Expensive nonlife-insurance policies as house abandons tax-rate cuts

Philippine Insurers and Reinsurers Association (Pira) is no longer hoping the proposed bill on the lowering of tax rate on nonlife-insurance products will ever be enacted under President Aquino. Pira Chairman Michael Rellosa said many of the country’s legislators are already in campaign mode, as indicated by the lack of quorum at the House of Representatives the past few months.

The proposed bill that will lower the tax on nonlife-insurance products had been pending during the 16th Congress, no matter the strong support from Insurance Commissioner Emmanuel F. Dooc.

The tax imposed on nonlife-insurance products in the Philippines is said to be the highest in the world, equal to 24.5 percent of the total premium paid for nonlife-insurance products, and 26.5 percent for fire insurance.

Nonlife-insurance products are levied a 12-percent  value-added tax and another 12.5-percent documentary-stamp tax. Fire insurance is slapped an additional 2-percent fire service tax. On top of these taxes, local governments also impose 0.15 percent up to 0.17 percent in municipal tax for property insurance.

Singapore only imposes a tax of 7 percent on nonlife-insurance policies, while Thailand imposes 11.3 percent.

Finance Secretary Cesar V. Purisima was earlier reported to have opposed the lowering of the tax, although he once supported the proposed 5-percent tax on nonlife-insurance products, which was a compromise with the insurance industry, which earlier proposed for a 3-percent tax.

The lowering of the tax on nonlife-insurance products would have been appropriate with the previous lowering of taxes by the Arroyo administration on life-insurance policies, with the old tax of 5 percent being lowered further to only 2 percent to boost the competitiveness of the country’s life-insurance industry.

Rellosa said the lowering of the tax on nonlife-insurance premium would also have been in line with the government’s new policy of promoting microinsurance as a tool for the financial inclusion of the poor, because most microinsurance products are nonlife-insurance products that provide cover for property loss.

But, as  it turns out, with the shelving of the measure on  nonlife-insurance  products, these were touted as the poor man’s protection against loss of property and income during times of natural calamities.

Such will continue to be levied a very high tax rate of 24.5 percent.

-- Business Mirror

Locking in Losses

We are in the last week of the Financial Year, here in India, and it is time for me to lock in any short term losses that I have incurred in my direct equity investments this year.  This is something that I routinely do at the end of the tax year, due to the way taxes are structured in India.  My goal is to lock in STCG (Short Term Capital Gain) losses, to either offset any STCG gains from this year, or from future years (since you can carry over STCG losses into the next year) Remember you cannot write-off STCG losses against salary income.  Also note that LTCG (Long Term Capital Gain) losses cannot be written off against STCG gains (They can be written off against LTCG gains, but then LTCG taxation on equity is NIL, so there is no real benefit)

I reviewed my direct equity portfolio today, and have identified STCG loss candidates, that I will sell over the course of this week.  I might buy some of them back (or similar stocks) in the first week of April, once the STCG losses are locked in this week.  Remember that this transaction cannot be intra-day since it needs to be on actual delivery basis.  This financial year, we had the awesome bull run in 2014, so i don't have any losses to show from stock purchases made during/prior to the bull run. However, things have slowed considerably in 2015, and YTD the stock market has been far from spectacular in its returns.  Most of my 2015 purchases are in the red, and need to be culled both from a portfolio quality perspective, and also from a STCG standpoint.

I only do this financial jugglery with direct stocks that I own, and not with any MF SIPs.  For example, several of my MF SIPs from earlier this year, are showing a notional loss at this time, since the market has retreated from its all time highs seen earlier this year.  However, I intend to hold on to these for the long term, during which time, (hopefully) they will have recovered the notional loss.  In my mind MFs are for long term, so there is no concept of short term sales/losses etc.

One final note is that you can only carry forward losses, if you file your tax return on time before the deadline this year.  I am sure we all do that, so it is just an FYI for the smart investor!

Top Five Tips to Save your Business Tax

A company always ensure that it pays the correct but minimum amount of tax possible. Getting a corporate tax return wrong can end in penalties.The entire process of tax return and legislation is complicated. As Benjamin Franklin said “tax is one of the perpetual certainties of life’. None of us are totally unaffected by taxation. How much we earn will be charged to income tax and much of what we buy is subject to VAT. The tax code allows you to subtract costs of doing business from the gross income and whatever is left is the net business profit.

