October 2024

The World Bank has presented its annual ranking based on an updated survey of the conditions for business development in 50 countries around the world. The report is titled "Readiness for Business." The ranking is based on three main indicators that reflect the opportunities for businesses to thrive in a given country: "quality of the regulatory framework," "efficiency of public services," and "operational efficiency."

The first indicator, "quality of the regulatory framework," includes the norms and regulations that businesses must comply with in carrying out their activities. In this category, Bulgaria is rated at 76.33 points, placing the country among the leaders in this indicator (6th place).

The second indicator, "efficiency of public services," encompasses the ability of businesses to comply with the rules and regulations of a particular country, as well as the availability of infrastructure that enables them to successfully develop their operations. According to this indicator, Bulgaria is rated at 64.03 points, placing it slightly behind the leading countries (11th place).

The third indicator, "operational efficiency," represents how much state and municipal administrative services assist businesses in developing their activities, as well as how restrictive regulatory norms and other legal standards are in a given country. According to this indicator, Bulgaria is rated at 70.49 points, placing it among the top countries included in the survey (8th place).

Source: Confindustria Bulgaria

On October 10th, 2024, the General Administration of Customs (GAC) has released the Announcement of the General Administration of Customs on Implementing the Write-off Management for Bonded Logistics Ledgers (Draft for Comment) (the "Draft") for public consultation until October 24, 2024.

The Draft focuses on three key areas:

1. Clarifying the scope of logistics ledgers subject to write-off management, including those for special customs supervision areas within the Golden Customs Project Phase II processing trade and bonded supervision subsystem, as well as those used in bounded supervision premises, inclusive of cross-border e-commerce ledgers.
2. Specifying detailed rules for write-off management of bonded logistics ledger, including provisions for the write-off cycle, time limit for declaration, required submission content, and the handling of the write-offs.
3. Outlining the transition requirements for switching between old and new bonded logistics ledgers: As the write-off management functionality for bonded logistics ledgers is rolled out, a six-month transition period will be provided to ensure seamless business operations, with clear guidelines for managing this transitional period.

Source: customs.gov.cn

On October 11th, 2024, three authorities including the Ministry of Finance (MOF) jointly released the Implementation Measures for the Pilot Reform of Water Resource Tax (the "Measures"), set to take effect on December 1, 2024.

The Measures outline regulations regarding elements of the tax system, such as taxpayers, tax base, tax rate standards, and tax incentives related to the water resource tax, stating that the water resource tax will be collected at differentiated rates based on the conditions of water resources, types of water usage, and economic development. The State will establish a minimum average tax rate standard for each province, autonomous region, and municipality directly under the Central Government, while local authorities will determine specific applicable rates. Additionally, the Measures mandate that higher tax rates be set for groundwater extraction and in regions facing significant water scarcity or over-extraction. They also clarify that, following the full implementation of the water resource fee-to-tax reform pilot program, all revenue from the water resource tax will be allocated to local governments.

Source: mof.gov.cn

Three departments, including the State Taxation Administration (STA), have jointly issued the Announcement on the Promotion and Use of Fully Digitalized Electronic Invoices for Railway Passenger Transport (the "Announcement") recently, effective from November 1, 2024. The Announcement specifies the basic content of electronic invoices (electronic railway passenger tickets), their numbering and coding rules, and the inquiry, verification, downloading, and usage by passengers and entities, among other matters. According to the Announcement, passengers may obtain, inquire about, download, and print the electronic invoices via the "Railway 12306" website or mobile app after completing their travel or paying the fees ticket refunds or rescheduling. Entities may both use their digital taxation accounts to inquire about, verify, download, print, and confirm the purpose of the electronic invoices, and verify the invoices through the National VAT Invoice Verification Platform. For entities that are general VAT taxpayers, electronic invoices may be used as VAT deduction certificates, and the input tax amount will be determined as per the existing regulations. A transition period for the full implementation of digitalized electronic invoices for railway passenger transport has been set, ending on September 30, 2025.   Source: chinatax.gov.cn

With the UK’s upcoming 2025 tax reform, many High-Net-Worth Individuals (HNWI) are exploring new options for establishing tax residency abroad. London, historically attractive for the tax advantages granted to non-domiciled (non-dom) residents, will see these benefits on foreign income gradually phased out. This change has HNWIs considering countries that offer solid tax benefits and stable environments for relocating their residency.

