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Monday
Jun082009

UK Entrepreneurs look at moving to low-tax Madeira

Wealthy UK business people targeted for 50% super tax on their income are looking at relocating part of their businesses to the sunshine tax haven of Madeira.
With European Union and Portuguese government support, the Madeira International Business Centre allows companies registered on the island to offer low tax benefits to businesses and entrepreneurs that are not available elsewhere in the EU.

At a time when the G20 is campaigning to close down other tax havens, one with the support of many of the G20 countries is an attractive proposition to business.
Trevor Nicholson, a director at HSBC private bank, said: “The impracticality of moving countries is not justifiable for many of the UK’s wealthy. Instead, we’re getting a growing number of queries about the possibility of basing a small part of the business in Madeira, where there is no tax on dividends and personal and corporation tax is low.”

Nicholson says owners of hedge funds and property companies are particularly interested in Madeira’s tax benefits.

Tax rates: Companies pay reduced corporate tax rate until 2020 on a sliding scale:
    * 2007 – 2009 - 3%
    * 2010 – 2012 - 4%
    * 2013 – 2020 - 5%

Additional Tax Benefits: Besides reduced corporate tax rates, new companies and their owners have other tax benefits tax benefits until the end 2020:

    * Exemption from withholding taxes on the distribution of dividends, royalty and interest payments
    * Exemption from capital duty, notary and registration fees

Traditionally, companies looking for a lower rate tax corporate tax regime than the UK look towards the Channel Islands or Switzerland, but Madeira is now firmly on the radar of many of the UK’s wealthiest individuals as a result of Chancellor Alastair Darling pushing the top rate of UK income tax up to 50% in the last Budget.

Goods and raw materials coming in to the EU via the free trade zone are exempt of import duty.
Goods leaving the EU via the zone are duty-free except for any value attributed to non-EU origin.
The tax regime makes Madeira an ideal halfway house for bringing kit-form goods in to the EU for final construction.

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