Debt Restructurings | UHY Dawgen Chartered Accountants Blog

Debt Restructurings | UHY Dawgen Chartered Accountants Blog:

A major international credit rating agency is warning of more Caribbean sovereign debt restructurings ahead of the Caribbean Development Bank (CDB) annual meetings in St Lucia this week.

The Wall Street-based Moody’s Investor Service said on Monday that it expects sovereign credit quality to continue deteriorating in the region.

“We see the defaults of Belize (Caa2 stable), Jamaica (Caa3 stable), and Grenada (unrated) over the past year as being part of a broader debt crisis in the Caribbean,” it said in a report.

“Moreover, we expect the risk of sovereign default in the region to persist as countries continue facing a combination of solvency and liquidity pressures and are increasingly unable and unwilling to service debt,” the report said.

Moody’s said the Caribbean’s debt overhang is a “legacy of debt accumulation that started in the 1990s as governments accelerated borrowing, often from external commercial sources, to finance public-sector investment.

“At its core, the Caribbean’s debt crisis is the result of a combination of poor fiscal discipline and unproductive investment that failed to significantly raise potential growth rates,” it said, adding that it resulted in “low and declining long-term growth”.

Moody’s warned that an increasing number of Caribbean countries are likely to renege on their debts, stating that they are running out of options in addressing limp economic growth and dismal state finances.

“At the moment, we see a high probability that Belize and Jamaica will relapse into default,” Moody’s said, adding that some countries, such as Trinidad and Tobago and Suriname are more economically stable than others.

It said Jamaica has a debt-to-Gross Domestic Product (GDP) ratio of more than 100 per cent, while the Cayman Islands and Bermuda have ratios of 23 per cent and 28 per cent, respectively.

Referring to International Monetary Fund (IMF) data, Moody’s said most small Caribbean states have debts-to-GDP ratios of more than 70 per cent and a current account deficit of 23 per cent.

The rating agency said the “policy toolkit for reducing debt in the Caribbean is limited”, adding that many countries cannot devalue their currency because exchange rates are usually fixed or managed.

In light of big budget deficits, Moody’s said many Caribbean countries are unable to stimulate growth through spending and investments.

“The lack of options has left debt restructuring as an attractive tool to reduce public sector debt,” said Edward Al-Hussainy, the report’s author and a Moody’s senior analyst.

“As new restructurings unfold, we expect governments to be more aggressive in seeking principal haircuts to achieve lower debt loads,” he added.

The report noted that the region has also been adversely affected by extreme weather that has often resulted in humanitarian and economic woes.

The Washington-based IMF said that since the early 1960s, the Caribbean has experienced losses equivalent to almost one per cent of GDP on average in weather damage annually.

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UHY Dawgen: Corporate tax competition heats up

UHY Corporation Tax Study

Corporate tax competition heats up

By Dawkins Brown

In an increasingly globalised world, governments are under pressure to find ways to attract and retain businesses to their country and then to help those businesses compete against their international competitors.

An increasing number of government’s now realise that one powerful tool they have to achieve those goals is lowering the level of corporation tax that they impose on business profits.

Clearly a high corporation tax rate can make one business location unattractive compared to overseas economies with lower tax rates. A high corporate tax rate can also suppress a corporate’s growth by taking money out of a business and its shareholder’s pockets that could alternatively be invested in marketing or R&D to further grow the business.

Thelatest research project from UHY’s international network has found that some developed nations are still dragging their economies down and hitting businesses with far higher corporation tax rates than faster growing emerging economies.

On taxable profits of USD 1,000,000 governments of the G7 economies take an average of 32.6% of corporate profits in tax, compared to an average of 30.3% in the BRIC economies and an average of 26.8% for all countries in the study.

Jamaica  falls at the average end of the scale, taking 25% in tax, which gives businesses a head-start over some of their international competitors.

Of course, a number of factors can affect how attractive a country is to businesses: different tax reliefs might be available; infrastructure matters; red tape and regulation plays a role; and some countries benefit from already being ‘hubs’ for certain industries.

Businesses in Jamaica benefit from tax relief: such as Capital Allowance , for example.