Switzerland: A Strategic Choice for Stability and Quality of Life

Switzerland continues to draw interest with its advantageous tax system, offering options such as an annual lump-sum taxation for non-domiciled residents in certain cantons. This framework allows HNWIs to benefit from competitive tax rates in a highly stable political environment with a top-tier quality of life, including exceptional healthcare and education systems. Switzerland also stands out for its natural beauty and multicultural setting, fostering an inclusive environment with unlimited Schengen access and an extensive network of treaties to prevent double taxation.

United Arab Emirates: Zero Taxation and a Cosmopolitan Environment

The UAE is one of the most attractive choices for HNWIs due to the complete absence of personal income, inheritance, or gift taxes, with no individual tax declarations required. Cities like Dubai and Abu Dhabi offer excellent healthcare infrastructure and a high standard of living within a cosmopolitan environment that blends tradition with modernity. With flexible visa options and a strategic location providing easy access to multiple international markets, the UAE also offers unparalleled investment opportunities.

Hong Kong: Tax Benefits and Access to the Chinese Market

Hong Kong ranks among the most sought-after destinations for investors and HNWIs due to its favourable tax system, which includes no capital gains, inheritance, or gift taxes. Individual income tax rates are among the world’s lowest, and Hong Kong’s unique position allows easy access to mainland China. Its economic dynamism and robust financial institutions make it ideal for those seeking a competitive environment with extensive networking and business development opportunities, bolstered by numerous treaties to avoid double taxation.

Evaluating the Right Jurisdiction: Final Considerations

Choosing the ideal jurisdiction depends on each individual’s personal and financial needs. Switzerland, the UAE, and Hong Kong each offer targeted solutions for tax planning and lifestyle, although their residency requirements and access criteria vary. Carefully considering all factors before making a decision is essential

If you’d like to delve into the specifics, download our complete guide “New Relocation Opportunities for HNWI,” where you’ll find practical information and targeted advice for each destination.

On 9 October 2024, China (People's Rep.) and Hong Kong signed a second amending agreement to update the closer economic partnership arrangement (CEPA) agreement on trade in services, signed on 27 November 2015 and effective from 1 June 2016, as amended by the 2019 amending agreement. The second amending agreement, signed in Hong Kong, entered into force on the date of signature and will become effective on 1 March 2025.

The 2015 CEPA agreement on trade in services aimed to promote trade liberalization between China (People's Rep.) and Hong Kong. An amendment to this agreement was signed on 21 November 2019, introducing new liberalization measures that took effect on 1 June 2020. The second amending agreement aims to further enhance liberalization and trade facilitation through new liberalization measures. Additionally, the new agreement adds institutional innovation and intensification of collaboration.

Source: IBFD Tax Research Platform News

Hong Kong's Treasury Secretary Christopher Hui recently announced plans to launch new tax incentives to stimulate the development of virtual assets and other investments in Hong Kong, aiming to strengthen its position as a business hub in the Asia-Pacific region.

During his 18 October 2024 speech at Hong Kong Fintech Week, Hui emphasized Hong Kong's strengths in advancing the artificial intelligence (AI) sector, citing its robust financial infrastructure, strong policy framework, and advantageous geographical location. He noted that while AI offers great potential, it also faces challenges, making it essential to establish regulatory regimes that not only guide but encourage its growth.

Hui said the Hong Kong government plans to include new tax concessions, like for virtual assets, in its law by the end of 2024. He also highlighted that tax incentives would expand to support the growth of the private credit market in Hong Kong.

"By expanding the availability of tax concessions to this wider scope of assets eligible under our fund regime and our family office regime, we will be able to add that extra impetus and pull to this [Hong Kong] market on their development front", Hui said.

Source: IBFD Tax Research Platform News

The Parliament passed the Multinational Enterprise (Minimum Tax) Bill and the Income Tax (Amendment) Bill on 15 October 2024 to implement the Multinational Enterprise Top-Up Tax (MTT) and the Domestic Top-Up Tax (DTT) to ensure that the minimum effective tax rate is 15%. The amendments are set to apply to multinational enterprise (MNE) groups in Singapore from 1 January 2025.

