G7 and Minimum Corporation Tax rates – What does it mean for your Offshore Trust?

G7 have agreed a Minimum Corporation Tax Rate of 15% which is really aimed at Big Tech. This will make Offshore Financial Centres less attractive, but will it affect your Offshore Trust?

In most cases it should not do so, because many of the companies carrying on business in low or nil tax jurisdictions will have profits which are below the threshold of profits required before the company is caught by the proposals.

One of the “evils” of the proposed system is that, if a jurisdiction does not charge the minimum rate, then the offshore jurisdiction would have an obligation of collecting the difference to take the total tax take up to 15%.

Where offshore companies are below the threshold they may still be adversely affected, because the amount available for distribution out of quoted securities will be reduced by the additional tax being paid.

Will this change the type of investments that trustees will be happy with?

Will it be possible to maintain yields?

What happens to pension funds?

The proposals have to be agreed by G20 and OECD. Also, Double Tax Treaties will need to be amended, so it will be some time before the proposals are in force.

In the meantime – watch this space!

If you have any concerns or queries relating to this matter, please contact Chris Cooke, Senior Partner at Rooks Rider Solicitors, and our resident specialist in corporate matters, taxation, offshore trusts and corporate structures.

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Written by Elizabeth Sam, Conveyancing Paralegal in the Real Estate team at Rooks Rider Solicitors….