This programme aims to manage corporate tax charges through the establishment of headquarters in either Cyprus or the U.A.E., both of which possess multiple bilateral treaties with key territories around the world. It follows recent legal authorities as to how to achieve a Place of Effective Management in a chosen territory for effective tax planning of companies and trusts.
The programme is built upon the following components that are put in place for a client’s company(ies):
1. An Office or HQ – London Trust has selected Cyprus as the first office location for this programme and is bringing the U.A.E and a South East Asian location on stream in the near future;
2. A corporate managing director – London Trust uses Londinium Management Services Ltd. as the Cypriot agent of effective management of the client company and Sterling Consultants as the U.A.E agent;
3. A local bank account – It is necessary to open a bank account for the client company. The account is managed and controlled by the managing director in accordance with a pre-agreed strategic, tactical and operational policies set down by the client company’s board of directors;
4. Safekeeping – The HQ houses the client company’s statutory books that include amongst others the register of shareholders, directors and corporate resolutions;
5. Correspondence – As correspondence arrives at the HQ it is reviewed and processed in accordance with policy;
6. Accounts – Regular management accounts and annual shareholders’ accounts are organised and distributed according to the client company’s policies.
The six points listed above form the core of the MD Programme, however, let us also consider the various charges to tax in order to see whether the programme’s benefits are worthwhile:
For Cyprus – Business profits after allowable deductions are taxed at 10% – the lowest rate in the EU.
There are no capital taxes to speak of for foreign enterprises(except as regards immovable property situated in Cyprus). There is a 15% tax on dividends and interest received by a client company but for finance companies this is often eliminated via the International Participation Exemption or a foreign tax credit.
Any overseas permanent establishment is exempt from business profits tax.
Cyprus is a member state of the EU.
A comprehensive list of Cyprus’ tax treaties is available at the following internet address:
http://www.londontrust.net/index.php?m=212&sm=228&l=1
For the U.A.E – There are no business profits tax in the U.A.E.
A comprehensive list of the U.A.E’s tax treaties is to be available shortly.
Conclusion:
The MD Programme is an organised systematic method of setting up and running a holding, trading, finance or royalty client company. Our recent research as published in the STEP journal explains the reasoning underpinning the programme.
London Trust has over ten years of experience in corporate services. They have the infrastructure, management team and systems to deliver MDP cost effectively and to a high standard. Do not hesitate to contact them for more information.
Email: corporate@london-trust.com
Telephone: +357 22 66 43 51