This development is in line with the Global Anti-Base Erosion Model Rules (Pillar Two) (the GloBE Rules) of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which require MNE groups be subject to a minimum effective tax rate of 15%.

Source: IBFD Tax Research Platform News

With the UK’s upcoming 2025 tax reform, many High-Net-Worth Individuals (HNWI) are exploring new options for establishing tax residency abroad. London, historically attractive for the tax advantages granted to non-domiciled (non-dom) residents, will see these benefits on foreign income gradually phased out. This change has HNWIs considering countries that offer solid tax benefits and stable environments for relocating their residency.

Switzerland: A Strategic Choice for Stability and Quality of Life

Switzerland continues to draw interest with its advantageous tax system, offering options such as an annual lump-sum taxation for non-domiciled residents in certain cantons. This framework allows HNWIs to benefit from competitive tax rates in a highly stable political environment with a top-tier quality of life, including exceptional healthcare and education systems. Switzerland also stands out for its natural beauty and multicultural setting, fostering an inclusive environment with unlimited Schengen access and an extensive network of treaties to prevent double taxation.

United Arab Emirates: Zero Taxation and a Cosmopolitan Environment

The UAE is one of the most attractive choices for HNWIs due to the complete absence of personal income, inheritance, or gift taxes, with no individual tax declarations required. Cities like Dubai and Abu Dhabi offer excellent healthcare infrastructure and a high standard of living within a cosmopolitan environment that blends tradition with modernity. With flexible visa options and a strategic location providing easy access to multiple international markets, the UAE also offers unparalleled investment opportunities.

Hong Kong: Tax Benefits and Access to the Chinese Market

Hong Kong ranks among the most sought-after destinations for investors and HNWIs due to its favourable tax system, which includes no capital gains, inheritance, or gift taxes. Individual income tax rates are among the world’s lowest, and Hong Kong’s unique position allows easy access to mainland China. Its economic dynamism and robust financial institutions make it ideal for those seeking a competitive environment with extensive networking and business development opportunities, bolstered by numerous treaties to avoid double taxation.

Evaluating the Right Jurisdiction: Final Considerations

Choosing the ideal jurisdiction depends on each individual’s personal and financial needs. Switzerland, the UAE, and Hong Kong each offer targeted solutions for tax planning and lifestyle, although their residency requirements and access criteria vary. Carefully considering all factors before making a decision is essential

If you’d like to delve into the specifics, download our complete guide “New Relocation Opportunities for HNWI,” where you’ll find practical information and targeted advice for each destination.

On 22 October 2024, the Thai Cabinet approved the signing of a draft letter of commitment for Thailand to join the Multilateral Competent Authority Agreement on Automatic Exchange of Information pursuant to the Crypto-Asset Reporting Framework (CARF MCAA).

Through the letter of commitment, Thailand indicates it will prepare for implementation of the relevant domestic laws and procedures and intends to begin exchanging information under the CARF MCAA by 2028.

The CARF is an important component of the International Standards for Automatic Exchange of Information in Tax Matters, published by the OECD on 8 June 2023, which also includes amendments to the Common Reporting Standard.

Source: IBFD Tax Research Platform News

The Monetary Policy Committee (MPC) of the Bank of Thailand has voted 5 to 2 in favor of reducing the policy interest rate by 0.25%, lowering it from 2.50% to 2.25% per year, effective immediately.

The Thai economy is expected to grow in line with previous projections, while headline inflation is anticipated to gradually return to the target range by the end of 2024. The household debt-to-income ratio is also expected to continue its gradual decline.

The MPC concluded that the current neutral monetary policy stance remains suitable for the economic and inflation outlook. The majority of committee members supported the rate cut, viewing it as a way to ease debt burdens without hindering the ongoing reduction in the household debt-to-income ratio. They considered the current level of interest rates to be neutral and aligned with the economy’s potential, especially in light of slowing credit expansion.

However, two committee members voted to maintain the policy rate at its current level. They argued that the current rate remains appropriate for economic and inflation trends and stressed the importance of preserving long-term financial stability. They also highlighted the need to retain the capacity of monetary policy to address future uncertainties.

