Tag Archives: financial
Don’t Forget Foreign Real Estate
WisdomTree director of research Jeremy Schwartz says investors should hold foreign real estate both for diversification and yield. Continue reading
Germany And France Back European Tax Deal
http://www.ft.com/cms/s/0/bea8b704-a120-11e2-990c-00144feabdc0.html#ixzz2QpLM98JN By Madison Marriage Germany and France have thrown their weight behind the adoption of a framework that would facilitate the automatic exchange of tax information across Europe. The two countries are expected to publish a common position on a proposal to adopt an EU version of the US Foreign Account Tax Compliance Act as they attempt to fight tax evasion following high-profile scandals. This comes as Sven Giegold, the outspoken German MEP, plans to lobby the European Commission to adopt a directive that would bring a Fatca-style agreement into European law. Fatca, which will be implemented in 2014, will require asset managers and other European financial groups to pass details of US clients to tax authorities, resulting in higher reporting costs. German and French finance ministers have said they are ready to put in place similar measures. Pierre Moscovici, the French finance minister, and his German counterpart Wolfgang Schäuble issued statements on April 7 calling for greater tax information sharing across Europe in a move that would closely imitate Fatca. It followed an admission on April 2 by Jérôme Cahuzac, French budget minister, to lying repeatedly when he denied holding a secret Swiss bank account. Mr Cahuzac said he held €600,000 offshore, although reports in the Swiss press suggest the sum was as high as €15m. Mr Moscovici said in an interview with a French radio station that he proposed developing a “European Fatca” with automatic exchange of information. “In the next few days [France and Germany] will adopt a common stance to ensure we make real progress with this endeavour,” he said. Mr Schäuble also told the newspaper Saarbrücker Zeitung that Germany welcomes “every step towards” the automatic transfer of information. He added that the German government is collaborating with other countries on this. At the same time, Mr Giegold’s Green party will also propose a Fatca-style tax package to the Commission. The measures, including the automatic exchange of information between European member states, will be designed to curtail tax evasion by wealthy Europeans. The package will require non-EU financial institutions to provide European tax authorities with information on EU taxpayers’ earnings, which would “exert pressure on tax havens”, the Green party said in a statement. Mr Giegold, who won notoriety through his controversial bonus-cap proposal under Ucits V, says: “To ensure that our financial system respects national tax laws, we need a European Fatca now.” He believes Germany and France should take the initiative and lead a coalition of countries that are willing to take action. Florian van Megen, a tax policy researcher at the European Parliament and parliamentary assistant to Mr Giegold, says the Commission is already “seriously” considering adopting such an agreement. “The [Commission] has seen the US do it without waiting for anyone else – why not catch the same train?” he says. “If Fatca seems to work and compliance seems to be possible, it makes sense to have a similar international framework.” The proposed European tax package would go further than Fatca. Under Fatca, details of all US clients with assets over $50,000 must be passed to the US Internal Revenue Service. European groups in Fatca-partnering jurisdictions can meet their Fatca obligations with their local tax authorities. Several Fatca agreements have already been reached by European member states and the US, including the UK, France, Germany, Italy, Spain and Switzerland. Luxembourg is yet to broker a Fatca agreement with the US but it is said to be close to completing one. Luc Frieden, Luxembourg’s finance minister, recently said his country was ready to extend its collaboration with tax authorities abroad and would no longer reject the idea of an automatic exchange of information between countries. Keith Lawson, senior counsel in tax law at ICI Global, the international fund association, says it is unlikely a European Fatca-style agreement would increase costs for fund groups in Europe. He says: “If firms are already implementing procedures to identify the tax residency of investors under Fatca, it will be easy enough to [comply with a European equivalent]. “There would be no additional burden other than coding the account as UK, Spanish or German, as opposed to a US investor. “There may be some additional costs but these would not be overwhelming.” Last year the head of BNP Paribas’ investment solutions division said the cost of compliance with Fatca would reach €100m. This article first appeared in Ignites Europe, an FT publication Continue reading
