Next up we spoke to Alok Chugh - Partner with EY’s Middle East practice, which is based in Kuwait. He leads the EY Kuwait tax practice and Government and Public Sector tax practice for EY Middle East. Alok has lived and worked in Kuwait for over 23 years and has been involved in a number of consulting assignments (including cross-border planning, application of double tax treaties and the efficient handling of tax and commercial affairs) for project due diligence, business paper preparation or review, and structuring operational activities).

Could you tell us a bit about the hottest topics being discussed in Kuwait in relation to tax at the moment? 

At the moment, there are some very important and bold regulatory changes in Kuwait. Some of the hottest topics for discussions are:

• Value Added Tax: All the 6 countries in the Gulf Cooperation Council (GCC) have signed the Master framework Agreement for implementation of Value Added Tax (VAT) in the GCC. Based on our understanding from discussions with the government officials, the 5% GCC VAT shall be applicable on goods and services by 2018.
• Tax Registration Number and update forms: Recently, the Ministry of Finance has set up a Tax Development Follow-Up Unit (TDFU) within the Department of Inspection and Tax Claims (DIT). The TDFU is setup as a set towards the e-filing module. The TDFU has issued new registration forms that needs to be submitted by all the taxpayers. The department shall use the information in the forms to create their centralized database of taxpayers. Further, all the taxpayers are issued a Tax Registration Number (TRN), which is mandatory to be mentioned on all the correspondence with the DIT.
• New Tax Card Further, the TDFU has started issuing Tax Cards to every company valid for each year and should be renewed on a yearly basis valid for another one year. Tax Cards are compulsory and is now mandate for every company to enter into a contract in Kuwait.
• Business Profit Tax: Kuwait is looking to introduce the New Business Profit Taxes. Based on our understanding, all Kuwaiti and foreign companies operating in Kuwait may be subject to 10% business profit tax under the proposed Business Profit Tax (BPT) law. The BPT is yet to be approved by the Kuwait Parliament. However, considering the recent developments in the GCC relating to the introduction of Value Added Tax (VAT), it is our current understanding that BPT is not likely to be approved before 2019.

What do you anticipate for the sector in 2017? Do you believe that there is potential for any significant legislative developments in the next twelve months? In what ways would these affect Ernst & Young? 

The VAT law is expected to be implemented by January 2018. Accordingly, the businesses have only 10 months to prepare for the VAT implementation and ensure the contracts have been amended to that effect and the IT systems are updated to ensure compliance with the laws. It affects EY in the way that we, as consultants need to be ready with our teams of professionals, for pre and post implementation phase of VAT. Considering the integrated model that we operate in, as a global firm, it gives us an edge in the market. In this respect, we have already mobilized our team of experts in the indirect taxes from around the world and we are already assisting many of our clients with the first phase of VAT impact assessment, assisting them in reviewing their contracts and IT system as part of VAT readiness.

Have there been any recent regulatory changes or interesting developments?

The Kuwaiti authorities are working on implementation of the economic diversification strategy. This task has become quite pressing, taking into account the current financial position of Kuwait. A number of fiscal and regulatory reforms being implemented aim at reducing the economic burdens of doing business in Kuwait. The two new regimes: Kuwait Direct Investment Promotion Law and Institutionalized Public – Private Partnerships may contribute to this process both in terms of attracting foreign investment in to the country and for diversification of economy.

You joined Ernst & Young in 1994 - how would you evaluate your role and its impact thus far?

Within a couple of years of my joining the firm, I realized the business prospect for our practice to grow and for my career professionally. With the support of the management, I was able to grow to an Executive quickly and then eventually, I became a Partner in 2008. Over the years, our tax practice has grown to a strong team of 46 professionals, with a market size of 65%- 70% of the tax practice in the country.

When you first joined EY, what were your goals in driving change within the company? How have these evolved in the past 23 years?

As I mentioned, when I joined EY, I realized the potential in the market for our practice. I was certain that we would go through changes in the way our clients would require our support and the manner in which we would serve our clients.