Every business should know as how to maximise their deductible business expenses to reduce their taxable profit. Here are some of the key points to save your tax:

Invest before deduction limits are cut:

Take advantage of the section 179 deduction that allow a business to deduct expenses for several capital equipment purchases such as business software’s, computers, furniture’s, vehicles or manufacturing equipment’s. This means if the company makes any purchase before the end of the year, they may be able to deduct most of their outlays for capital equipment’s. Even if the company do not think that they need to make new purchases, they can review their inventory and equipment and use them at the year end to replace the obsolete assets. Also make sure to talk to your tax advisor or accountant for more specifics.

Defer your income:

If the company wants to be in the lower tax bracket deferring income is a good idea. Billing late somewhere in December will defer your taxable income. If the company cannot defer income or wages of their employees, they can consider delaying the payment of bonus until the New Year. If the company can operate on a build-up accounting basis they can claim a deduction for the bonuses even though the bonuses aren’t paid until next year.However, the bonuses must be rewarded within 2.5 months of year end.

Vehicle and travel expenses:

There are numerous deductions from vehicle as well as travel expenses. Not only can you deduct 48.5% per mile for business trips but also can deduct tolls paid during the trips. Expenses related to business travel including expenses for hotels, airfares, cab fees or rental cars are deductible. Moreover, you can also deduct the expenses of a business associate travelling with you provided he/she is professionally involved with you in the business. However, make sure that all the receipts are kept.

Education deduction:

Work-related education can also be deducted provided such education courses improve job-related skills. Companies can deduct employees’ educational expenses if such courses are applicable in the job. In addition, transportation to and from the classes may also be deducted.

Keep the business records organised:

Knowing what records to keep and for how long can save the billable hours especially when the tax session rolls around. The types of record to keep and how long to keep them depends on the following items involved -

Keep copies of income tax returns for a minimum of three years. However if it is suspected that no return has been filed there is no limit on the number of years the file can go back for examination. So it is better to keep the copies of tax returns for an indefinite period of time

Keep records of the costs of assets purchased such as confirmations of securities purchased or receipts of equipment purchased. The records are needed to figure out the basis of assets used for determining the gain or loss upon a sale

Keep records relating to meal and entertainment for maximum of three years from the filing of the return?

Keep records of employees for at least four years. These records include:

* Date and amount of all payment to the employee
* Time slips of employment
* Copies of employment tax return
* Employee information such as name, address, date of employment or social security number.

If your company is looking for tax advisor you can contact Wisteria chartered accountants in London who will offer you proactive services in terms of high quality and specialist tax advice in all areas of corporate taxation.

Choosing Someone To Do Tax Preparation

For most people, the tax season is a headache-inducing time of the year. Aside from the tons of computation that one has to do, an individual would also have to make sure that they fill their forms properly and have the needed attachment in place. Although this might be of little concern to people who are extremely organized with their records, the same cannot be said for majority of the people. This is where the help of a tax preparer such as the Karliner Tax Services provider comes into play.

When seeking the help of a tax preparer, a person has to consider a number of factors in mind, one of which is the preparer’s qualifications. With the release of the recent guidelines from the IRS, one has to keep in mind that they should only get a preparer who has been issued a Preparer Tax Identification Number, or PTIN. It is also a good idea to consider only a tax preparer who is affiliated with a relative professional organization and who makes sure that he or she does continued education. The last one is particularly important, as the preparer has to be aware of the different updates in the guidelines when it comes to tax preparation.

Once an individual has made a shortlist of possible tax preparer to hire, experts such as the Karliner Tax Services recommend checking into the person’s history. If possible, one should get a tax preparer who has not had any negative records at the Better Business Bureau. Aside from this, one should also look into the person’s licensure status as well as the presence of any disciplinary action. This can easily be coordinated with the state board of accountancy as well as state associations.

Everyone should be wary of tax preparers who claim to be able to help people take home a larger amount of refund. In the same manner, people should also stay away from tax preparers who charge fees based on how much refund a person is able to get. Under no circumstance should a tax preparer have the refund deposited to his or her account as the whole refund should go directly to the person.

If possible, one should go for a tax preparer who makes use of electronic filing. Aside from being a sign that the tax preparer is someone who is trusted by many, the use of electronic filing also lessens the probability of errors caused by human intervention. Electronic filing has also been proven to be one of the most secure ways of processing tax returns. 

In order to ensure that the tax preparer is able to do a good job of filing the tax returns properly, the client concerned would have to make sure that the tax preparer has the entire document he or she needs. This would include receipts, pay stubs, and W-2. One has to be wary of tax preparers who are willing to push through with the filing even before the client has received his or her copy of the W-2.