However, the headline corporate tax rate can send a clear signal that a government is ‘business-friendly’.

Cutting the headline rate rather than introducing new tax reliefs has several benefits. Firstly, all businesses can enjoy a lower tax burden if the overall rate is cut. Secondly, fewer tax reliefs mean less complexity in a tax system, reducing tax compliance costs for businesses and reducing the likelihood of business disputes with tax authorities.

Competition between countries on corporation taxes ensures governments are constantly trying to find ways to make doing business in their economy easier.

Some major economies have already taken steps to reduce their corporation tax rates, including the UK, Canada, and Japan – although Japan’s rate still remains far higher than other economies.

This puts pressure on emerging economies to cut their already low rates to ensure that their competitive advantage is not undermined.

The recent announcement by the Jamaican Government of a reduction in Corporation Tax rate for unregulated Companies from 33.3% to 25% is commendable and will significantly increase Jamaica’s global competitiveness. This policy change has propelled us below the Average Tax Rate of 25.59%.

Jamaica still, has worked to do to make sure it does not fall behind other countries cutting their rates in order to maintain its advantage over others.

Governments have a difficult balancing act to pull off. Low corporate taxes might mean higher taxes elsewhere in the system such as higher capital gains taxes or specific taxes on increases in land values that have received valuable development approvals.

However the balance is found, it’s vital that governments do find one. Businesses, and the jobs they bring, are highly mobile, and it is difficult to make a case for operating in a high tax country when the business can get a better deal elsewhere.

What You Need To Know About TCC - Business - JamaicaObserver.com

What You Need To Know About TCC - Business - JamaicaObserver.com:

More and more often the issue of tax compliance takes centre stage, as more persons realise that taxes are critical to the economic reform programme for Jamaica. One indicator that an individual or company is meeting tax obligation is a Tax Compliance Certificate, commonly called a TCC. This mechanism was introduced as a requirement for persons doing certain transactions or entering into certain arrangements and is managed by Tax Administration Jamaica (TAJ). It is important that persons understand what it is, who needs it and how to they go about getting it.

What is a TCC?

A TCC is a document issued to an individual or a company as proof that payments of tax liabilities and wage-related statutory deductions are up-to-date.

Why do persons need a TCC?

A TCC is needed to ensure that an individual or organisation is tax compliant and that all tax-liabilities and wage related statutory deductions are up to date where applicable. This signals that they have paid their fair share and further serves to encourage voluntary compliance.

Who needs a TCC?

The following individuals or companies need a TCC:

o Applicants for a Customs Brokers Licence

o Applicants For Quarrying Licence

o Applicants For Betting Gaming and Lotteries Licence

o Applicants For Citizenship or Work Permit

o Applicants For Security Firm Registration

o Applicants for contracts from Government

o All importers who need to submit an import entry to clear goods through Customs.

What are the requirements for obtaining a TCC?

First Time Applicants:

1. Visit TAJ Compliance Section for interview

2. Complete application form

3. Original receipts (and copies) since January of the current year for payment of the following:

o P.A.Y.E (Income Tax, Education Tax)

o Company/Individual Income Tax

o Education Tax (Self-employed individuals)

o General Consumption Tax (SCT)

o H.E.A.R.T. Contributions (also Remittance Advices stamped and by Collector of Taxes. Especially important if trainees are employed.)

o National Housing Trust (NHT) contributions

o National Insurance Scheme (NIS) contributions

4. Clearance letters from NHT, HEART and NIS Offices and from the Tax Administration Jamaica for Individual Income Tax, Company Income Tax, Education Tax, GCT & SCT.

5. Certified copies of all arrangements to pay.

6. Taxpayer Registration Number (TRN).

PAYE Individuals Clearing Personal Items:

1. Completed application form.

2. Last pay advice and copy.

3. Letter from employer stating that deductions have been paid over to the relevant authorities or clearance letter from Tax Administration Jamaica.