I have learnt and experienced that it is important for any organization to continue to learn and adapt itself to the change in the market. As they say, “to improve is to change, to be perfect is to change often”. Given that we are part of the professional world, we need to anticipate the changes outside the organization and be prepared internally ahead of those changes.

Written by Kamlesh Chauhan, Senior VAT Manager at haysmacintyre

Most businesses in the financial sector are not entitled to reclaim the full amount of VAT that they incur on costs because they are partly exempt for VAT purposes. This is a complex area of VAT, and as the VAT year end approaches for most, now is a good opportunity to take stock of your VAT position. We often find many businesses are not minimising their VAT costs effectively, and are unaware of the requirements around their VAT year end (which is usually March, April, or May).

To complicate matters, rules governing VAT are continually changing due to new legislation, updates in HMRC’s guidance, and various case law precedents released over time. In the current climate, with the need to increase tax revenues, the corporate finance sector is an area that could easily be targeted by HMRC. A simple error, such as treating the VAT treatment of a transaction incorrectly can have knock on effects on your VAT recovery and your annual adjustment figures, leading to a significant amount of VAT being at stake, especially if the errors occur consistently over time as HMRC can assess going back for a four-year period.

For those that receive exempt income, (typically firms that arrange corporate transactions such as M&A activity, debt restructuring, divestments, IPOs or debt and equity private placements) an annual adjustment must be carried out at the end of each VAT year. This requires you to apply the normal VAT recovery method using annual data, rather than on a quarter-by-quarter basis. The difference between what can be reclaimed on an annual basis, compared to with what was claimable in the individual VAT return periods, then forms the annual adjustment which may be in your favour.

Many businesses simply fail to carry out an annual adjustment, or just get the calculations wrong which can lead to being penalised by HMRC, so it’s important to check you are doing it correctly – seeking professional help will of course aid this. It is crucial that you have applied an annual adjustment for each of the last four years.

 If you are partly exempt there is an additional adjustment required for the VAT recovery claimed on expenditure relating to capital assets, including any commercial property (purchase and/or refurbishment) costing over £250,000 and computer hardware costing over £50,000. This is dependent on the change in the annual adjustment recovery rate, from the rate applied to the original year of purchase, and use of the asset to the rate calculated in each subsequent adjustment year for a period of 10 years (an adjustment period of 10 years is applied for all commercial property capital assets). If an asset is disposed of within the 10-year adjustment period, the remaining periods will be calculated based on the VAT treatment applied to the disposal.

In terms of the implications for non-compliance (whether intentional or not), HMRC will seek to charge penalties and interest. The amount will range from 15% to 30% of the VAT owed for a “careless” error identified by HMRC. Deliberate or concealed errors will attract even higher penalties. The actual penalty amount is subject to HMRC’s assessment of whether the business took “reasonable care” or not in making the error.

It is worth considering applying for the use of a special method of partial exemption. For most businesses in the financial services sector, this needs to be agreed in writing with HMRC, otherwise a method based on turnover must be applied. A more beneficial method can be based on the number of projects or transactions being worked on, or based on a sectorised approach with different methods for VAT recovery in each part of the business. Although it can be difficult to agree the method the benefits can be significant. For those with a special method already in place, it is always worth reviewing whether it is still reasonable for the business as this may have been agreed with HMRC some time ago, after which business operations have changed.

It is crucial to keep on top of your VAT position, with regular annual reviews. Failing to do so can leave the business at a disadvantage. We would encourage all partly exempt businesses to seek specialist advice to ensure that they not only avoid the pitfalls, but also take advantage of potential improvements to their VAT recovery position. Regular reviewing of your VAT position by external advisers also demonstrates, if any errors do arise, that “reasonable care” is being taken by the business, which will help mitigate and reduce any penalties that HMRC may seek to apply.

Kamlesh Chauhan is a senior VAT manager at haysmacintyre. He can be contacted on +44 20 7969 5584 or by email: kchauhan@haysmacintyre.com.

Business leaders are skeptical of Congressional predictions that US tax reform will come by this summer, with more than half (53%) predicting that significant business tax reform won't arrive until 2018, according to a recent poll by KPMG LLP, the US audit, tax, and advisory firm.

