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International tax planning services
The increasing pace of the world economy globalization, development of new technologies, the speed of capital movement increase the volatility of the international market and require non-standard practical solutions.
Due to the current global trends in international taxation (implementation of the BEPS plan, as well as the ATAD and ATAD-2 directives in the EU) and the constantly changing national legislation of Kazakhstan and other countries, it is increasingly difficult to maintain the high level of efficiency of current international taxation structures in the jurisdictions involved.
EY expert team helps overcome difficulties that Kazakhstan companies and individuals face and offers a wide range of international tax planning services.
- with transnational corporations with presence in Kazakhstan
- for medium and large Kazakhstan companies with investments outside Kazakhstan or the establishment of joint ventures with foreign partners
- with medium and large business owners in Kazakhstan
- with wealthy private clients having assets in Kazakhstan and overseas.
Our services comprise development and implementation of effective structures of international investment, including:
- establishment of financial, holding, trust and trade structures for beneficiaries
- establishment of private equity funds, hedge funds for asset managers
- advising on tax structuring of foreign direct investment in Kazakhstan and abroad.
Our practice is focused on solution of strategic international tax planning issues and assistance in complying with tax legislation both in Kazakhstan and abroad.
The specialists of our company have extensive experience and deep knowledge of international taxes and the requirements of foreign jurisdictions that are often used by Kazakhstan investors when investing abroad and by foreign investors when investing in Kazakhstan.
Our specialists will help you effectively solve the tax issues arising in various countries irrespective of the level of their complexity.
Therefore, we are developing complex international tax strategies that enable to efficiently manage the existing tax risks and create environment for a steady growth.
Structuring of international investments
In terms of strategic investment it is necessary to regularly analyze the level of tax efficiency of holding structures in the most popular international jurisdictions used in your structure (for example, the Netherlands, Luxembourg, Singapore, Cyprus). In this connection we propose the following types of services:
1. With regard to the development and implementation of international investment structures in promising projects and effective exiting such projects:
Private equity funds / hedge funds
If you and your potential partners consider establishing a private equity fund or hedge fund for investing in various high-yield assets, both in Kazakhstan and abroad, we will be happy to assist you with choosing / developing the most optimal structure of the fund itself and investing / owning assets from a tax and regulatory perspective.
Potential tax consequences in the jurisdictions of the fund and beneficiaries, regulatory requirements or limits on the costs of maintaining the structure of the fund and infrastructure in the selected jurisdiction are the fundamental factors for choosing the jurisdiction when establishing the fund and can affect both the successful functioning of the fund itself and attract potential co-investors for investments in promising projects. The rich experience of our specialists will help you to conduct an appropriate analysis of various structuring options and prepare the necessary documentation.
Our goal is to achieve the maximum efficiency of the selected asset ownership structure for the client both from a commercial and tax and regulatory perspective. We strive to offer the most practical solutions taking into account interests of our clients.
Joint venture (JV)
For the purposes of attracting foreign investment in Kazakhstan, we can offer to consider the structuring of ownership of assets through joint ventures. At the same time, it is necessary to carefully consider the issue of selecting the target structure of the joint venture, taking into account the requirements of potential investors for the legal system and infrastructure, as well as efficiency issues in terms of maintaining the cost structure, commercial costs and taxation when exiting the projects both at level of the joint venture level and its Kazakhstani founders.
Using their many years’ experience our specialists will help taking such important decisions such as selection of:
- the structure of a joint venture
- its potential location
In particular, we offer the following services:
- conducting a comparative analysis of alternative options for structuring investments through a joint venture in terms of international taxation
- development of a tax effective step-by-step plan for transferring assets from the current to the selected structure.
Personal holding mechanisms (PHM) of various complexity
Our proposal to private clients includes effective solutions for planning personal investments by developing personal holding mechanisms ("PCM") for investing in both Kazakhstani and foreign assets, allowing to minimize the potential tax risks associated with building a structure, its operating activities, and the future exit at various levels, including tax risks for family members in transferring assets to heirs.
Our practical experience in this area will help you in taking strategically important decisions regarding the ownership structure of Kazakhstani and other assets, and also to have a closer look at possible options, including trusts.
One of the frequently used PCM mechanisms in selecting the asset ownership structures is an issue of confidentiality and disclosure. In this connection, trusts stand out among other asset ownership mechanisms.
In particular, building a proper trust mechanism in accordance with English law or the law of other countries, on the basis of common law, allows for the loss of legal ownership of assets entered into the Trust without loss of beneficial ownership of income and capital. Trusts are often used in Kazakhstan by individuals and are “complex” entities from the point of view of Kazakh tax legislation. Depending on the structure and “location” of the trust, different consequences may arise. We have a wealth of practical experience in the proper structuring of asset ownership, in particular, the creation of trusts, the transfer of property and the generation of income.
2. Regarding restructuring existing investment structures:
Current asset ownership structures, often created many years, and sometimes decades ago, are not always effective and, in this connection, require revision.
Optimization of structures in accordance with global trends in international taxation
The world trend of transition from aggressive tax planning to general transparency led to the need to analyze current structures and management mechanisms. The countries of the EU, OECD and the G20 carry out activities aimed at raising the attention of governments to the BEPS and counteracting tax evasion.
This directly affects the Kazakh companies and individuals with structures in these countries.
Many countries have already taken preemptive measures unilaterally by amending the national legislation, including the application of:
- GAAR (general anti-avoidance rules) and the substance over form principle (among others)
- automatic intercountry exchange of information (including, unified standards of intercountry reporting).
Many actions (including in Kazakhstan and countries that Kazakhstan companies and individuals use in their structures) will be specified in the framework of MLI (multi-lateral instruments) - multi-country conventions in different variations, which are expected to take effect in soon.
Also, one of the significant aspects to be taken into account in the implementation of the BEPS project plan is the requirement to the level of presence in all involved jurisdictions of holding structures.
Specialists of our companies experienced in international tax planning will help you:
- Determine deficiencies and weaknesses in the existing structures
- Restructure them for creating the most tax effective strucutre for the next few years.
In view of the rapid changes in the world such structures may have to be changed/simplified to meet the commercial realities and tax structural changes. One of such instruments is redomiciliation of companies in the structure.
Redomiciliation of companies as part of restructuring
As part of global changes, Kazakhstan's tax legislation is also changing under the impact of tightening sanctions for the use of offshore structures. Tax authorities tighten requirements for beneficial structures located in jurisdictions with low taxation, which can significantly affect existing structures, which include companies registered in offshore jurisdictions.
In this connection, we propose to consider redomiciliating companies or other mechanisms in offshore countries to other favorable and stable jurisdictions that are not included in the offshore list by the Government of Kazakhstan. Redomiciliation is migration of your business into another jurisdiction while maintaining its legal form. This process is extremely convenient, due to the fact that it simplifies the process of restructuring and reduces the tax risks for the beneficiaries.
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Corporate tax, indirect tax, personal taxes, transfer pricing and more for over 150 countries.