About the author: Laura Hoover is a former tax advisor who now takes various home-based gigs such as tax computation and consultation. She is currently thinking of getting back into the industry and get a job at a tax servicing company like Karliner Tax Sevices. 

The countries with the world’s top 5 highest income rates

With the globe still struggling to recover from the worst recession since World War II and elections occurring in Europe and the USA, taxes have once again become a hot topic of conversation as many countries propose further rises. But which countries currently have the highest income tax rates?

5. Japan, Belgium, Austria, UK (tied)
The top income tax rate for Japan, Belgium, Austria and the UK is 50%. As the only Asian country in the top 5 highest income tax rates in the world, Japan’s top tier rate of 50% is more than double Asia’s average of 23%. Despite this, its tax revenue is the fifth lowest amongst OECD member countries due to a rocketing national debt crisis.
Western Europe may have the highest income tax rates of any region in the world but Belgium’s highest tax rate is still 5% higher than the average. Belgians are lumped with the highest tax and social security burden, regardless of income, of any OECD member. Austria may frequently be ranked as one of the best places to live in the world but they are certainly taxed for the privilege! When the UK raised its top income tax rate to 50% in 2010 it leapt from the 13th to the 4th highest income tax rate in the European Union and was the biggest top-rate income tax hike in the world that year.

4. The Netherlands
At 52%, well above Western Europe’s average of 45.7%, The Netherlands’ top income tax bracket is undoubtedly high but it does help to pay for a wealth of benefits. The Dutch enjoy reimbursements of up to 70% on childcare, subsidies on children’s books, money towards holidays which amounts to 8% of an individual’s salary, and free medical care.

3. Denmark
Denmark’s income tax rate for its top band of wage earners may have come down from 62.3% in an economy-boosting drive in 2008 but it is still 55.4%, making it the third highest rate in Western Europe. However, these tax cuts have also decreased the tax and social security burden on single taxpayers.

2. Sweden
At 55.6%, Sweden’s top income tax rate is higher than any other Scandinavian country and the second highest in the world. However, its taxes fund an incredibly generous social security system - Sweden spends more of its GDP on social services than any other country in the world - which allows Swedes to enjoy free education, subsidised healthcare and public transport, and a government-guaranteed pension.

1. Aruba
Not many would guess that the country with the highest income tax in the world is Aruba. The tiny Dutch territory in the Caribbean has a top tier income tax rate of 59%, far higher than the Caribbean average of 26.7% and astronomically higher than the Bahamas, Bermuda and the Cayman Islands which have no income tax at all. However, the island also boasts one of the highest standards of living in the Caribbean.

Aruba may not stay at the top spot for much longer if the newly elected French president Francois Holland has his way. To help pay off the country’s crippling debt, Holland is proposing to raise the income tax rate on the wealthiest (those who earn over €1 million) from the current 48% to a whopping 75%!

This articles is provided by My Refund, the New Zealand registered tax agent www.myrefund.co.nz

Overview of the Indian Tax System

The Indian tax system can be very complex, but for a clearer understanding, we can break it down into simple elements that make up one’s personal income:

a) Salary from an Employer.

b) Rental (house property) income

c) Capital gains (gain or losses made by the buying and selling of Shares and other capital assets)

d) Business income – income earned as a professional or as a partner in a firm.

e) Other sources of income such as interest and dividends.

Put all these incomes together and you get your Gross Total Income. It is called “gross” total income because you can reduce this income by various schemes available. These are called Tax Deductions. You can reduce your tax liability by investing in either of the following tax deductions:

a)  Invest money into a Provident Fund account

b) Investing a term deposit (FD) for 5 years

c) Paying premium of life insurance policy for yourself, your spouse and your children.

d) Repaying the principal component of a home loan.
e) Paying the Tuition Fees for the education of your children.


The above tax deductions can help you reduce your taxable income by upto Rs 100000 under Section 80c of the Indian Income Tax Act.

There are other tax deductions which are applied when you pay premiums of a mediclaim policy or when you give donations to recognized charitable organizations or when you pay the interest of an education loan, amongst several others that help you further reduce your taxable income.

After the tax deductions have been applied we arrive at your Total Income. We can then calculate your tax liability as per the following tax slabs:

There are basic exemptions limits on which you pay no tax. Any income over these limits is then taxed at different rates listed below:

For the assessment year 2012-2013, the basic exemption limits are:
Rs. 180000 for men, Rs. 190000 for women and Rs. 250000 for senior citizens

All Income Over the basic exemption limit but below Rs. 500000 will be taxed at 10%.