Only 16% of more than 1,000 respondents polled during a recent webcast expect tax reform to be achieved in 2017.  In addition, 11% do not expect reform until 2019, and 21% are unsure of the timing.

"While many factors could affect the timing and eventual content of the tax reform proposal, the legislative process clearly needs to be a key area of focus for business leaders," said Jeffrey C. LeSage, Vice Chairman – Tax at KPMG. "Although the outcome is uncertain, we are looking at the best chance for meaningful tax reform in decades, so attention will likely continue to be high as developments unfold," he added.

When asked which of the proposals in the current House Republican tax plan would have the greatest anticipated impact on their business, 41% cited the proposal's new reduced corporate tax rate structure.  From an industry perspective, respondents from the retail and industrial manufacturing sectors selected the hotly-debated border adjustment proposal as likely having the greatest impact on their organizations, at 38% and 37%, respectively.

"Developments on the tax reform front could evolve quickly," said John Gimigliano, principal in charge of Federal Tax Legislative and Regulatory Services in the Washington National Tax practice of KPMG. "That's why business leaders need to stay engaged, consider how the current House GOP Blueprint may affect them, and be ready to respond quickly as tax reform advances through the legislative process."

The poll of more than 1,000 tax, financial and other business professionals was conducted during a March 2 KPMG TaxWatch webcast that is part of the firm's Tax Reform Thursdays webcast series.

(Source: KPMG LLP)

TaxTalent recently released its most important tax staffing report of the year. The  2017 Global Tax Market Assessment identifies a potential perfect storm that could cause significant disruption for the tax industry in 2017.

Data indicates another thirty-year transformation cycle could result from major tax reforms.

The 2017 Global Tax Market Assessment is produced in conjunction with TaxSearch, Inc. and British-based BPA and forecasts global tax market trends and their effect on staffing, retention, and talent development within corporate tax departments.

According to Tony Santiago, president of US-based TaxTalent and TaxSearch: "This is a critical time for corporate tax functions to pay attention to what could be a major market shift. We believe there are three major trends that, if combined, could have a big impact on the tax industry in the near future."

The three potentially disruptive market trends include:

1. Major tax reform in the US.
2. International tax regulatory changes.
3. Major demographic shifts in the tax profession.

Santiago stresses that tax and finance leaders need to be prepared by looking at past data as evidence of another thirty-year disruption cycle. "It appears we could be entering another major market transformation like those experienced in 1986 and 1954. Corporate tax professionals need to be aware of these potential market changes so they can prepare their tax departments and be equipped to respond to any fallout from this situation."

Key Results from the 2017 Global Tax Market Assessment:

• 2017 will be a candidate-driven market in the US and globally, even more so than in 2016.
• The type of candidates needed in tax departments - having employees who are adaptable and flexible to change - will help tax departments significantly. These are key traits to look for while hiring as well as identifying existing employees in the US and globally.

(Source: TaxTalent)

It's that time of year again. Revenue agencies are expecting you to mail in your annual income by April 30^th 2017.

Along with this, it is encouraged to submit any costs or expenses that may lower your annual income. Those could include: childcare expenses, new home ownership, medical expenses, charitable donations, and more. The CRA (Canada Revenue Agency) website now hosts many new updates, including ways to maximize your tax benefits, credits and deductions.

Being up to date on your taxes is something you will want to get educated on. Its value and importance is something we should all take the necessary time to become literate in.

After all of this is done, calculations provided by CRAs tax forms will determine whether or not you will be getting money back (income tax receivable), or if you will owe money (income tax payable).

