Jewish Times Asia March 2015
Financial Wealth Planning
Regulatory issues may effect global wealth assets Supplied by
Devin Ehrig, Vice President Winterbotham Financial Services
The future of wealth in an increasingly international regulatory environment is a daunting reality to comprehend. Given the general trend emphasising global financial transparency, it is inevitable that many entrepreneurs and family offices will need to adapt their established structures in order to remain compliant to international standards.
With the repercussions of the global financial crisis still being felt in international markets, understanding how to evaluate the true strength of a jurisdiction where your international business is anchored may be fundamental to continued financial sustainability. Global Inertia
Spearheaded by the US, member countries of the OECD have
rallied for a globally recognised transparency standard. In 2010 the US introduced two model arrangements for information sharing relating to assets held by US tax residents abroad. These models have been tacitly adopted as a model regulatory framework for the sharing of tax information internationally. By 2017 a common reporting system is scheduled to be implemented across the globe, which will mark the true foundations of a system where transparency is valued over individual privacy. International Transparency and your Assets
For private entrepreneurs and family offices, this means existing international structures may likely fail to achieve their original objectives, and potentially will no longer be feasible in the current global environment. As the foundation of any sustainable cross-border struc-
ture is the choice of jurisdiction where business may domicile, understanding what factors to consider in a global context will lead to better decision making for the future. Simply following the herd and accepting a wholesale solution to organise and control your international assets puts you and ultimately your family at risk. Generally, the key attributes a professional should balance when considering a jurisdiction in relation to the particular needs of a client include: • Business Factors (Rule of Law, Economic Environment, Tax Simplicity) • Financial Services Activity (Available Services, Professional Expertise) • Infrastructure (ICT, Accessibility) • Human Capital (Government Initiative, Talent Availability) • Reputation (International Recognition, Media/Market Exposure)
An optimum structure in the era of transparency will forgo a simplistic view balancing lowtax against secrecy, and instead weigh the attributes in each jurisdiction to create a platform to effectively manage global assets. The global emphasis on active corporate governance and strict data protections require corporate substance above paper shells, while the call for greater transparency now demands accounting and transactional records be maintained in a format which is readily understandable to the world. An Unexpected Option
Critically, the interplay between an engaged government and a tangible set of benefits can be a determining factor in making your decision where to domicile. The Bahamas in particular has many examples where proactive government policy has led to the creation of structures which fulfil both wealth management and international
After receiving peer-review recommendations from the OECD in 2010 and 2011, The Bahamas Government leveraged its advantages as an independent nation to quickly draft amendments to existing trust laws which would encompass developing global standards.
Suggestions from the private sector introduced enhanced accounting and records maintenance requirements for all trusts domiciled in the jurisdiction, quickly moving the territory into compliance with international transparency norms as they continued to be adopted, always on the basis of a level playing field. With no change to a competitive tax regime, the relationship between government and private industry allowed for a rapid response but at the same time maintained the commitment to international standards in a flexible, and effective, manner. That is the power of looking beyond the herd! Devin is the Vice President of The Winterbotham Hong Kong Trust Company (Hong Kong) Limited, a subsidiary of The Winterbotham Trust Company in The Bahamas. He focuses on helping entrepreneurs and their families in Asia structure their international assets. If you wold like to contact Devin, his email address: dehrig@winterbotham. com