- Offshore Financial Regulators Announce Collaborative FinTech Partnership 10th August 2018
11 financial regulators have announced the creation of the Global Financial Innovation Network, a partnership intended to support businesses to engage in innovative financial technology projects in their territories.
The regulators include those of some low-tax financial centers keen to attract FinTech startups to their territories. The partnership is intended to facilitate the exchange of information and best practices among the regulators, to enable them to hone their regulatory regimes for such business, and support businesses seeking to launch new projects.
The project features the following 11 organizations:
- The Abu Dhabi Global Market;
- The autorite des marchés financiers, France’s stock market regulator;
- The Australian Securities and Investments Commission;
- The Central Bank of Bahrain;
- The Bureau of Consumer Financial Protection;
- The Dubai Financial Services Authority;
- The Financial Conduct Authority;
- The Guernsey Financial Services Commission;
- The Hong Kong Monetary Authority;
- The Monetary Authority of Singapore;
- The Ontario Securities Commission; and
- The Consultative Group to Assist the Poor.
According to a statement issued by several of its members, “The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.”
In a new consultation on the GFIN’s objectives, it is proposed that GFIN will:
- Act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models;
- Provide a forum for joint policy work and discussions; and
- Provide firms with an environment in which to trial cross-border solutions.
Input is being sought from innovative financial services firms, financial services regulators, technology companies, technology providers, trade bodies, accelerators, academia, consumer groups and other stakeholders.
- Luxembourg Introduces New VAT Group Regime 8th August 2018
Bill of law no. 7278, providing for the implementation of new value-added tax grouping rules in Luxembourg, entered into force on July 31, 2018. The bill was approved by parliament on July 26. The new VAT grouping regime is intended to replace the Independent Group of Persons (IGP) regime, which was restricted to only entities engaged in activities in the public interest following rulings from the European Court of Justice. Article 132(1)(f) of the EU VAT Directive provides an additional exemption for certain activities that are in the public interest. The exemption allows persons who carry on these activities to join together to form a cost-sharing group (CSG) so that they can acquire services and recharge their members for their use of the services at cost without incurring any additional sticking VAT. A CSG is a separate, independent entity, set up to enable its members to supply themselves with certain qualifying services at cost and exempt from VAT. As a result, a “co-operative self-supply” arrangement is created – a term coined by the EU Commission. Because the CSG is a separate taxable person from its members, it’s able to make supplies for VAT purposes to its members. This exemption allows small providers who can’t afford to acquire assets on their own account to benefit from the same overall VAT position as larger providers who can afford to purchase the assets themselves. Therefore, the more members of a CSG there are, the greater the potential savings and lower the costs per member of operating the relevant CSG. Rulings from the European Court of Justice in September 2017 – DNB Banka (Case C-326/15) and Aviva Towarzystwo (Case C 605/15) – precluded those engaged in insurance or financial services from benefiting from the exemption, ruling that these services cannot be said to be in the public interest. In May 2017, the ECJ had ruled that Luxembourg had transposed in too wide a manner rules in the VAT Directive on services provided by independent groups to their members. The introduction of the new VAT group regime will therefore benefit those financial services firms who can no longer access the IGP regime. Article 11 of the EU VAT Directive, enabling the establishment of VAT groups, provides that, “after consulting the advisory committee on value-added tax (the VAT Committee), each member state may regard as a single taxable person any persons established in the territory of that member state who, while legally independent, are closely bound to …
- Guernsey Fully Compliant With Latest Tax Transparency Standards 26th July 2018
Guernsey has received an overall rating of “compliant” from the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes.
The rating follows the second round of a Global Forum peer review to assess the territory’s compliance with the international standard on tax transparency and exchange of information on request.
Guernsey and Jersey were both rated Largely Compliant after the first round of reviews ended in 2016. Confirmation now that Guernsey is compliant matches the ratings earlier awarded to Jersey and the Isle of Man.
Gavin St Pier, President of the Policy and Resources Committee, welcomed the rating, which is the best possible, stating: “Time and time again, whenever we are objectively assessed, we come out amongst the very top of international assessments, ratings, and league tables.”
St Pier said a major part of the Global Forum review process focused on the effectiveness of Guernsey’s beneficial ownership register. He said the Global Forum supported Guernsey’s view that the register is effective, noting that information on the register is verified by regulated service providers, updated on a near-to-real-time basis, and accessible by law enforcement and tax authorities on request.
The Global Forum is the leading multilateral body mandated to ensure that jurisdictions around the world adhere to and effectively implement international tax transparency standards. Reviews assess jurisdictions against updated international standards, which incorporate beneficial ownership information of all legal entities and arrangements.
The rating is particularly noteworthy given the UK’s efforts earlier this year to compel the territory, as well as the other Crown Dependencies, to introduce a publicly accessible register of beneficial ownership information. Eventually an amendment was made to the UK Sanctions and Anti-Money Laundering Act 2018 to exclude the Crown Dependencies, but the UK’s Overseas Territories remain obligated to adopt a public register showing the beneficial owners of legal entities by 2020 or face having a register imposed. The Overseas Territories are reportedly preparing a legal challenge to the UK legislation.