Income over Rs. 500000 but below Rs. 800000 will be taxed at 20%.
and lastly,
Income over Rs. 800000 and above is charged at 30%.

Once your tax liability is determined, all your tax credits such as TDS, advance taxes and self assessment taxes are deducted from your liability to get to a final grand total of the possible taxes that you may pay or get refunded.

Working Example:

A Male, aged 45 with a Salary Income of Rs. 250000 and Interest Income of Rs. 50000, a Rs. 5000 Investment in Employee Provident Fund and a total TDS of Rs. 5000 in the assessment year 2012-2013 will be taxed as follows:

Gross Total Income: Rs. 250000 + Rs. 50000 = Rs. 300000
Tax Deduction: Rs. 5000 (Investment in EPF)
Total Income: Rs. 295000
Basic Tax Exemption: Rs. 180000
So you have to now pay Tax on Rs. 115000 @ 10% = Rs. 11500
But you have already paid TDS of Rs. 5000, which is deducted from Rs. 11500 to arrive at a final tax figure of Rs. 6500 + Surcharge + Education Cess which is payable as your final tax liability.

The above article has especially written for Finance Buzz on Tax system in India by Aashish Ramchand, a Chartered Accountant by profession and Co-Founder of Make My Returns (www.makemyreturns.com)

Step by Step Guide to Register a Company in Cyprus

You may have heard of the numerous tax benefits the country of Cyprus is offering and wish to register your company in its midst. It is a wise decision on your end. To begin, familiarize with the procedure that has to be accomplished listed below:

Cyprus Company Name
The Registrar of Companies offers a free company name check to all businesses interested to register in Cyprus; however, the following rules has to be remembered:

• As a rule, your company name has to end with either one of these two suffixes: LLC or LTD.
• The name you choose should not be identical or deceptively similar with any of the existing corporation under registration in Cyprus.
• You are given the liberty to use a Greek Company Name, but the necessary English Translation has to be supplied to the Registrar of Companies.

After complying with the following rules, your company name will be submitted for approval to the Registrar of Companies.

Determining the Share Capital
While waiting for the approval of the company name, determine the share capital each shareholder is to receive. Follow these guidelines to make the task easier.

• There is a minimum required share capital of €1,708
• Share capital has to be expressed in Euro, except for older companies that may have their shared denominated using the previous currency honored in Cyprus, the Cypriot Pounds
• Companies considered as LLC are given the liberty to issue as many or as few shares as they deem necessary

Determining the Cyprus Company Directors and Shareholders
The preliminary stage does not end with the finalization of share allocation; the company must also determine their list of directors and list of shareholders. The following guide will be of assistance in proceeding with this stage:

Director Guideline
• The directory may be of any nationality, but it is best if the director is a Cypriot tax resident to take advantage of tax benefits
• It is possible to have more than one director, but the minimum requirement is one
• Nominee directors are acceptable, particularly for fast incorporation
• Corporation are accepted to act and be registered as directors
• It is important to indicate the name of the initial directors because it will be recorded at the Registrar


Shareholder Guideline
• The Registrar requires a minimum of one shareholder for the formed company
• The shareholder may belong to any nationality and may reside in any place of the globe
• Corporations are given the right to become shareholders
• Nominee shareholders are also tolerated

Secretary Guideline
A resident secretary is necessary to fulfill the requirements of the Registrar. Although, you are in no need to provide a resident secretary; you are expected to demonstrate that the company formed can properly control and manage the activities of the company within the jurisdiction of Cyprus. Nevertheless, the primary task of the secretary is to accept papers and documents from local authorities.

Cyprus Company Registered Office
Aside from the above mentioned officers, it is also important to choose a registered office where you will accept your correspondences. Feel free to inquire with certain legal institutions for assistance if you feel the need to request for a virtual office.

Once you have decided on these important aspects of your company, it is time to submit these documents together with the payment of fees to the Registrar. If you manage to submit and fill out the form accordingly, then expect five days to receive the certificate of incorporation together with other documents from the Registrar.

About the Author: Achilleos D. is the Manager of the Corporate and Legal Department at Oxford Tax Solutions. He has extensive experience in company formation, litigation, corporate and international tax.To learn more about Cyprus company registration visit:
http://www.oxfordcy.com/index.php/en/cyprus-companies-cyprus-company-register-cyprus-offshore