As this blog has noted, and at times celebrated, most economies have continued on in their efforts to liberalize their international trade and their domestic economies, notwithstanding the turbulent and uncertain economic environment. Having said that, and with the regularity of day following night, Venezuela continues to follow a failed model of central planning. To wit, part of legislation before the National Assembly, would require the bank to make loans to “productive sectors” to be determined by the government. Good evidence of the fact that Venezuela is “swimming against the tide”, is the fact that inflation is out of control: prices rose 28.9 percent in September from the same month a year earlier.
Venezuela Bank Law May Weaken Autonomy, Spur Prices
Financial impediments for foreign investors come in many shapes and sizes. In this instance, Brazil is acknowledging the problem of a dearth of residential mortgage lending, to foreigners looking to acquire a home in Brazil. Although in theory the Central Bank allows foreign investors to have access to finance, in practice it does not really happen. Mr de Souza (the general co-ordinator for investment promotion at the Brazilian Ministry of Tourism) remarked, “In some rare circumstances, for example when a foreign buyer already has an account with an international bank such as HSBC, it happens, but the system for people to get finance is not really in place.” This is set to change, and is another step in foreign investment liberalization that is occurring in Brazil, and which contributes to what has become a very vibrant economy.
Mortgages for Brazil Property Investment on the Horizon
NAFTA trilateral trade has increased three fold in fifteen years (N.B. to $949 Billion as of 2008) and, given certain countervailing pressures, it is encouraging to see the NAFTA participants reconfirm their commitment to the free trade principles underlying the NAFTA accord.
Canada, U.S. and Mexico Reaffirm Commitment to NAFTA
Court action by US Steel, arising from its acquisition of Stelco (a Canadian company), may prompt a review and rewrite of the Investment Canada Act, which regulates the investment in Canadian companies by foreign investors. The current provisions of the Act (specifically sections 39 and 40), provide for government sanctions, including the forced divestiture of the offending entity’s Canadian assets, without judicial recourse. To say there is a constitutional issue here, is a significant understatement.
CP – Court challenge could result in rewrite of Investment Canada Act: expert
While positive aspects of Indian tax reform have been more common place in recent times, this article highlights some of the less than inspired choices being made by the Indian Parliament, in the area of both domestic and international tax reform.
The Hindu – What is the scope of tax on gross assets in Direct Taxes Code?
As has been commented, on a number of previous blog posts, the Black Economic Empowerment regime in South Africa, although well intentioned and noble in it’s objectives, has remained the subject of concern, regarding uniform and universal application. BusinessReport provides a salient and insightful review of one industrial sector in South Africa that may be missing the mark and, more importantly, tips on how to become compliant.
BusinessReport (SA) – Drug multinationals deny evading BEE law
This article from World University News is a great survey of the issues involved in Intellectual Property (“IP”) ownership, and the significance of the express language of the contract of employment.
UWN – Who owns IP, university or researcher?
Two relatively recent amendments to the Income Tax Act (South Africa) reflect a policy of encouraging the development of small enterprises. The first of these is aimed at reducing the compliance burden of micro enterprises and the second encourages venture capital investments in small enterprises.
Micro businesses
The Sixth Schedule to the Income Tax Act has been introduced to regulate a turnover tax available to micro businesses instead of the tax on taxable income with all the administrative and record keeping, not to mention expense, that this involves. A micro business may be a natural person, a company or a close corporation, but not a trust, and its annual turnover may not exceed R1 million. The taxpayer, if a natural person, may not have shares or a member’s interest in any company or close corporation other than listed companies, unit trusts, sectional title bodies corporate or share block companies; or be a personal service provider; or render a professional service; or earn investment income greater than 10% of total receipts from the business and investments. In other words, the target market is the small business entrepreneur.
Tax is based on turnover on a sliding scale ranging from 0% to 7% of turnover.
Venture capital investments
Section 12J came into operation on 1 July 2009 and regulates the taxation of venture capital investments. 100% of the cost of shares in a venture capital company may be deducted. The venture capital company will not trade, but will merely hold equity investments in small and medium sized companies, which are known as qualifying companies. The deduction is limited to natural persons, listed companies and companies within a listed group. The maximum amount deductible by a natural person is R750 000 per annum to a maximum of R2.25 million. Companies do not have this limit, but may not hold more than 10% of the equity of the venture capital company.
A venture capital company must be a resident, have its tax affairs in order, must be unlisted (unless it is a junior mining company) and may not invest more than 15% of its total capital in any one company. A qualifying company must also be a resident, with its tax affairs in order. Its investment income is limited to 20% of its gross income and it must spend the capital raised from its share issue within 18 months on tax deductible expenditure.
Georgian President Mikheil Saakashvili pushes a plan to liberalise the economy to attract more investment and decouple from the Russian economy. Follow the link to watch a brief video clip on the move by Georgia to boost its economy.
Reuters – Georgia Woos Investors
Every few years, we see the emergence of the “next big thing” which invariably required government to act as the economic incubator to spearhead a new national industrial base to challenge the worlds best. Nano technology is, and has been this “next big thing”, for a number of years and, it would appear from the comments of Russian President Dmitry Medvedev, that the Russian State is prepared to play a leading an instrumental roll in the development of this technology. He says: “We also have our own immodest goal in this area: we want to become leaders here”!
ISRIA – Speech of President of Russia Dmitry Medvedev at Opening of Moscow International Nanotechnology Forum