Islamic Investors Chase Yield, Assets In Australia
PUBLISHED: 16 APR 2013 19:00:50 | UPDATED: 17 APR 2013 To avoid interest payments, Islamic finance structures favour physical assets that are often effectively bought by the investors. Photo: Ben Rushton SHAUN DRUMMOND The prospect of higher yield in Australia is driving Islamic investors Down Under just as it is the broader global investment community, but the focus on capital-intensive industries is adding to its appeal for this source of funds. Managers of two fledging Islamic funds set up in Australia in the past 18 months say they knew these factors presented opportunities, but they were still surprised by the level of interest from Islamic investors. Amanie Advisors’ Melbourne-based representative, Mark Darras, says he was virtually mobbed by Islamic banks and sovereign wealth funds on a trip to the Middle East in November. The Advisor has identified asset leasing as the best entry into the Australian market for Islamic investors as it is “very sharia compliant”, says Darras. The founder and chairman of Amanie, Mohd Daud Bakar, visited Australia on Tuesday to host the firm’s first Islamic investment forum in Australia which brought together Middle Eastern and Malaysian investors with Australian companies to discuss opportunities and what Australian companies would have to do to create the appropriate structures for investment. A private meeting between about 20 investors, primarily from the Gulf States, and about eight representatives of Australian companies was scheduled for Wednesday. SUKUK YIELDS NEAR RECORD LOWS Samar Madini, vice-president of fixed income and islamic finance products at Dubai-based SJS Markets, said a shortage of “safe” investment instruments and the growth in cash liquidity globally have pushed yields on Islamic bonds to near-record lows of less than 3 per cent for five years tenure. As a result, he expects more Western firms issue sukuk (Islamic bonds) to take advantage of the demand and the low rates. “We are already seeing Western institutions issuing sukuk, such as GE and Nomura and I expect more Western institutions are going to issue sukuk to attract the islamic banks, and other institutional investors.” Australian companies are also considering issuing sukuk in Malaysia . As well as prohibiting the payment of interest, sharia law doesn’t allow Islamic investors to put money into anything connected with gambling, alcohol, tobacco and pork products. To avoid interest payments, the Islamic finance structures favour physical assets that are often effectively bought by the investors, which then collect a lease off the issuers in lieu of interest payments. CLEAR GUARANTEES ON CASH FLOW WANTED Bakar says the funds being targeted in the Middle East needed to invest a minimum of $50 million and the primary areas in Australia that would be suitable would be financing asset leasing in aviation, infrastructure, mining, power plants and in the medical and pharmaceutical industries. He says they only have “soft commitments” from investors at the moment, but it is understood the first foray will be into aircraft leasing, with a possible $US107 million investment being discussed. “We help co-fund the purchase and then lease the aircraft on,” explained Darras. They are keen to invest in assets linked to companies with clear guarantees on cash flow, such as mining offtake agreements in India and China. “Investors are looking at the underlying economy, and production of this kind of assets in this country,” said Bakar. Sydney-based Crescent Wealth, meanwhile, is accelerating its push into introducing offshore Islamic institutional investors to Australian companies. Managing director Talal Yassine says both investors and issuers have shown interest, prompting the fund to accelerate plans beyond their present super fund directed at Australian Islamic investors, with their first official trip to see investors in the Middle East and Malaysia in May. SELF-MANAGED ACCOUNTS FAVOURED Bakar says his fund is “targeting a few sovereign funds and a few other dedicated funds”. Some want to put their money into a managed fund, but many favour a self-managed account because they want to show they are the direct owner of the asset, Bakar says. Bernie Ripoll, federal parliamentary secretary to the Treasurer, told the forum in Melbourne on Tuesday that the Labor government wants to reduce any barriers to Islamic finance in the country but that it was still considering the recommendations of a Board of Taxation review handed to the government last July. He said there were no “substantive” barriers at the Commonwealth level. One of the biggest impediments is state-based stamp duty on property transfers, which affects Islamic investments as they involve a transfer of assets into and out of special purpose vehicles in order to avoid interest payments. Continue reading
