Author Archives: schatzi

Aug
04
2022

Like It or Not, Legal Tax Avoidance Is Here to Stay

Tax has historically always been a controversial subject. Who pays taxes and how much they pay often being a sore or sensitive point. And when you hear about tax avoidance, it can immediately provoke a hostile reaction, with people immediately, and often erroneously, assuming some law has been broken.

That tends to be the common reaction, and in the UK, a number of high profile figures have been pilloried in the press for their tax avoidance. But under scrutiny, most such individuals may be the recipients of moral outrage but rarely legal retribution.

The reason being is that they are taking advantage of perfectly legal tax avoidance schemes. One of the most common schemes utilised by high earning individuals revolves around remuneration trusts. In the UK, they represent perfectly legal tax mitigation schemes.

They operate by allowing an individual or company to use an offshore company to invoice for their services rather than paying them directly, which, unsurprisingly, provides a whole host of tax benefits. The offshore company can then, without breaking any UK tax law, transfer these funds to a UK company to invest on its behalf. Because the money is held on trust for the offshore company, there is no tax payable on the UK company’s investment or the profits it then accrues from the investment. Additionally, the offshore company can pay loans to private individuals who receive these loans tax free.

Naturally, remuneration trusts prove one of the more robust and legal tax avoidance strategies, but they are only accessible to high earners, usually companies, shareholders and individuals earning in excess of £100.p.a. Such schemes have been accepted by HMRC in the UK since 1994, and have been scrutinised by legal opinion too. As such, they remain perfectly legal, and serve as an important distinction when talking about tax avoidance.

Anyone who evades taxes they should be paying is subject to the rule of law, and can be rightly persecuted. However, when an individual undertakes perfectly legal tax planning strategies, the question is one of morality rather than legality. And, whether an individual should be allowed to legally avoid taxes by such strategies is also a political question.

Currently in the UK, there are numerous tax mitigation schemes which can legally help high earners, but changes in government could in the future render such strategies illegal based on a view that high earners should not be able to avail themselves of tax planning strategies unavailable to all.

But, for now, they are accessible to high earners and it pays dividends when hearing about high profile individuals engaged in tax avoidance to read between the lines and ascertain whether they are engaged in illegal activities or merely taking advantage of the numerous legal tax schemes such as remuneration trusts which provide them with substantial tax benefits on their earned income.

Jul
04
2022

Investing in China – The Banking Sector

China’s banking sector has traditionally served as a party-controlled feeding trough for its inefficient, unprofitable state-owned enterprises (SOEs), most of which were technically insolvent. The process was simple – extend a loan to an unqualified SOE applicant, then write off the loan as a bad debt when it failed to repay. This situation is beginning to change, and Chinese banks are attracting the attention of foreign banks that are beginning to view them as investment opportunities rather than potential competitors. Nevertheless, China’s banking industry is beset by several problems.

1. SOE Lending: The importance of the Chinese banking sector as a source of domestic capital is hard to overstate. Mainland China’s stock markets are anemic compared to the behemoths of Hong Kong, Tokyo and New York, and China’s bond market is virtually nonexistent. That leaves banks as the only major source of over-the-table domestic funding for private enterprises. Yet SOE lending continues to siphon off a good part of banking capital, notwithstanding that China’s stock markets were largely designed to provide SOEs with an alternative source of funding. Many domestic companies have resorted to the underground institutional loan sharks with their high interest rates, or relying solely on retained earnings for funding. Even though SOE loan defaults have declined dramatically at some banks for recent loans, the industry as a whole is still experiencing a hangover from imprudent lending under earlier, more politicized lending policies.

2. Corruption: There is a crackdown underway, but corruption is rampant in many sectors of the Chinese economy, and the government is always cracking down on corruption in this or that industry. Meanwhile, the cycle continues. It is tempting to predict that only the threat of bankruptcy due to foreign competition will ever be enough to create the political will necessary for consistent enforcement of the law.

3. Decentralization: China’s banking sector looks fairly centralized on paper, but the hidden problem is the de facto independence of far-flung branches from headquarters. China’s branch banks have been used to operating with a much greater independence than is the rule in the West (thus contributing greatly to the corruption problem), and any attempt to assert control from HQ is bound to be met with spirited local resistance.

The moment of truth is coming up fast, however, as China’s WTO commitments require it to fully open its banking and insurance markets to foreign competition next year. The government is responding introducing a host of new regulations to rationalize lending practices and by cracking down on internal corruption (whether the new regulations will actually be followed by the branch banks is a question that only time can answer). Banks are responding by listing with IPOs on overseas markets and with American-style “downsizing”, closing branches and laying off staff.