Thailand’s economy is projected to grow by 2.7% in 2024 and 2.9% in 2025, driven by tourism, private consumption, and improving exports, particularly in the electronics sector. However, the recovery remains uneven across industries.

Financial conditions have tightened slightly. The Thai baht has appreciated against the US dollar, reflecting both global monetary policies and domestic factors. Borrowing costs for the private sector through commercial banks and the bond market have remained stable, while overall credit growth has slowed, particularly in small and medium-sized enterprises (SMEs) facing structural challenges, as well as in the hire-purchase and credit card sectors.

Source: thailand.prd.go.th

The Thailand Board of Investment (BOI) said that applications for investment promotion in the first nine months of 2024 increased 42% on year in value to a combined 722.5 billion baht (ca. USD 21.7 billion), the highest level since 2015. Large projects in target sectors such as electrical appliances and electronics (E&E), and digital, mostly data centers, led rankings due to a significant afflux of foreign direct investments (FDI).

The number of applications for investment promotion during January to September increased 46% to 2,195 projects, from 1,501 projects in the same period of 2023. The adjusted investment value of the projects applied in the first nine months of 2023 was 509.4 billion baht.

Mr. Narit Therdsteerasukdi, Secretary General of the BOI said: "The investment applications in the first nine months clearly demonstrate the rising confidence of investors in key tech industries that Thailand is the strategically located, safe and resilient place that’s best for their business, Thailand’s robust digital infrastructure, clean energy resources, and strong government support are providing the right environment for data center and advanced technology investment, including wafer manufacturing."

FDI during the nine months increased 38% from the year earlier period to 546.6 billion baht.

The applications for projects in targeted industries accounted for 68% of the total investment value, led by the E&E sector with 291 projects worth a combined 183.4 billion baht, followed by the digital sector with 107 projects worth 94.2 billion baht, and the automotive and parts sector with 212 projects worth 67.8 billion baht. The agriculture and food processing sector saw 226 projects worth a combined value of 53 billion baht, while there were a total of 162 petrochemicals and chemicals projects with a combined value of 34.3 billion baht.

Singapore was the top source of FDI with applications worth 180.8 billion baht, more than twice the 79.7 billion seen in the year earlier period, mostly due to large investments in E&E and data centers by units of Chinese and American companies. China ranked second with 114.1 billion baht, up 18% from 96.5 billion baht a year earlier, and was followed by applications from companies based in Hong Kong (68.2 billion baht), Taiwan (44.6 billion baht), and Japan (35.5 billion baht).

E&E applications so far this year have included the 11.5 billion baht investment by FT1 Corporation, a Thailand-Hong Kong-Singapore wafer manufacturing joint venture between Hana Microelectronics and PTT Group that will start producing silicon carbide wafers as early as the first quarter of 2027. Several printed circuit board (PCB) applications were also filed this year, such as China-based Multi-Fineline Electronics’ project to invest 13.9 billion baht to manufacture multilayer PCBs and flexible PCBs in Thailand.

Electrical appliance project applications filed so far this year include China’s Haier Appliance Manufacturing’s 13.5 billion baht investment in a new smart air conditioners manufacturing facility, and Taipei-based Inventec Electronics’ investment of 11.8 billion baht for the manufacturing of smart electrical appliances and smart electronic devices , including PCBA, notebooks, docking stations.

As for the digital sector, most of the investment value came from applications to setup large data centers by units of large tech and cloud service companies such as Google (Alphabet) from the U.S., Australia’s NextDC, and India’s CtrlS Datacenters.

Automotive sector applications include Continental AG group’s Continental Tyres (Thailand) Co., Ltd. project to spend a total of 13.4 billion baht to expand its tire plant in Rayong Province and boost annual production by an additional 3 million high-performance radial tires, mostly for export, reaffirming Thailand’s status as the World’s second largest tire production base, and Southeast Asia’s automotive hub.

Source: boi.go.th

On October 14, 2024, the Ministry of Finance of the United Arab Emirates (MOF) announced significant changes to the Economic Substance Regulations (ESR) following the enactment of Cabinet Decision No. 98 of 2024. This decision amends Cabinet Decision No. 57 of 2020, dated August 10, 2020, relating to economic substance requirements, making substantial revisions to the existing regulations. These changes represent a step forward in strengthening the country’s competitiveness, aligning it with the new federal Corporate Tax framework.