For those of you who are lucky enough to receive a refund, consider your financial goals. This money could be used to better your financial situation, such as:

1. Paying down debt – If you are prepared for a financial emergency, then the general rule of thumb is to pay down your debt. There is a freedom in being debt free. Some suggest paying off the smallest debt first so you can feel the satisfaction of having one debt entirely paid off. However, both approaches have their merits.
2. Paying down the mortgage – One of the biggest benefits of paying off your mortgage is having long-term financial security. Without the heavy burden of a mortgage to pay every month, you will be able to enjoy financial security for a long time. Once the mortgage is paid off, you will have extra breathing room in your monthly budget, freeing up some more money to pay off other debts.
3. Invest in RRSPs – Putting some cash into an RRSP will serve as your retirement income later in life. Investing in RRSP's will also reduce your tax payable amount on last year's income.
4. Put it into a TFSA – You also have the option of putting your refund into a Tax-Free Savings Account. A TFSA is almost like a savings account, but it is registered with the federal government. The key benefit of a TFSA account is that you do not have to pay taxes on earnings.

One of the most common reasons why many Canadians get into debt trouble is that they make uninformed financial decisions that can sometimes have a very negative result. By using your tax refunds wisely, you will be making a smart choice that benefits you long term.

(Source: Money Mentors)

As corporate accounting undergoes even tighter scrutiny, how can CFOs ensure transparency and accountability? Finance Monthly here benefits from special insight by Nigel Youell, EPM specialist at Oracle.

Tax reporting is rapidly climbing up the corporate agenda, with one quarter of C-suite executives saying that the issue comes up at board-level discussions more than once a month, up from just 5% five years ago.

Thanks to the globalisation of world trade and an increasingly complex array of national and cross-border regulations, companies have understandably put tax affairs under the spotlight. Complicating things even further is the public’s growing interest in corporate tax, which has led to a call for greater transparency into businesses’ tax reporting.

This shift has led to initiatives such as the OECD’s Base Erosion and Profit Shifting (BEPS) project, which aims to bring consistency to international tax practices. When BEPS comes into effect in early 2018, organisations will have to publically report in detail on their earnings in every jurisdiction in which they operate.

Finance leaders have always faced the challenge of balancing their fiduciary responsibilities to shareholders with regulatory compliance. In order to stay on top of changing regulations and stand up to increased scrutiny on corporate tax however, businesses need a new approach to reporting that is faster, more accurate and more transparent.

This will take a change in strategic priorities. Much of the money spent on enterprise technology in recent years has gone towards flagship systems such as ERP, yet many organisations still rely on manual data entry and spreadsheets for tax reporting. This approach is no longer suitable for the type of granular tax reporting that is now mandated by so many jurisdictions and cross-border authorities.

Businesses need accounting and reporting systems that can measure contributions in each country they operate in, and be clear about how they allocate costs across their organisation. They also need to be scrupulously accurate and transparent in their reporting. The risk of error is too high to work with spreadsheets quickly, and audit trails have become too hard to follow in many cases.

A technical fix for the exigencies of modern reporting

Automation is the key to helping businesses meet regulatory compliance obligations and satisfy shareholder demand for greater accuracy and transparency in their reporting. This is because automated processes provide a clear audit trail.

Also, because this added level of rigour makes it easier to keep track of what is going on, the entire reporting process is faster and businesses can keep stakeholders informed up to date on their activity.

A modern, automated reporting system consists of three core functions:

• Profitability and Cost Management: While traditionally used to track whether a particular product is profitable, Profitability and Cost Management applications are now being used to calculate and justify transfer pricing policies. This is less about tracking all the different components of a product supply chain, which is straightforward, and more about attributing less direct costs.

Consider a car factory in Sunderland that manufactures vehicles for the global export market. A breakdown of costs per car also needs to include the cost of keeping the lights on in the factory, of employees on the assembly line, and of the executive staff who run the operation locally.

• Tax Reporting in the cloud: Tax reporting systems enable businesses to achieve greater alignment between tax and finance teams, which is essential to delivering on the country-by-country reporting requirements set out by legislation like BEPS. For more on this, check out this interview with Richard Scammell of PwC on how the cloud can help businesses modernise their reporting approach.

• Narrative Reporting: Governments, stakeholders and the public expect companies to share transparent and accurate results with a clear narrative. Data without context has little value, and for companies to continue being transparent about their tax approach they’ll need to rationalise their decisions with more detail than ever.

We are undergoing one of the biggest overhauls to corporate taxation in years, and companies need a reporting infrastructure that is fit for purpose – not just to meet regulatory requirements, but also to ensure that businesses have the insight they need to run their operations efficiently.