4. Import documents with arrival notice and copies.

Self-Employed Individuals Clearing Commercial Items:

1. Completed application form.

2. Original receipts (and copies) since January of the current year for payment of the following:

o Income tax (individual).

o GCT (if applicable).

o Education Tax.

o HEART Contributions.

o NHT Contributions.

o NIS Contributions (produce stamp card).

3. Clearance letters from NHT, HEART and NIS Officers and from the Tax Administration Jamaica for individual Income Tax, Company Income Tax, GCT and Education Tax

4. TRN.

Returning Residents:

1. Completed application form.

2. Passport.

3. Arrival Documents.

4. Other evidence that there is no local liability for taxes/statutory deductions:

o Letter from Jamaica Consulate.

o Clearance letter from Tax Administration Jamaica.

5. Import Licence from Trade Board (for motor vehicle).

Where do persons apply for a TCC?

A TCC can be obtained at any of the following Tax Offices:

o St. Ann's Bay Tax Office

o Mandeville Tax Office

o May Pen Revenue Service Centre

o Constant Spring Revenue Service Centre, Kingston

o Spanish Town Revenue Service Centre

o Montego Bay Revenue Service Centre

o King Street Revenue Service Centre, Kingston

o Savanna-La-Mar Tax Office

Read more: http://www.jamaicaobserver.com/business/What-You-Need-To-Know-About-TCC_14197598#ixzz2SPykdgyK
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Meeting the Infrastructure Challenge with Public-Private Partnerships | UHY Dawgen Chartered Accountants Blog

Meeting the Infrastructure Challenge with Public-Private Partnerships | UHY Dawgen Chartered Accountants Blog:
The need for infrastructure investment around the globe is climbing. In emerging markets, population growth, increasing urbanization, and rising per capita incomes are driving the demand for new roads, power stations, schools, and water delivery systems. In the developed world, including the United States, significant reinvestment in aging infrastructures is becoming urgent. But this need for infrastructure investment comes in the wake of a financial crisis that has severely constrained public budgets in many countries. The result: a staggering gap of approximately $1 trillion to $1.5 trillion annually between demand and investment in infrastructure.

Public-private partnerships (PPPs) will increasingly play a crucial role in bridging the gap. These partnerships—in which the private sector builds, controls, and operates infrastructure projects subject to strict government oversight and regulation—tap private sources of financing and expertise to deliver large infrastructure improvements. When managed effectively, PPPs not only provide much needed new sources of capital, but also bring significant discipline to project selection, construction, and operation.

Successfully forming and managing PPPs, however, is no small feat. For one thing, governments, accustomed to focusing on delivering services, need to change their mindset and begin viewing these partnerships as a product that they must develop, market, and sell to potential private-sector partners. At the same time, both the public and private sectors must overcome the challenges created by an inherent conflict between their respective objectives: the public sector wants to minimize total or overall economic costs and ensure the delivery of high-quality service, while the private sector aims to maximize returns.

If not managed properly, that conflict can wreak havoc. In Latin America, for example, many PPPs have had to be renegotiated, a development that often results in greater costs to taxpayers. And in the United Kingdom, the government’s first private-finance initiative was criticized for, among other things, failing to deliver good value for taxpayers’ money.

Such stumbles, however, are not inevitable. Drawing on ten years of experience in advising both governments and private-sector companies, The Boston Consulting Group has identified a series of best practices that underlie successful PPPs. more

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How Successful M&A Deals Split the Synergies | UHY Dawgen Chartered Accountants Blog

How Successful M&A Deals Split the Synergies | UHY Dawgen Chartered Accountants Blog:

Academic research has repeatedly confirmed that about two-thirds of all mergers and acquisitions among public companies destroy value for the acquirer, at least in the short term. Even when acquirers justify deals by pointing out the ample synergy opportunities that they offer, capital markets remain skeptical. Yet a significant minority of acquisitions do manage to create value for the owners of both the acquirer and the target, demonstrating that despite the doubters in the capital markets, the overriding M&A rationale—value creation—remains valid.

Of course, the specific path to value creation varies widely by company, depending on the economics of its business, its valuation in the marketplace, and the terms of any given M&A transaction. But whether by buying out-of-favor targets near their cyclical lows, realizing cost efficiencies, or boosting the top line through organic growth, acquirers and M&A partners can create value—provided the transaction is accurately priced and specific value-creation strategies are executed effectively.