Key Updates:

• Cessation of ESR Obligations: Starting from the financial year beginning after December 31, 2022, companies classified as "Licensees" will no longer be required to submit Economic Substance Notifications or annual Economic Substance Reports. However, the ESR will continue to apply for financial years from January 1, 2019, to December 31, 2022.
• Cancellation of Penalties: Administrative fines imposed for periods after December 31, 2022, will be annulled. Additionally, any fines that have already been paid will be refunded, although the refund mechanism will be communicated later.

• Compliance with Tax Regulations: Even in the absence of ESR obligations from 2023 onwards, companies must ensure compliance with the federal Corporate Tax regulations, particularly for free zone entities seeking to benefit from the preferential 0% tax rate.

Considerations for Businesses:

• Review of Past Compliance: Companies with ESR obligations from 2019 to 2022 should ensure they have accurately submitted all required notifications and reports and maintained sufficient documentation to demonstrate their economic substance in the UAE, as the Federal Tax Authority (FTA) retains the right to audit documents for six years.

• Adjustment to Corporate Tax: Free zone entities must evaluate whether they meet the economic substance requirements to continue benefiting from tax exemptions. This includes demonstrating key economic activities, maintaining adequate resources, and employing qualified personnel.

 

With the UK’s upcoming 2025 tax reform, many High-Net-Worth Individuals (HNWI) are exploring new options for establishing tax residency abroad. London, historically attractive for the tax advantages granted to non-domiciled (non-dom) residents, will see these benefits on foreign income gradually phased out. This change has HNWIs considering countries that offer solid tax benefits and stable environments for relocating their residency.

Switzerland: A Strategic Choice for Stability and Quality of Life

Switzerland continues to draw interest with its advantageous tax system, offering options such as an annual lump-sum taxation for non-domiciled residents in certain cantons. This framework allows HNWIs to benefit from competitive tax rates in a highly stable political environment with a top-tier quality of life, including exceptional healthcare and education systems. Switzerland also stands out for its natural beauty and multicultural setting, fostering an inclusive environment with unlimited Schengen access and an extensive network of treaties to prevent double taxation.

United Arab Emirates: Zero Taxation and a Cosmopolitan Environment

The UAE is one of the most attractive choices for HNWIs due to the complete absence of personal income, inheritance, or gift taxes, with no individual tax declarations required. Cities like Dubai and Abu Dhabi offer excellent healthcare infrastructure and a high standard of living within a cosmopolitan environment that blends tradition with modernity. With flexible visa options and a strategic location providing easy access to multiple international markets, the UAE also offers unparalleled investment opportunities.

Hong Kong: Tax Benefits and Access to the Chinese Market

Hong Kong ranks among the most sought-after destinations for investors and HNWIs due to its favourable tax system, which includes no capital gains, inheritance, or gift taxes. Individual income tax rates are among the world’s lowest, and Hong Kong’s unique position allows easy access to mainland China. Its economic dynamism and robust financial institutions make it ideal for those seeking a competitive environment with extensive networking and business development opportunities, bolstered by numerous treaties to avoid double taxation.

Evaluating the Right Jurisdiction: Final Considerations

Choosing the ideal jurisdiction depends on each individual’s personal and financial needs. Switzerland, the UAE, and Hong Kong each offer targeted solutions for tax planning and lifestyle, although their residency requirements and access criteria vary. Carefully considering all factors before making a decision is essential

If you’d like to delve into the specifics, download our complete guide “New Relocation Opportunities for HNWI,” where you’ll find practical information and targeted advice for each destination.

In October 2024, the UK government launched a groundbreaking Employment Rights Bill with changes that promise to reshape the workforce landscape. From pay adjustments and enhanced leave entitlements to new anti-harassment mandates, this Bill is set to bring transformative change across businesses. Here’s a look at what these new standards mean for employers and how to start preparing now.