The shift to cloud-based reporting has already begun to gain traction in the finance department, and as businesses look to adapt to a more transparent, regulated environment this shift will increasingly extend to tax processes as well.

Deloitte's Tax Policy Leader Jon Traub, principal, Deloitte Tax LLP, offered the following statement in response to the tax reform outlook provided during President Trump's address to Congress on February 28^th 2017:

"It's an exciting yet uncertain time for tax reform, with prospects rising for Congressional action and talks of revenue raisers to pay for it swirling around the Capitol and in corporate boardrooms. What is certain is that difficult choices face Congress if they intend to enact tax reform this year. We are in the very early stages of a very long game, so twists and turns are more likely than not.

"There is much uncertainty in all of this, but it is possible we will emerge from the debate with an entirely new way of taxing businesses in the US Companies are rightly eager to understand the potential impact of these proposals on their tax burden and supply chains. To be prepared in this uncertain tax environment, companies can consider situational modeling that weigh proposals against one another, scenario plan, and create customized alternatives in order to analyze the effects of various tax reform proposals."

(Source: Deloitte Tax LLP)

New rules to help prevent tax avoidance via non-EU countries were agreed at the recent meeting of the Economic and Financial Affairs Council. The Commission welcomes this agreement which will prohibit multinational companies from escaping corporate tax by exploiting differences between the tax systems of member states and those of non-EU countries (so-called 'hybrid mismatches').

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said: "Today is yet another success story in our campaign for fairer taxation. Step by step, we are eliminating the channels used by certain companies to escape taxation. I congratulate the member states for agreeing on this tangible measure to clamp down on tax abuse and install a fairer tax environment in the EU."

The new provisions build on the Anti-Tax Avoidance Directive (ATAD) agreed last July, which sets out EU-wide anti-abuse measures against tax avoidance. Hybrid mismatches occur when countries have different rules for the tax treatment of certain income or entities, which multinational companies can abuse to avoid being taxed in either country. The agreement reached today (ATAD 2) will ensure that hybrid mismatches of all types cannot be used to avoid tax in the EU, even where the arrangements involve third countries. Today's agreement comes less than four months after the Commission put forward its proposal.

The new rules will come into force on January 1^st 2020, with a longer phasing-in period of 2022 for one article (Art. 9a).

The binding measures agreed today build on the extensive work done over the past two years to tackle corporate tax avoidance and ensure fair and effective taxation in the EU.

Major initiatives put forward by the Juncker Commission to boost tax transparency and reform corporate taxation are already reaping results. Member states agreed on the ambitious Anti-Tax Avoidance Directive last July, ensuring that anti-abuse measures will apply throughout the EU from 2019. Member states also agreed – in record time – Commission proposals to increase transparency on tax rulings and on multinationals' tax related information. The proposal for public Country-by-Country Reporting by large companies is being negotiated by Council and the European Parliament, as is a proposal to strengthen the Anti-Money Laundering Directive.

A number of other substantial corporate tax reforms have also been proposed, notably the re-launch of the Common Consolidated Corporate Tax Base (CCCTB) in October 2016. Member states are also working on a common EU list of third country tax jurisdictions that do not conform to international tax good governance standards. The list should be ready by the end of the year.

(Source: EU Commission)

The next Thought Leader that we spoke to is a professional that frequently updates Finance Monthly and our readers on all things tax in New Zealand. Here Richard Ashby, who has been dealing with New Zealand taxation for over 29 years, introduces us to recent developments in the sector and shares his predictions for the year ahead.

What have been the hottest topics being discussed in New Zealand in relation to tax since we last spoke in September?

For the past few months there have been two separate taxation Bills, making their way through Parliament. Both Bills contain some fairly significant changes that will mostly impact the SME market (in a positive way thankfully), with one of the Bills also providing the required legislation to facilitate NZ’s commitment as a signatory to the Automatic Exchange of Information project, and the introduction of new disclosure rules with respect to NZ’s foreign trust regime. The latter has been the NZ government’s response to the release of the Panama Papers, which suggested NZ was being used as a tax haven by wealthy non-resident individuals. One of the Bills was passed last week and the other is expected to pass pre-31 March (NZ’s tax year end).

