Latest news with #businessMigration
Times
5 days ago
- Business
- Times
Non-doms leave Britain after tax loophole closes
There has been a sharp increase in business leaders moving out of the UK, according to an analysis of company filings, as fears grow about the impact of changes to the non-domiciled tax regime. More than 4,400 directors have fled over the past year, including a big jump in numbers over the past few months, according to Companies House records. Departures in April were 75 per cent higher than the same month last year. The pace of exits was highest in finance, insurance and property, which are all popular with non-doms. The analysis, by Bloomberg, suggests that Labour's tax changes are fuelling an exodus of top talent. In April, the government abolished the centuries-old non-dom tax regime, which allowed wealthy foreigners living here to shelter their worldwide assets from British taxes for an annual fee starting at £30,000. In its place, the Treasury introduced a much-less generous residence-based system. This requires any wealthy foreigners who have lived in the UK for longer than four years to pay income and capital gains taxes on their global earnings. If they stay long enough, their worldwide assets will also become subject to inheritance tax of 40 per cent, which is one of the highest rates in the world. There are no definitive figures on how many non-doms have left but a recent survey by Oxford Economics found that 60 per cent of tax advisers expected more than 40 per cent of their non-dom clients to leave within two years of the policy change. When Labour's plans were announced, the Office For Budgetary Responsibility (OBR) estimated that between 12 and 25 per cent would go. Foreign Investors for Britain, a lobby group representing wealthy overseas investors, believes that more than 12,000 of the estimated 74,000 non-doms in the UK have already relocated with many more planning to leave over the coming months and years. There are also reports that many wealthy Britons are leaving. New World Worth estimates that the UK lost a net 10,800 millionaires to migration last year, a 157 per cent increase on 2023, meaning it lost more wealthy residents than any other country except China. The Bloomberg analysis found that the United Arab Emirates was the most popular destination for relocating directors. There are varying accounts from economists on what proportion of non-doms would have to leave to result in the policy being a net drain on tax revenues, but most consider that if more than a quarter go, tax receipts might fall. The OBR's initial analysis suggested that the policy would increase revenues by £33.8 billion over the next five years, although critics say this figure is deceptive because it is artificially inflated by a temporarily lowered tax rate on cash being brought into the UK by any non-doms who choose to stay. Many economists also question the analysis and believe the policy could easily end up costing the exchequer money when non-doms' overall contribution to the economy is taken into account. Research by Oxford Economics found that each non-dom contributes, on average, £400,000 annually in direct taxes, spending, and business activity — while on average they invest £118 million. However, others question these numbers. Fariya Mohiuddin, of the campaign group Tax Justice UK, described figures on the number of wealthy people leaving the UK as 'scaremongering and statistical obfuscation by companies that represent the interests of billionaires and multimillionaires'. She said: 'Taxing the super-rich to revitalise key services like the NHS and education, that we all rely on, is more urgent than ever. Taxing the wealth of the richest is simply not going to cause a mass exodus.' Nonetheless, a growing list of high-profile business people, wealthy individuals and investors have left. Bloomberg reports that the billionaire French heiress, Anne Beaufour, the German investor, Max Gottschalk, the chief executive of Magna Capital, Alexander Ginzburg, the co-president of JC Flowers, Tim Hanford, and the boxing promoter, Eddie Hearn, are among the names to relocate in recent months. Leslie Macleod-Miller, of Foreign Investors for Britain, said: 'We're not just losing individuals—we're losing ecosystems of innovation, philanthropy, and investment.' The Treasury declined to comment.
The National
26-05-2025
- Business
- The National
UAE corporate tax: Can charging different prices for the same product impact liability?
As June approaches, we are four months from the filing deadline faced by the majority of the country's businesses. Of course, it would be far better for everyone concerned if they didn't wait until the final weeks to file returns. Hundreds of thousands of entities trying to submit documents at the same time might cause a strain on the online systems that must be used to complete the process. Having managed many corporate tax returns already, the one element confusing people the most is arm's length trading. While I have written about elements of transfer pricing in the past, the subject is so broad that it could have its separate regular column. Today, I want to address the topic from two fronts. Firstly, explaining what it is and why it matters. Secondly, with so many people and their businesses moving to the UAE, why these types of migration come with their own compliance frameworks. Yes, very often it's plural. An arm's length transaction means the seller would charge the same price to all buyers. This is where the goods or services are of the same value and volume for all purchasers. Delivery can be anywhere in the world. For simplicity, imagine that the seller faces no competition. You either purchase from this entity or go without. That means it is extremely difficult to conceive of a circumstance where there would be different pricing for different people. I hear you say: 'How about if it's a family member or close friend? Am I not allowed to sell my wares for whatever price I like?' Interestingly, you are. Unless it's a legislated government-controlled item and there are few of these. While you can set whatever price you like to whomever you like, for tax purposes, the regulatory authorities want to be assured that you are not setting the price with an objective of gaining a tax advantage. Therefore, in your reporting, you would need to account for any changes in pricing driven by familiarity with one or more customers so that your UAE tax liability is not affected. How is that done? My advice is not to do it in the first place. If reviewed in an audit, this type of activity will raise questions that will remove you from driving your business forward. You might understand how trading with family members is a regulated space, but at what level of relationship does a friend get covered by the same requirements? To avoid doubt, a relation is anyone from great grandfather to great grandchild, and an individual to their second cousin twice removed. That said, what is the equivalent measurement for friends? I have not been able to find anything specific, however, transactions might be challenged if discrepancies in pricing are discovered and it is found that two parties know each other. Where ambiguity like this is found to exist and the amounts are sufficiently material, it would likely be inevitable that the matter might end up in court, with an adjudication being made in adherence to the spirit of the law. On to our second topic. An individual with an existing business in Europe has decided to move to the UAE. The intent is to replicate the operation of the original company. The first emigration is that of the business owner. For tax purposes, you cannot simply leave one country, particularly where you are a national, and move to another. There are rules and processes, coupled with much careful planning that is required to minimise having to satisfy two nations' reporting regimes simultaneously. While the foundational rules for this are reasonably similar in approach by most countries, there can be variability and continuing evolution. For example, when moving to the UAE, how many days of a tax year have you spent in the country you are leaving before you can avoid being a tax resident in that year? A potential second emigration is that of your business. This occurs if you seek to close the existing one and open it in the UAE. That will likely be deemed a sale. Sometimes the old business continues, there might be employees and certain customers who refuse to move, while a carbon copy is set up in the UAE. It's inevitable that some trading among the entities, management and operational staff will be shared and you have to now prove that transactions are being conducted at arm's length plus a connected party operating in two jurisdictions. This can be very messy. Get help.