Most acquirers seek to create value by capturing cost synergies. But there is more to value creation than simply identifying synergies and executing strategies to realize those synergies. The Boston Consulting Group teamed up with the Technische Universität München (TUM) to compile new research demonstrating that in successful deals, buyers and sellers share the synergies. Acquirers cannot expect to capture 100 percent of those synergies for themselves; sellers will anticipate the buyers’ synergies and demand takeover premiums, reasoning that the target is worth more in the hands of the acquirers than in their own. Our research suggests that sellers collect, on average, 31 percent of the average capitalized value of expected synergies. However, in practice, the seller’s share varies widely.

Potential synergies may include closing redundant plants or production lines, realizing economies of scale in purchasing, centralizing administrative functions, reducing headcount, or pushing forward other forms of streamlining. Not every acquisition has synergistic potential, however. In regulated industries such as transportation, utilities, and telecommunications, for example, there are sometimes few synergies available—even though they often operate as part of “natural monopolies” that, in theory, have high potential for synergies. Companies in such industries tend to be influenced and constrained by national regulators that generally bar them from realizing all available synergies for the benefit of the end consumer, and thus the net value of any synergies disclosed at the time of a merger announcement is relatively low. more

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Jamaica Budget and Taxation Bulletin 2013

Dr. The Hon. Peter Phillips, Minister of Finance & Planning presented to Parliament the
Government’s plan to fund the 2013-14 Expenditure Budget of J$520.9 billion which had
been previously tabled on 4 April 2013.
The budget for 2013/2014 is cast against the background of the economic reform programme which aims to provide the conditions under which Jamaica can achieve sustained economic growth and development and job creation which is so essential.
In his presentation he indicated that the main focus of the budget of both central government and the self-financing public bodies is fiscal consolidation as a means for reducing the public debt to sustainable levels. The overall budget for central government is $520.8B which is 14 per cent less than the revised estimate for the past
fiscal year. The bulk of the savings arise from the reduction in public debt expenditures of $100.7B. This represents savings in interest costs of approximately $10B and reduction in the repayment of principal of $90.7B.
Debt Expenditure
The budget provides for debt servicing expenditure of $225.2B of which $119.5B
represents interest charges and $105.7B represents repayment of loans – both internal
and external.Get your copy of Jamaica Budget and Taxation Bulletin 2013

How to Turn a Worthless Business Idea into a Million-Dollar Startup | Entrepreneur.com

How to Turn a Worthless Business Idea into a Million-Dollar Startup | Entrepreneur.com:

Everyone has ideas. I get ideas by the dozen. When I’m brushing my teeth, when I’m driving to work, when I’m at my desk reading an article. But that does not mean that all can be converted into million-dollar businesses.

Not that these cannot be converted into million-dollar businesses, but I may simply not be driven enough to see those particular ideas through to that milestone.

You may get many ideas, too. But if you don’t, don't despair. You don’t need ideas to start a business. Regardless, your business ideas are worthless. Let me explain why.

Ideas are just ideas. An idea is the seed of a successful product or service. Without proper care and maintenance, it will not bloom. Ideas require solid research of the target market, a good strategy and a sound business plan, without which, ideas cannot go much further.

Related: 4 Ways to Find Your Next Revolutionary Business Idea

If you want to start a business and make a go of it, you need more than just an idea. To begin turning startup dream into a million-dollar business, consider the following advice.

1. Settle on one business idea.
If you're mulling a number of ideas, odds are good that none of them will see the light of the day. Why do I say that? Because your approach is all wrong. Skimming through different ideas every day and figuring out whether they motivate you or whether they work won't get you anywhere.

The amount of time you’re spending on them will likely be insufficient. An you're probably not passionate about any of them. So how do you fix it? Take one idea that moves you, that you feel most passionate about and stay with it. Stay with one till you can’t go any further. Until you’ve given it your all.

Read more: http://www.entrepreneur.com/article/225354#ixzz2PFRlmFv7
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