15th November 2022
Global tax news for recruitment agencies
As anyone that’s been monitoring international news will be only too aware, there are significant pressures in national economies around the world, with countries increasing interest rates and strengthening their legislative grips in order to balance out their finances. One of the key methods that most governments are adopting is tightening tax regulations, in attempts to catch those suspected of evasion. And, for agencies placing contractors around the world, this creates a significant number of challenges. With the introduction of new laws placing the tax burden on these agencies, in many cases, it’s never been more important to ensure both your organisation, and the individuals you work with, are operating in a legal way. We’ve highlighted some of the latest cases from around the world that recruitment firms should be aware of in order to stay up-to-speed with tax developments.
Credit Suisse settles French tax fraud probe for €238m
Credit Suisse settled a tax fraud and money laundering case, that has been rolling on for a number of years now, with a €238m payment to the French government last month. The agreement was announced in court and confirmed by the bank in a statement and resolves the investigation over whether it helped clients to avoid paying tax between 2005-2012. The alleged scheme, which is said to have taken place in a number of countries around the world, cost the French state over €100m in fiscal damage according to the prosecution office. Credit Suisse has been keen to close the case ahead of its recent strategic review and had earlier agreed to pay $495m to settle additional allegations that it mis-sold mortgage backed securities in the USA. This case highlights that, regardless of status and scale, tax authorities are on the hunt for non-compliant behaviour and are more than happy to hand out colossal fines to those it suspects are involved in financial crime. After all, not many agencies can handle a fine of the scale that Credit Suisse has been given.
Malta’s woes continue with embezzlement and tax evasion scandals
Anyone staying up to speed with domestic developments in Malta will be only too aware that the country has been battling a raft of tax-related cases across its gaming, financial, and even political, sectors in recent years. In 2021 it was placed on the FATF grey list, for jurisdictions that ‘require additional monitoring’ and, last month, the head of the Agency for European Integration and Economic Development (AEI) in Vienna, has been accused of embezzling EU funds to a trust based in Malta. The AEI was launched in 2003 and carries out twinning projects, however, since 2017 its balance sheet rose from €580,000 to €15.5m, which caught the attention of tax authorities. This led to an investigation which found a trust structure in Malta designed to benefit the family of the AEI chief, who has so far remained unnamed. In addition, authorities in Belgium had warned nationals against using Maltese companies to register luxury goods in a method adopted to save thousands in tax. Clearly, Malta is going through somewhat of a difficult legislative period, however this means that the spotlight will be heavily focused on the country over the coming years and authorities will be on high alert for anyone they suspect of behaving in a non-compliant manner. If your agency places contractors in Malta it’s worth keeping a close eye on regulatory changes before it’s too late.
Is the Bank of Israel set to launch a digital shekel?
According to recent reports, over 100 countries – including Israel – are considering exploring Central Bank Digital Currencies (CBDCs) that could mean money is denominated in flat currency in electronic form via Blockchain token’s in certain jurisdictions. Israel’s Central Bank has been tackling a range of well-publicised issues, however its CBDC Project Manager, Yoav Soffer, has suggested that the introduction of the so-called Digital Shekel could “allow for more freedom”. While the proposal is still in its early stages, it does highlight a wider movement being seen around the world of governments looking to develop more digitally-based currencies. This is certainly an area worth monitoring as any move away from traditional tax and legislative systems could create large compliance and tax burdens for agencies placing contractors around the world.
Greek government says more deals in works following new French tax treaty
Following the ratification of the new Greece-France agreement designed to eliminate double taxation and prevent tax evasion and avoidance, the Greek Finance minister has suggested that more deals are in the works with countries such as Australia and Japan. According to Christos Staikouras, “The Ministry of Finance is actively involved in shaping developments in the field of taxation at the OECD and European Union level, and is already negotiating or planning negotiations in order, on the one hand, to revise existing agreements and, on the other hand, to extend the network of Double Taxation Agreement with new countries with a focus on peace, stability and security.” Greece certainly isn’t the only country looking at strengthening cooperation agreements with other countries. Many nations appear to have learned that it’s considerably easier to tackle tax evasion by working in partnership with other jurisdictions, and it’s highly likely that the coming years will see more deals being put in place. For agencies placing contractors this presents yet another major legislative challenge to be aware of with the introduction of new regulations likely creating additional complexities for these firms to manage.
As you can probably tell, the global tax and compliance world is only heading in one direction. Legislative burdens are only going to increase and become more challenging for agencies that place professionals internationally, particularly those without specialist knowledge. And, as we have seen, authorities around the world are feeling more confident in their collective abilities to track down firms and individuals accused of breaking financial laws and prosecute them accordingly. This means that for your agency, it’s never been more important to ensure you and the professionals you are placing are compliant. If you are in any doubt about the legislative status of your agency or the contractors under your watch, then please visit our website or speak to 6CATSPRO for expert advice that could keep you out of hot water.
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