Building a Fairer Workplace: Key Changes

The Employment Rights Bill is part of the government's commitment to making work fairer and safer, spanning five major areas:

1. Strengthened Protections Against Unfair Dismissal

One of the most notable changes is the shift in unfair dismissal protections, which now apply from day one rather than after two years of employment. However, a probation period will still apply, with the exact length to be determined through consultation. Additionally, the controversial "fire and rehire" practice—where employers dismiss and re-engage staff to alter contract terms—will be largely prohibited, only allowed in cases of dire financial necessity.

2. Pay and Sick Leave Reforms

For the first time, Statutory Sick Pay (SSP) will be available from the first day of illness without any minimum earnings threshold. Large employers with over 250 employees are also now required to establish action plans to address gender pay gaps, moving beyond reporting to take concrete steps toward reducing pay disparities. The Low Pay Commission has also been tasked with setting a single minimum wage for all ages based on the cost of living—a significant shift from previous age-tiered rates.

3. New Time-Off Entitlements

The Bill introduces several essential time-off rights, including bereavement leave from the first day of employment. Parental and paternity leave will also become available immediately for new employees, removing the one-year and 26-week minimum requirements previously in place. Additionally, flexible working is set to become the default, meaning employers must show specific and reasonable grounds for denying flexible work arrangements.

4. Fairer Contracts for Zero-Hour and Low-Hour Workers

Workers on zero-hour and low-hour contracts will benefit from greater security with the right to guaranteed hours contracts based on their average working patterns over a defined period. Employers will also need to give these workers reasonable notice for shifts, along with compensation for last-minute cancellations or schedule changes, adding a layer of predictability for those in non-traditional roles.

5. Expanded Responsibilities for Workplace Equality and Anti-Harassment Measures

The Bill strengthens requirements for employers to prevent workplace harassment, including harassment from third parties, by requiring them to take “all reasonable steps” to ensure safety. For large employers, this duty extends to supporting employees experiencing menopause and creating actionable plans to close gender pay gaps.

What’s Next for Employers?

While the Employment Rights Bill has entered the parliamentary process, its implementation is not expected until 2026. This gives employers time to adapt, but it’s wise to start planning now. Key areas for immediate attention include reassessing contracts, updating HR policies around harassment and leave, and initiating action plans for pay gap reductions.

Employers should also keep an eye on several additional long-term changes proposed by the government, including:

• Right to Disconnect: Employees may soon gain the right to disconnect from work after hours, a crucial development in the era of remote work.
• Carer’s Leave Review: Proposed adjustments aim to better support employees with caregiving responsibilities, adding flexibility and protections.
• Equal Pay for Outsourced Services: Future regulations may prevent employers from using outsourcing to bypass equal pay obligations.

Preparing for a Future-Ready Workplace

The Employment Rights Bill presents employers with both challenges and opportunities to create a more inclusive, equitable, and flexible workplace. Start by reviewing current policies, ensuring HR practices align with the proposed changes, and fostering open communication with employees about their rights and responsibilities.

By embracing these shifts, employers can not only comply with upcoming laws but also attract and retain top talent in a competitive market where workplace culture and fairness are paramount.

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Author: Erika Marveggio, HR Generalist 

The 2024 UK Budget introduced substantial tax changes, targeting capital gains, inheritance tax, non-domicile status, and employer obligations. Chancellor Rachel Reeves’s measures aim to raise £40bn in additional revenue and reflect the government’s commitment to sustainable economic growth through increased public investment. Below, we detail the most relevant tax implications from the Budget, with a focus on Diacron Group clients who may be affected by these shifts.

Capital Gains Tax (CGT) Adjustments

Capital Gains Tax rates have risen sharply, with the basic rate moving from 10% to 18% and the higher rate from 20% to 24%. This change will impact clients holding assets such as shares, second homes, or other investments, potentially reducing after-tax returns on disposals. For clients considering selling significant assets in the near term, Diacron Group recommends re-evaluating tax planning strategies to optimise the timing of disposals and explore any available reliefs, such as Entrepreneurs’ Relief for qualifying business assets. Effective structuring and planning can help mitigate some of the increased CGT burden.

