrain as a leader of the list of the countries most convenient to change the residence to. The rating made by HSBC bank ranges the countries depending on opinion of the respondents which estimate the possibility of adapting to the social and cultural environment of each particular jurisdiction, and also possibilities of employment and business management. In 2008 the first place on these indicators belonged to Canada which this year has gone to the second place.
According to the survey results in 2009 first ten countries convenient for expats, except Bahrain and Canada, included Australia, Thailand, Malaysia, the republic of South Africa, Hong Kong, Spain, Singapore and the USA.
How many banks are necessary?
There can be only 500 banks in Russia provided there is financial stability - claimed the Vic- Premier & Minister of Finance of the country Alexey Kudrin. Now in Russia, according to the Central Bank, there are hardly more than thousand credit organizations. At the same time, according to Kudrin, it is necessary to increase reliability of the Russian financial organizations. “I am convinced that crisis was the last straw which has shown that less banks are needed, but they should be more reliable, exposed to better supervision ", - the Minister of Finance has declared. Kudrin has added that now financial stability in the country is slowly restoring. Therefore it is necessary to toughen minimum capital requirements for the banks. The Minister of Finance already said that it is planned to increase minimal requirements to the capital up to billion rubles by beginning of December. Since January, 1st, 2010 the minimum capital for banks is established in 90 million rubles, since 2012 - 180 million rubles. Meanwhile, the assistant to the President of Russia Arcady Dvorkovich has informed that introduction of increased requirements to a minimum capital of banks is unlikely to start before 2012. In the beginning of December the Deposit insurance agency informed that in 2010 up to 80 Russian banks can remain without licenses. Thus about 30 organizations will loose the license failing to fulfill the minimal capital requirements.
The external debt of Belarus has exceeded $19 billion
In 2009 an external debt of Belarus increased more than by $4 billion constituting $19 billion 298,5 million. Thus in the third quarter of the current year the state debt has grown on $1,674 billion, the National bank of Belarus informs. Totally the amount of foreign debts of government authorities. increased drastically almost on $ 1 billion & is now of $4,574 billion Debt of credit regulation bodies has grown almost 6 times and has constituted $2,52 billion Debt of other sectors of economic activity for an accounting period has grown on $1 billion and has constituted $8,325 billion. Debt of commercial has grown as well. The external debt of Belarus has grown slightly from January till October, 2009 - to $3,12 billion , having increased by $38,7 million Thus the vice-premier of Belarus Andrey Kobyakov on December, 17th has declared that the Belarus government managed to change the situation for a number of basic economic issues and to ensure gradual growth. According to Kobyakov, Belarus has suffered from a world financial crisis less, than other countries.
Foreign experts positive about RF corruption fighting
The group of the states on counteraction of corruption (GRECO) positively evaluates actions of the Russian authorities in this sphere, but considers that this phenomenon is still widespread in Russian Federation, -Bjorn Jansson, the representative the GRECO declared in December .
"Under our estimation, corruption is a widespread system phenomenon in Russia, that involves the whole society, including law-enforcement system. But it is seen that the Russian authorities seriously concern this problem", - Jansson told, meaning creation of anticorruption committee.
Speaking at the All-Russia seminar-meeting devoted to problems of the theory and practice of revealing and suppression of corruption offences Jansson has noticed that GRECO, having studied the situation in Russia, has developed 26 recommendations which, in its opinion, should considerably increase the corruption counteraction. Among these measures the representative of the organization named strengthening of the judicial system independence and toughening punishment for corruption crimes. Jansson has informed that in some countries corruption crimes are considered till now as administrative violation, but he didn’t mean Russia. The first deputy of the Public prosecutor of the Russian Federation Alexander Buksman speaking at the seminar named corruption in Russia one of the main reasons preventing to overcome of crisis." Almost 38 thousand corruption crimes were solved in Russia during nine months of the current year that is 11 % more than last year's indicators. Among them 11 800 are bribe cases.", - Buksman has told. Russian Federation entered GRECO on February, 1st, 2007, and one year ago, in December, 2008 the first report on corruption counteraction was received from Russia. As Jansson has declared, on June, 30th next year Russia should report the organization about fulfillment of the recommendations given.
MIDLAND CONSULT
