MENA Investment & Immigration Summit Dubai- 1 March 2017 Jas Sekhon presentation

ECONOMIC CITIZENSHIP AS A TOOL FOR TAX
PLANNING.
Jaswinder (Jas) Sekhon
Investment Immigration Summit- MENA
Dubai 28 February- 1 March 2017
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Global Legal Group - Jaswinder (Jas) Sekhon- MENA presentation on
tax planning 28 February 2017- Private & Confidential (c)- General
information only and not tax, legal or financial advice

Core areas of international legal expertise
We are specialists that in aggregate bring more than 150 years of international and
multi jurisdictional expertise to our clients.
2
Global Legal Group - Jaswinder (Jas) Sekhon- MENA presentation on tax planning 28 February 2017- Private & Confidential (c)- General information only and
not tax, legal or financial advice

Combining onshore & offshore
Our lawyers are world leading experts in major global domestic countries and have also worked and lived in
many offshore jurisdictions; this is unique amongst the practices of law firms.
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TAX PLANNING OPPORTUNITIES
- CRS - “RESIDENCE” AND “SOURCE”
• Country taxation principles are based on taxation of “tax residents” and “source” of
income. If either is in a country- the country will impose taxation.
• Citizenship means that you may be able to move “residence” or “source” from a high
tax country to a low tax country.
• Key concepts
• Citizenship does not mean that you are tax resident in a country;
• Citizenship does not mean that you will stop paying tax in your prior country;
• Citizenship does not mean that your entities controlled by you will not pay tax in
your home country; and
• Citizenship does not mean that you may not now have a liability for tax in two
countries.
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TAX “RESIDENCE” –
OECD MODEL CONVENTION
• ARTICLE 4 REQUIRES:
• Ordinarily resident- (where is your permanent home?)
• Domicile (citizenship, place of birth etc.)
• If tax resident in two countries then the tie breaker rules look at the individuals
centre of vital interests (economic and/or personal)
• SECOND HOME?
• a secondary home could qualify as a permanent home for the purposes of
the tie-breaker rule?
• A question of fact?
• Nonetheless, BEPS Action 6 aims to strengthen the impact of domestic anti-
avoidance provisions which could tackle such planning opportunities, by
proposing that tax treaties will not limit the applicability of such anti-
avoidance provisions.
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TAX “RESIDENCE” – ART 4
OECD MODEL CONVENTION
1. For the purposes of this Convention, the term “resident of a Contracting State” means any
person who, under the laws of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature, and also includes
that State and any political subdivision or local authority thereof. This term, however, does
not include any person who is liable to tax in that State in respect only of income from
sources in that State or capital situated therein.
2. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both
Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident only of the State in which he has a permanent home
available to him; if he has a permanent home available to him in both States, he shall be deemed
to be a resident only of the State with which his personal and economic relations are closer
(centre of vital interests);
b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a
permanent home available to him in either State, he shall be deemed to be a resident only of the
State in which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a
resident only of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent authorities of the
Contracting States shall settle the question by mutual agreement.
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OECD -SELF REPORTING FORM- CRS-
INDIVIDUALS – ENTITIES- “CONTROLLING PERSONS”
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VITAL TAX CONSIDERATIONS FOR
ACQUIRING
ECONOMIC CITIZENSHIP
• THE FOCUS IS CURRENTLY ON “BEPS” (BASE EROSION - PROFIT SHIFTING”) – BUT
• The question of moving residence will be quickly addressed by countries, as this potentially,
avoids CRS.
• Moving or creating entities will also be a vital aspect – i.e. trusts or companies- family offices-
if you are the “controlling person” – then this will be reported.
• The timing is vital- creation must be when no longer tax resident in the high tax country
• Establish a permanent home in the new country or in a low tax country as soon as possible
• Moving residence for tax purposes may also become a tax avoidance issue if not handled
legally and properly- Action point 6 – BEPS – flags entities moving to reduce tax as tax
avoidance.
• No clear guidance on whether personal or economic relations have a greater value in the tie
breaker rules
• Look at other (second-third) homes carefully – number of days spent in a country may also
have an impact on tax liability and you may trigger taxation there as well.
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THE IDEAL SCENARIO –
THE GOOD NEWS
• Moving tax residence in conjunction with economic citizenship
means that you can drastically revitalise your tax global planning
• Three- four- five passports but live and work in the UAE? Or …
• Establish a family office with a trust or foundation – or both – in a low tax
jurisdiction with substance
• Restructure your global activities in view of BEPS – royalties, IP, payments
to UBO’s, transfer pricing
• Overcome the major issues that will surface with POEM!! – “Place of
effective management”
• Finally, face succession planning issues for your assets or business- wills,
testamentary trust, ownership
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THE IDEAL SCENARIO –
Restructure and plan – the next step..
• FATCA- BEPS- CRS- will not adversely impact you if look at issues for
residence and source- with substance- and consider a low tax jurisdiction
for your primary residence.
• Economic citizenship avails of these opportunities but does not of itself
avoid these issues of tax residence and source of income.
• These are not simple issues and require expert advisers for HNW
individuals (not corporate tax advisers!)
*****
Thank you!
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We welcome enquiries from entrepreneurial clients and
institutions, who require our confidential services, in areas
such as complex commercial, funds, international tax,
litigation & dispute resolution, trusts and family office
needs.
Contact us for a discussion – obligation free
Independent lawyers – onshore and offshore - international tax advisers for HNWI clients for over
30 years.
Contact in Dubai
Mr. Jaswinder (Jas) Sekhon
jss@global-legal-group.com
Profile on linked in.
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MENA Investment & Immigration Summit Dubai- 1 March 2017 Jas Sekhon presentation

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MENA Investment & Immigration Summit Dubai- 1 March 2017 Jas Sekhon presentation