Representatives of offshore financial centres like Cayman Islands, Isle Of Man, Mauritius and British Virgin Islands are going all out to convince Indian clients to launch their business or investment verticals from these jurisdictions. Corporate advisory businesses in these ‘capital havens’ have begun offering India-centric services to asset management companies (AMCs) and firms intending to raise capital or launch investment vehicles.
According to international lawyers, Indian mutual funds, investment firms and corporate bodies are approaching zero tax destinations to raise offshore capital or start new business verticals. Corporate enablers (international lawyers, corporate advisors etc.) are working overtime to get these businesses to jurisdictions they represent. The trend of Indian companies launching offshore funds or special purpose vehicles has picked up post the market turnaround since mid-2009.
“We’re getting enquiries from several investment managers now. The idea of setting up offshore funds is fast catching among Indian asset management companies,” said Chetan Nagendra, head of India practice, Harneys Westwood & Riegels, a firm that services clients setting up businesses in British Virgin Islands (BVI) and Cayman Islands.
On their part, zero-tax jurisdictions like Cayman Islands, Isle Of Man, Mauritius and BVI are trying hard to get as many India listings as they can while market conditions are favourable. Asset managers or corporates would prefer these jurisdictions as they provide benefits like tax neutrality, zero tax on investment income and flexible corporate & regulatory structure.
“India becomes a logical step to us after having covered almost the whole of Asia. Moreover, there is intense competition among similar destinations to get more listings and business. The competition is driven by increased regulatory and transparency requirements from global players,” said Sherri Ortiz, ED, BVI International Finance Centre, which is the largest FDI contributor to China.
Almost all these zero-tax jurisdictions are offering tailor-made solutions like offshore fund licensing , capital raising, SPVs and trading company formation, setting up trusts, M&A services and shipping & aircraft registry services (for affluent Indian clients). Experts expect M&A services to do well in India as most companies are looking for foreign partners or overseas acquisitions.
“India is a good market because of its mass population and growth. From a practitioner’s point of view, setting up an offshore businesses or fund is relatively easier than incorporating them locally,” said Kapil Dhar, consultant, Sable Trust, that services trusts in BVI.
“Though highly regulated, it takes just about 24-48 hours to start a new company or fund in BVI. This helps professionals like fund managers — who have money on the line — to start their investments immediately,” he added. Offshore financial destinations have always been a conduit for capital flows into India.
Large chunks of investments flow into the country from tax havens like Luxemburg, Mauritius, UAE and Hong Kong. Outflow of investment from these regions was over $16 billion in 2008-09 and $18 billion in the previous fiscal. However, there are many sceptics who doubt the quality of the money flowing in from these jurisdictions.
“There are lot of claims made by these jurisdictions; most of them just want to emulate the Mauritius model. In fact, none of these destinations have much to offer to Indian clients. Regulators do not like the trend of setting up offshore funds or investment vehicles and they are right about it,” said Ashvin Parekh, partner-financial services, Ernst & Young.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/Indian-mutual-funds-approach-zero-tax-destinations-to-raise-offshore-capital/articleshow/5582011.cms
According to international lawyers, Indian mutual funds, investment firms and corporate bodies are approaching zero tax destinations to raise offshore capital or start new business verticals. Corporate enablers (international lawyers, corporate advisors etc.) are working overtime to get these businesses to jurisdictions they represent. The trend of Indian companies launching offshore funds or special purpose vehicles has picked up post the market turnaround since mid-2009.
“We’re getting enquiries from several investment managers now. The idea of setting up offshore funds is fast catching among Indian asset management companies,” said Chetan Nagendra, head of India practice, Harneys Westwood & Riegels, a firm that services clients setting up businesses in British Virgin Islands (BVI) and Cayman Islands.
On their part, zero-tax jurisdictions like Cayman Islands, Isle Of Man, Mauritius and BVI are trying hard to get as many India listings as they can while market conditions are favourable. Asset managers or corporates would prefer these jurisdictions as they provide benefits like tax neutrality, zero tax on investment income and flexible corporate & regulatory structure.
“India becomes a logical step to us after having covered almost the whole of Asia. Moreover, there is intense competition among similar destinations to get more listings and business. The competition is driven by increased regulatory and transparency requirements from global players,” said Sherri Ortiz, ED, BVI International Finance Centre, which is the largest FDI contributor to China.
Almost all these zero-tax jurisdictions are offering tailor-made solutions like offshore fund licensing , capital raising, SPVs and trading company formation, setting up trusts, M&A services and shipping & aircraft registry services (for affluent Indian clients). Experts expect M&A services to do well in India as most companies are looking for foreign partners or overseas acquisitions.
“India is a good market because of its mass population and growth. From a practitioner’s point of view, setting up an offshore businesses or fund is relatively easier than incorporating them locally,” said Kapil Dhar, consultant, Sable Trust, that services trusts in BVI.
“Though highly regulated, it takes just about 24-48 hours to start a new company or fund in BVI. This helps professionals like fund managers — who have money on the line — to start their investments immediately,” he added. Offshore financial destinations have always been a conduit for capital flows into India.
Large chunks of investments flow into the country from tax havens like Luxemburg, Mauritius, UAE and Hong Kong. Outflow of investment from these regions was over $16 billion in 2008-09 and $18 billion in the previous fiscal. However, there are many sceptics who doubt the quality of the money flowing in from these jurisdictions.
“There are lot of claims made by these jurisdictions; most of them just want to emulate the Mauritius model. In fact, none of these destinations have much to offer to Indian clients. Regulators do not like the trend of setting up offshore funds or investment vehicles and they are right about it,” said Ashvin Parekh, partner-financial services, Ernst & Young.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/Indian-mutual-funds-approach-zero-tax-destinations-to-raise-offshore-capital/articleshow/5582011.cms
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