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Japan anti-terrorism, Irish tax, Malaysia taxes: Compliance

13 October 2014 16:32 (UTC+04:00)
Japan anti-terrorism, Irish tax, Malaysia taxes: Compliance

By Bloomberg

Japanese Prime Minister Shinzo Abe's cabinet approved legislation to freeze terrorists' assets amid criticism that the nation lacks measures to halt money laundering and terrorism financing.

The cabinet also endorsed a proposal to amend a law aimed at stopping criminals from transferring proceeds from their activities, the Finance Ministry said Oct. 10.

The moves came after the Financial Action Task Force in June urged Japan to address deficiencies in its efforts to counter money laundering and funding of terrorists. By not addressing the shortcomings, Japan risks becoming the first developed nation to join the global organization's list of high- risk jurisdictions that includes North Korea and Syria.

The new terrorist asset-freezing system would allow Japan to regulate domestic transactions of funds by terrorists. The current regime based on the foreign-exchange law limits only overseas money transfers with terrorists designated by the United Nations Security Council.

Proposed changes to the anti-money-laundering law include clarifying how to judge suspicious transactions so that financial institutions can report them to regulators, according to materials distributed by the Finance Ministry Oct. 10.

Regulators from Hong Kong to the U.S. are stepping up efforts to curb money laundering, including boosting measures to catch risk-management failures at banks.

Compliance Policy

'Double Irish' Corporate Tax Break's End Is Weighed by Officials

Ireland's finance ministry officials are weighing phasing out a tax device used by multinational companies including Google Inc., according to a person with knowledge of the matter, as the European Union looks into the practice.

Ireland is considering whether to eliminate a technique known as the "Double Irish," which allows companies to avoid paying corporate tax on much of their income, or phasing the tax break out over four or five years, said the person, who asked not to be named, as no final decision has been made.

Irish Finance Minister Michael Noonan is under pressure from the European Commission to end incentives that sweeten the nation's 12.5 percent corporate tax rate as he prepares his Oct. 14 annual budget speech. The commission said Oct. 10 it asked for information from Ireland on tax residency rules earlier this year.

The finance ministry didn't respond to a question about whether the abolition of the Double Irish is under consideration.

Malaysia to Extend Tax Incentives for Islamic Bonds for 3 Years

Tax exemption for expenses incurred on issuance of sukuk based on principles of Islamic finance will be extended by three years from 2015, Malaysia Prime Minister Najib Razak said in a budget speech delivered to Parliament Oct. 10.

Najib also announced the government will introduce the Investment Account Platform in 2015. The new Shariah-compliant investment product will provide opportunities for those who want to invest in entrepreneurial ventures, Najib said in the speech.

IAP investors will be given an income tax exemption on profits on qualifying investments for three consecutive years, according to speech.

Compliance Action

Indian Stock Exchange Told to Submit Study-Based Plan of Action

The Securities and Exchange Board of India directed the National Stock Exchange to submit a plan of action report within three months based on a compliance study by an independent expert.

Sebi ordered the exchange to be cautious in dealings in securities markets and comply with legal requirements.

The order pertains to the National Stock Exchange's Oct. 5, 2012, failure to implement the 10 percent limit for the index circuit breaker, under the terms of June 2001 Sebi rules requiring index-based market-wide circuit breakers, according to the Sebi order.


Doral Shares Surge on $229 Million Puerto Rico Tax-Refund Ruling

Doral Financial Corp., the holding company for Puerto Rico's second-largest bank, jumped 58 percent in early trading following a San Juan judge's ruling that it's entitled to a $229.9 million tax refund.

The Puerto Rico Department of Treasury will be required to refund the full amount over five years under the ruling by Superior Court Judge Laureana Perez Perez, issued after the market closed on Oct. 10.

Doral hasn't posted an annual profit since 2005 and has been under pressure to collect the tax refund that the San Juan- based firm said was due under a 2012 agreement.

The bank sued the Treasury when settlement talks broke down earlier this year. Doral claimed the government reneged on a promise to return the overcharge.

The tax dispute arose amid a slowdown in Puerto Rico's economy, which has struggled to expand since 2006. Puerto Rico's credit rankings were dropped to speculative grade in February.

Puerto Rico Treasury Secretary Melba Acosta Febo vowed to appeal the decision.

"We respectfully disagree with the court's ruling in this matter, which is inconsistent with the Internal Revenue Code, applicable laws and regulations," she said in a statement.

The case is Doral Financial Corp. v. Commonwealth of Puerto Rico, KAC2014-0533, Civil Court of First Instance, San Juan Superior Division.

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