There has also been continual discussion concerning BEPS and where NZ is positioned with respect to the various Action Plan’s issued. Most of the commentary coming out of Inland Revenue in this regard, is that NZ already has appropriate legislation in place to apply OECD recommendations.

What do you anticipate for the sector in 2017? Do you believe that there is potential for any significant legislative developments in the next twelve months?

2017 is an election year for NZ, and with an expected budget surplus in May, the present Government is already hinting that there will be personal tax rate reductions, targeted at lower to middle income earners.  There are also likely to be further modifications to the present tax system, aimed at making it easier for taxpayers to comply with their obligations, thereby lowering the cost of compliance (which Inland Revenue has an ongoing project to continually reduce), although I would not expect to see any significant changes over the coming twelve months, bearing in mind the myriad of changes included in the recent two Bills.

As a thought leader in this segment, how are you developing new strategies and ways to help your clients?

 Listening to your clients and fully understanding their needs is essential to providing good, sound tax advice. You have to continually ask questions and ensure you obtain all relevant facts. Once the detail is obtained however, the key to developing new strategies and ways to help you clients, is knowledge of the legislation and keeping abreast of any changes, the opportunities that lie within it to assist your client in obtaining their desired result, and most importantly, the ability to maintain an open mind and constantly question how the rules relevant to your client’s scenario, can be applied to produce the best result.

When you first joined Gilligan Sheppard, what were your goals in driving change within the company?

 Actually, when I joined Gilligan Sheppard (just over 20 years ago), I had basically just completed an eight-year stint with Inland Revenue, and the first day on the job, I discovered I still had so much to learn. What was clear however, was that I now had an ingrained passion for dealing with NZ taxation. This connection had also transformed into a desire to spend as much of my time as I could, assisting clients with their tax issues, particularly as a problem solver, with a goal to obtaining the best outcome when dealing with whatever situation they had got themselves into.

Since becoming a partner of Gilligan Sheppard in 2005, my goal has been to develop a sustainable tax practice within the firm, which has started to become a reality in the past three years, when we decided to separate the practice into three separate business units, one being a dedicated tax team.

How would you evaluate your role and its impact over the last year or so?

In the past twelve months, we have started to promote a tax advisory service to other accounting firms who may not have their own internal tax resource. This has certainly been a learning curve as the nature of the advisory has changed from one of dealing with clients of Gilligan Sheppard who you have a natural relationship of trust with, to dealing with other accounting firms whom you are effectively in competition with for business services work, and the consequent need therefore to build a different type of trust relationship.

Do you have a mantra or motto you live by when it comes to helping your clients with audits and tax-related matters?

Communication is the key – never be afraid to ask a question, be an active listener and never be in a hurry to give advice just for the sake of giving it. When it comes to the Inland Revenue, always be pro-active in your dealings with them, and emotive reactions can be very costly, so always ensure your client focuses on the economics of any Inland Revenue dispute, and does not get caught up in the emotions of having to win.

To hear about tax practices in the UK, this month we spoke with Rebecca Potton - a Chartered Tax Advisor with 15 years’ experience and Head of the Private Client department at Myers Clark, Chartered Accountants.

 Established in 1912, Myers Clark is one of the largest independent firms of chartered accountants in Watford, UK. Myers Clark offers a broad range of services for thousands of businesses and individuals, as well as national and local organisations in the Not-For-Profit sector.

Can you tell FM a little about the services you provide and the kind of clients you deal with?

 We are able to provide a full range of services including accounts, tax returns, tax planning, trustee and executorship. I also act as an expert witness often in cases of matrimonial disputes.

Myers Clark is very fortunate to have a varied client base, comprising sole-traders and partnerships to high net-worth individuals and top executives.

What are the most common tax planning solutions that you offer to your clients?