Foreign banks are responding by investing billions of dollars into Chinese banks, surprising in light of the above problems. Furthermore, they are acquiring minority stakes that are unlikely to ever offer them operational control, in some cases mainly for the purpose of securing access to distribution networks for insurance, credit cards, and investment products after 2007.

Nobody wants to see China’s banks wither in the wake of foreign competition – not even their foreign “competitors”, because a Chinese banking crisis would have a significant negative effect on the entire world economy.

Jun
02
2022

Mixed Mode Marketing

Ask any successful business owner, and they will tell you that finding success can often be nearly impossible without a high-quality marketing campaign. These days, marketing is the most important thing you can do for your business, as competition continues to increase amongst businesses in all fields. The marketing industry, however, has seen an immense amount of change over the course of the last decade, particularly in the last few years. No longer are more traditional marketing techniques like print, radio and television advertising considered to be the best way to market a business. Instead, the industry has turned to the internet as the next generation of marketing.

Even though the internet has taken precedent as of late in the marketing industry, the fact remains that the best way to market a business is to utilize a variety of different techniques, a process often known as “mixed mode marketing.” The concept of mixed mode marketing is to create a strategic plan that encapsulates a variety of different marketing techniques, rather than focusing on any one in particular. For instance, instead of focusing all of your marketing budget on a television advertising campaign, the preferred method would be to spread that money around, incorporating different techniques such as public relations, print mail, and online lead generation followed by direct sales calls into one cohesive strategic plan.

The new age of media has changed the way mixed mode marketing is done in a variety of ways. The internet has superseded other forms of media (especially print), and it is important for the marketer/business owner to follow the changing trends in marketing. After all, sticking with old, dying methods will only result in a giant waste of time and money. The more you can do to utilize the internet for lead generation, the better results you will get, and the more likely your sales calls will be productive.

So instead of allocating your entire marketing budget to a single technique, consider utilizing mixed mode marketing. After all, there’s no better way to get your business to where you want it than to formulate a strategic plan and follow through with it. The more you can embrace new media, the more success you will find in mixed mode marketing, The new age of media has changed the way mixed mode marketing is done in a variety of ways. The internet has superseded other forms of media (especially print), and it is important for the marketer/business owner to follow the changing trends in marketing. After all, sticking with old, dying methods will only result in a giant waste of time and money. The more you can do to utilize the internet for lead generation, the better results you will get, and the more likely your sales calls will be productive.

So instead of allocating your entire marketing budget to a single technique, consider utilizing mixed mode marketing. After all, there’s no better way to get your business to where you want it than to formulate a strategic plan and follow through with it. The more you can embrace new media, the more success you will find in mixed mode marketing.

May
03
2022

Properties Commonly Found For Sale On The Outer Banks NC Real Estate Market

Are you looking to relocate to the Outer Banks area of North Carolina? If you are, you may be wondering what type of properties you can buy. To determine what types of properties are currently available for sale, you will want to examine the Outer Banks NC real estate market, preferably with an Outer Banks real estate agent.

When examining the Outer Banks NC real estate market, whether you do so with an Outer Banks real estate agent or not, you will see that a number of different properties are available for sale. While the Outer Banks NC real estate market changes weekly, sometimes even daily, there are a number of common property types that can be purchased. Just a few of those properties are outlined below.

Traditional homes can be found for sale on the Outer Banks NC real estate market. The term traditional is used to sometimes differentiate between homes that people live in all year round and vacation homes. Speaking of vacation homes, vacation homes are another property type that is commonly found on the Outer Banks NC real estate market. Although many vacation home owners often use their own vacation homes for personal use, there are many more that use them to make a profit, by renting out the home in question to Outer Banks vacationers.

For those looking to reside in the Outer Banks area, but not necessarily own their own home and land, condos are available for sale. In fact, condos are considered one of the most sought after types of properties found on the Outer Banks NC real estate market. Condos are nice because if you buy one, you actually own your own living space, which is inside a larger building, which is often referred to as a condo complex.

Those looking to start new or start fresh in the Outer Banks area of North Carolina are often interested in building their own homes. If you would like to do this, you will find a number of land listings on the Outer Banks NC real estate market. What is nice about these land listings is many of them are considered waterfront properties, making them one of the best type of properties found on the Outer Banks NC real estate market.

In addition to living or vacationing in the Outer Banks area of North Carolina, there are also those who are interested in starting a business there. On the Outer Banks NC real estate market you can regularly find a number of commercial buildings available for sale. So, if your dream is to start an Outer Banks business, you may be able to find it easy and relatively affordable to turn your dream into a realty.

The previously mentioned property types are commonly found for sale on the Outer Banks NC real estate market. As it was previously mentioned, the Outer Banks NC real estate market regularly changes. For that reason, you will want to consider meeting with a real estate agent to help you start finding your dream property right away.