Inheritance Tax (IHT) Changes and Business Asset Considerations

While the inheritance tax threshold remains frozen at £325,000, a 20% IHT rate now applies to assets over £1m, particularly impacting business and agricultural properties. This could significantly affect clients with family businesses or substantial property holdings who intend to pass on wealth to the next generation. Estate and succession planning will be critical for clients with high-value estates to navigate these new tax liabilities. For clients holding significant assets in business property, specific reliefs such as Business Property Relief (BPR) may offer valuable opportunities for IHT mitigation. Diacron Group can assist in evaluating asset portfolios and structuring holdings to reduce the impact of these increased inheritance tax obligations.

Abolition of Non-Domicile Status

The removal of non-domicile (non-dom) tax status from April marks a fundamental shift for many high-net-worth individuals and internationally mobile clients who have relied on this status for tax efficiency. Without the non-dom status, clients who previously shielded foreign income and gains from UK taxation may need to reconsider their residency status, asset locations, and overall tax planning approach. This change will particularly affect long-term UK residents with substantial overseas income and assets. Diacron Group can support clients by identifying alternative residency and holding structures, as well as tax planning strategies that maintain financial flexibility while remaining compliant under the new UK tax framework.

National Insurance and Employment Costs

Employers will see a rise in National Insurance contributions, with the rate increasing by 1.2 percentage points to 15%, and the secondary threshold reduced from £9,100 to £5,000 starting in April. These adjustments are expected to generate £25bn annually and will increase payroll costs across sectors. Companies should assess workforce structures, consider payroll optimisations, and explore tax reliefs to absorb this added expense. Diacron Group’s advisory services can help clients navigate these changes, optimise workforce planning, and identify tax efficiencies to mitigate the impact on cash flow and profitability.

VAT on Private Education and Income Tax Threshold Adjustments

A 20% VAT on private school fees, effective from January 2025, will increase educational expenses for families in private education, while future income tax thresholds will be adjusted for inflation starting in 2028/29. Although the impact of these income tax adjustments will not be immediate, they signal potential increases in personal tax liabilities for higher-income households over the coming years. Clients are encouraged to consider long-term budgeting strategies and cash flow planning to accommodate these changes.

Increased Compliance and Anti-Tax Avoidance Measures

The Budget also outlined a focus on curbing tax avoidance, with measures projected to raise £6.5bn by targeting umbrella companies and other tax arrangements. These stricter compliance requirements indicate that businesses should ensure robust adherence to tax regulations and might benefit from regular internal audits or reviews to stay aligned with the updated rules. For clients concerned about compliance, Diacron Group provides audit services and regulatory advice to pre-empt and address any tax risks posed by these new anti-avoidance measures.

Looking Forward: Preparing for Budget Implications

The Budget’s tax increases and compliance shifts reflect the government’s strategic focus on addressing revenue needs while promoting public investment. Diacron Group advises clients to review and adjust their tax strategies accordingly, taking advantage of available reliefs, structuring options, and timing strategies to manage potential liabilities effectively.

For tailored advice on navigating these changes, contact Diacron Group for a consultation. Our team is ready to provide comprehensive support to ensure compliance, enhance tax efficiency, and optimise financial planning in light of the latest regulatory requirements.

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Author: Angelo Chirulli, Tax Advisor Diacron London 

The California Franchise Tax Board (FTB) recently proposed significant amendments to the state's personal income sourcing and apportionment rules. In particular, these changes target non-resident corporate directors who receive compensation for services performed outside California, but where the corporation has a commercial domicile in the state.

The new amendments stipulate that if a corporation's commercial domicile is in California, then any fees paid to non-resident non-employee directors for services, regardless of where performed, will be considered California-source income. Under the proposed regulations, only non-resident employee compensation will be sourced based on where the employee performs their duties. For non-resident directors, their compensation will be subject to California tax if their corporation is domiciled in the state.

The amendments also clarify that income earned in the state by non-resident performers or professionals, and paid on some basis other than a daily, weekly or monthly basis, must be included in their California gross income. The income must be apportioned between California and other states and foreign countries in such a manner as to allocate to California that portion of the total compensation which is reasonably attributable to personal services performed in the state.

Note: The regulations build on Chief Counsel Ruling 2019-03 (as a PDF), which clarified that compensation paid to an independent, non-resident director of a company is sourced to where the highest-ranking corporate officers carry out the Board's directions (i.e. sourced to where the decisions and actions of the Board are executed).

Source: IBFD tax research platform news