 Assuming the role of a trusted advisor and professional friend, our clients seek our guidance on trusts, inheritance tax and estate planning, together with the routine compliance matters such as self-assessment tax returns. Many clients utilise the expertise of our department to arrange their affairs tax efficiently whilst also maintaining their current standard of living.

We frequently act on behalf of a director both in an individual and business capacity, which affords us a unique perspective from which to advise. Such cases require us to consider a mutually beneficial tax solution for the business and the individual without incurring increased tax liability to either party.

What would you say are the specific challenges of assisting clients with tax-related matters?

 Many of our clients seek tax planning because they wish to pass their wealth to their families, however in most cases they wish to do so without comprising their current standard of living. Similarly, there are a number of clients who prepare their finances to facilitate a comfortable retirement whilst achieving the greatest tax efficiency. We ensure that tax is not the sole motivation behind our advice, it needs to be the most effective solution for that client’s individual needs.

Do you have any examples?

 A client, let’s call her Alison, was widowed in her early sixties and was worried about her inheritance tax liability because she was still earning a significant salary. Not unlike many people in the South East, Alison’s home fully utilised the inheritance tax reliefs available. Alison also had a stock market portfolio and an investment property, which was becoming cumbersome to manage. When organising her affairs, Alison was clear that she did not want to distribute her assets to her children immediately, but wanted to prepare effectively.

As a result of the planning, Alison was able to sell her rental property and decided to invest in products which gave her sufficient income to maintain her lifestyle, retained her capital and reduced her exposure to inheritance tax.

Another example is Bill, who sought advice on an exit strategy from his trading company to minimise this tax liability and whilst enabling him to access sufficient funds to spend his retirement sailing. Like many individuals, Bill had not worried about inheritance tax nor had he made sufficient provisions for his retirement. An issue for Bill, which is also faced by many other clients, is that the value of his shares in his company were exempt from inheritance tax by virtue of business property relief. However, as soon as he retired and sold his shares, Bill would have a cash asset liable to inheritance tax, in his case generating a tax liability of approximately £300,000.

Our priority for Bill was to ensure he would have enough capital to buy his boat and built this into the planning, which when completed saw Bill with a pension providing him with income for his retirement and an inheritance tax saving of £60,000.

As a thought leader, how are you ensuring that clients are engaged and informed about the development of new tax regulations or permissible strategies in the UK?

 We pride ourselves on being the go-to accountants for many businesses and individuals in Watford, and have established a reputation of excellence, integrity and innovation. Our specialists are trusted by clients to provide accurate information about tax regulations. We provide our clients with the opportunity to actively engage with this information through a calendar of seminars and events, as well as targeted communications.

Can you tell FM about your involvement in the community?

 Myers Clark has a CSR policy which includes charity fundraising events, being involved in corporate charity partner networks and establishing partnerships with local schools. This year we are introducing a new programme of work experience and summer job placements to local students in Year 10, Sixth Form and University Students.

In terms of market competition, where does Myers Clark stand nationally and what are its goals moving forward?

 Myers Clark is one of the largest independent firms of Chartered Accountants in Watford with a well-established reputation for highly skilled specialists. Our goal moving forward is to continue to provide support to individuals and businesses navigating the complex maze of tax and facilitating tax planning to ensure a profitable future.

A coalition of over 25 American businesses of diverse sizes and industries, including both importers and exporters, representing nearly every sector of the American economy have launched the American Made Coalition in support of pro-growth tax reform. The coalition strongly supports modernizing the outdated US Tax Code by removing barriers to economic growth and American job creation. The Coalition believes the obsolete and biased tax system subsidizing imports of foreign goods must be replaced with one that restores the United States' competitive advantage in the foreign marketplace.

"American workers and businesses are not competing today on a level playing field with foreign competitors because of an outdated and unfair tax system," said John Gentzel, coalition spokesman. "The American Made Coalition is committed to advancing legislation that modernizes our tax system, levels the playing field for American businesses and workers, encourages investment, incentivizes job creation in the US, and helps American-made products compete worldwide. The House tax reform blueprint has the best chance of moving real transformative tax reform for the first time in more than 30 years."

