Disclosure Obligation, says Inland Revenue "In accordance with assurances given by the Paymaster General during the Finance Bill process, we remain committed to ensuring that everyday tax advice does not trigger a disclosure obligation".

	The EU has a policy of subsidising the poorer member states. Ireland is not poor having reduced tax rates & lowered the burden of government. Yet the EU continues to pay money to Ireland even though it is now the 2nd richest nation in the EU. 4 countries [Ireland, Portugal, Greece and Spain] were revealed to receive more money from the EU than they pay in.

OECD endorses higher taxes in the UK which really needs to lower taxes and reduce the burden of government but the Paris-based OECD recently warned that the UK will need to raise taxes to counter rising levels of public borrowing. The government deficit is likely to be above 3% of GDP in 2004, and in the absence of a rise in taxes, additional action may be needed to achieve a reduction. Despite rising corporate tax receipts brought about by increased company profitability, and higher revenues from fuel tax as a result of fast-increasing oil prices, the OECD warned that these sources of additional taxes will not be enough to make up the expected fiscal shortfall. The OECD concluded that a "further period of fiscal retrenchment was almost certainly needed" if Brown is to meet his self-imposed 'Golden Rule' of borrowing only to invest over the economic cycle.

Dubai law

Dubai passes law, DIFC established. His Highness Sheikh Maktoum bin Rashid Al Maktoum, Prime Minister of the United Arab Emirates and Ruler of Dubai has signed a decree formally establishing the Dubai International Finance Centre.

The Government of the British Virgin Islands is considering changes for the Tax Code of the country. In particular, a maximum increase of 20% over the current fees paid to the government for BVI IBC renewal is proposed e.g. fees for a company with authorized capital under US$50,000 could be $360 instead of the present $300.

Cyprus  - Tax Amnesty

Tax Office says "highly successful". The Cypriot tax amnesty under which undeclared bank deposits could be revealed at a tax charge of only 5% has generated CYP90m for the government, says the tax office.

The system of EU taxation on interest payments will be a retention [with-holding savings tax rate] as follows:

• it must be a physical person

• the person must be resident in a EU member state

• the payment must be qualified as an interest payment in the meaning of the agreement

• the person must receive or secure the interest payment for his or her own benefit

• if you don't want tax to be with-held on your behalf, you must have the right to expressly authorise the bank or investment house (the paying agent) to pass on your information to your EU Member State

• if you believe you are exempt from with-holding tax, you can prevent with-holding tax being levied against your assets upon presentation of relevant documentation from your EU Member State showing that you are in this case tax exempt

Despite certain exceptions and alternatives, it is important to note that all EU Member States have agreed to the EU Savings Tax Directive 2005 in one way shape or form. UK Crown Dependencies, the Dependent Territories of the Netherlands, and others have also volunteered to abide by the principles of the EU Savings Tax Directive 2005, the current list of countries affected is as follows:

Andorra, Anguilla, Aruba, Austria, Belgium, British Virgin Islands, Cayman Islands, Channel Islands, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Isle of Man, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Monaco, Montserrat, Netherlands, Netherlands Antilles, Poland, Portugal, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turks and Caicos, UK

If you are resident in one of the above countries, and you have savings or investments that generate you interest or "savings income", and these savings or investments are in one of the other above listed countries, it is very likely that you will be affected by the EU Savings Tax Directive 2005.

Cross EU border taxation treaties and deals

An opinion released recently by an advocate general at the European Court of Justice (ECJ) is expected to have favourable implications for EU taxpayers allowing them to look around for the most favourable tax deals. Commenting on the case of a German taxpayer who had asked to be taxed in Holland as a Dutch taxpayer, referring to a tax treaty between Holland and Belgium which entitles Belgian non-resident taxpayers to the same tax reductions as Dutch residents, the ECJ ruled that individuals and firms can examine a European country's international tax arrangements and demand to be treated in line with the most favourable.

Britain's Caribbean tax havens are likely to come under further pressure from Brussels to lift their banking secrecy. In a "corporate and financial malpractice" document, the European Commission has called time on the opaque financial laws of BVI, Cayman Islands and others. Banking transparency is suggested together with existing EU trade and aid deals with African, Caribbean and Pacific countries and territories. Brussels would then have the power to use such things as banana quotas and development grants as leverage to access financial information. Brussels is also offering "economic support" to help "co-operative" territories that open up their financial sectors to scrutiny.

Guernsey

Channel Islands

Jersey, Guernsey, Isle of Man

Jersey, together with Guernsey and the Isle of Man, has agreed to implement a with-holding tax system [option to exchange information] on payments of savings income that fall within the scope of the Directive. Locally the legislation has been put forward and agreed in principle by the States, and it is now up to the tax authorities to finalise guidance notes and address any remaining grey areas.

The Directive will apply to all payments of interest to EU residents and the person or entity responsible for the payment [typically a bank] will need to comply with the necessary with-holding/reporting requirements. The provision in respect of remitted income is ultimately aimed at UK non-domiciles who rely on remittance protection of foreign income. If interest received by UK resident non-domiciles is not to be remitted to the UK and therefore not subject to UK income tax, then in accordance with the draft guidance notes, the Directive need not be applied on the payment of interest to that individual. This is going to be difficult to implement where there are other variables like individuals that have more than one passport and/or a lack of information in respect of tax residency forcing reliance on the individual's passport.