The American Made Coalition is focused primarily on supporting reform efforts, championed in the House of Representatives by Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, that would lower tax rates, encourage domestic investment, spur job creation, and modernize the overall tax system for a 21st Century economy.

A key aspect of the House tax reform blueprint is a border adjustment provision that would eliminate the "Made in America tax" - an unfair tax hitting goods produced domestically while favoring foreign-made goods. By ending the "Made in America tax," we can create a more favorable business environment for American manufacturing and level the playing field so American workers can compete with foreign competitors.

The Tax Foundation estimates the House Blueprint proposal will create 1.7 million new jobs, boost GDP by 9.1%, and increase wages by 7.7%.

The American Made Coalition believes that 2017 presents an important opportunity to modernize our tax system and a focused public campaign - one supporting competitive business tax rates, a modern territorial system, and the border adjustment of businesses taxes - is urgently required to achieve success. Together, these three components are essential to leveling the playing field for American-made goods and services and encouraging American jobs, investment, and manufacturing.

(Source: American Made Coalition)

It has been now more than a year since the Organisation for Economic Cooperation and Development (OECD) issued its recommendations addressing base erosion and profit shifting (BEPS). Following this initiative, Europe has embraced the BEPS Project and has passed various directives at a rapid pace, thus actively contributing to changing the international tax landscape. One of the biggest milestones reached so far is the Anti-Tax Avoidance Directive, which was passed by the Economic and Financial Affairs Council (ECOFIN) in July this year.

The measures of this Directive are expected to have a significant impact on the tax landscape in Europe. Most EU countries are thus already reforming their taxation systems and proposing new tax incentives in compliance with the latest standards.

Luxembourg has not escaped this trend and is adapting its tax framework to both the OECD-BEPS standards and the new EU requirements, while also ensuring that it remains attractive. Luxembourg’s recent announcement of a progressive decrease in the corporate income tax rate, from 21% to 18%, marks one of the first steps towards remaining competitive, and will lead to a global income tax rate of circa 26% in 2018. The government is already considering a further decrease in the corporate income tax rate, but a final decision will not be taken before an assessment of the effects of the BEPS Project and related measures on the State budget is made.

Bearing in mind the above developments, a key element of the country’s competitiveness undoubtedly remains its economic strength and stability. Major rating agencies have confirmed the country’s 'AAA' rating with a stable outlook. And it is further expected that Luxembourg will continue to experience growth superior to the European Union and Eurozone average, which is particularly noteworthy given the current changes in the international corporate tax framework. Additionally, in the context of Brexit, Luxembourg is well positioned compared to other EU countries as a leading centre in Europe for investment funds (in second place worldwide after the USA), and investors can rely on its long-standing business-friendly environment as well as on fewer bureaucratic and administrative hurdles.

Looking into the future, it is clear that the Luxembourg tax landscape will continue to evolve to keep pace with international tax changes. In the short term, the main trends that are likely to remain dominant are a continuing and increased focus, by the Luxembourg and other local tax authorities, on transfer pricing and substance requirements. This has already resulted in the recent release of a new bill in Luxembourg providing further guidance on applying the arm’s length principle from 2017 onwards, in line with the work on Actions 8-10 of the BEPS Project (on ‘Aligning Transfer Pricing Outcomes with Value Creation’). The bill outlines the legal framework for a comparability analysis and emphasises that the arm’s length principle must be applied to all controlled transactions. Another trend that will inevitably derive from all these evolutions, and from tax transparency and automatic exchange of information becoming the new normal, is the increase in tax audits and cross-border tax disputes.

These international developments will heavily affect multinational groups, which face the challenge of understanding the changes, delineating the unique ways in which their organisations are affected, and mapping out the best way to respond. Companies must therefore start reshaping their structures and business models, where appropriate. They must also ensure that they have adequate transfer pricing and supporting documentation to outline how they have determined the arm’s length principle for their intra-group transactions in the context of a wider value chain analysis, and to demonstrate that they have the right economic substance and business rationales underlying their transactions. This will definitely be key in a world in which tax authorities worldwide have, more rapidly than ever, greater access to all taxpayers’ data.