Global Business Magazine - January 2013

LUXURY BRAND SERIES HOTELS & RESORTS 2013

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HOT NEW EUROPEAN HOTELS OF 2012

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Tax Avoidance LeveLing The PLAying FieLd

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Spotlight on BRaZil

Real eState inveStMent

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The world’s capital market

The London Stock Exchange Group is Europe’s leading diversified exchange business, incorporating Borsa Italiana and the London Stock Exchange. With over 400 member firms trading and more than 2,600 companies quoted across its markets, the Group operates the largest and most liquid equity marketplace in Europe.

The London Stock Exchange’s Primary Markets team put UK and international companies in touch with one of the world’s deepest pools of global capital. Our markets are home to companies from all over the world, ranging from start-ups to some of the world’s largest corporations.

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inside This Month:

Spotlight on BRaZil

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business Talk For some of the most powerful and influential UK-based companies, despite a vast turnover and large profits, operating out of more than one jurisdiction has meant minimal corporation tax – a fact that ironically has been brought to you courtesy of Google on an Apple computer. Our first cover story of 2013 looks at how the government can properly tackle the tax avoidance issue and make corporation tax more transparent. We ask, with so very few companies these days completely ‘clean’, can the moral dilemma faced by the consumer really be solved by boycotting?

This month our Brazil focus looks at those law firms taking advantage of the country’s current prosperity, whether it be focusing on trade relations with foreign companies, or providing services to assist clients in estimating the potential market value of their company.

International Tax finds out about the important changes Thailand has made to keep in line with global tax policy trends, and why Australia remains such an attractive prospect for foreign investors.

With so many businesses looking to license their brand worldwide, our Licensing focus presents the questions that must be asked before undertaking a global programme; the importance of managing processes effectively to maximise the licensing income from royalties; and why understanding the who, what, where, when and why of licensing is so vital to determining the how. We also find out about the Mexican company that has used their extensive knowledge of manufacturing to become a leading licensing player.

Staying on the subject of prosperity, we focus on Real Estate and why this has become one of the most important engines for the Peruvian economy, and the importance of overseas investors understanding the basic framework of real estate law in England and Wales. We also look at fractional ownership in Mexico for prospective buyers and how it differs from timeshare.

Lastly, with opulence, enjoyment and quality so synonymous with our Luxury Brand Series, at GBM we know when we’re onto a good thing. That’s why we continue to bring you more unforgettable hotels and resorts around the world. Here’s to a great year ahead.

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The opinions expressed in GBM do not necessarily reflect those of the editors, publishers or their agents. The information provided in GBM is general and may not be applied to a specific situation. GBM does not purport to provide legal or other professional advice and takes no responsibility for actions taken on the basis of information provided herein. Legal advice should always be sought before taking any such action. Laws and government policies are constantly changing and accordingly GBM takes no responsibility for the accuracy or currency of the information provided herein. If you require particular information you are advised to consult with the article’s author or seek legal advice.

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tax avoidance leveling the playing field

Tax Avoidance Leveling the Playing Field

Pressure is growing to close the loopholes that multinational corporations use as a way of minimizing tax payments. A topic that was once of interest only to tax lawyers and social justice campaigners suddenly found itself front center of the U.S presidential elections - and became the subject of a furor in the United Kingdom so great that it led to Starbucks agreeing to make a £20 million, one-off payment in order to halt the PR backlash.

“The present international tax system treats trans-national corporations (TNCs) as if they were loose collections of separate entities operating in different countries,” says Sol Picciotto, Emeritus Professor of economics at Loughborough University.

“There is currently only weak coordination between tax authorities, and this ‘separate entity’ approach gives TNCs tremendous scope to shift profits around the globe to suit their tax affairs.

“This tax avoidance mainly involves two related methods.

First, TNCs create subsidiary companies or entities in convenient countries, usually those with no or low income tax (tax havens)… Second, a TNC can adjust the prices of transfers between members of the group to shift profits from high tax to low-tax countries. This is known as ‘transfer pricing’.”

Who is using fancy geographical footwork to cut their tax bills, and how do they pull it off?

Should this be a business model that all corporations aspire to, or are there good business reasons to lobby for tighter tax control?

Surprisingly, businesses as well as public services may be losing out as a result of avoided taxes.

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Whose Profits are Taking a Vacation?

In the United States, corporations can indefinitely defer payment of taxes on profits that are moved overseas. For many corporations, the overseas branch of the organization consists of little more than a P.O. box in a country with effectively a zero rate of corporation tax like the Bahamas or the Cayman Islands.

Despite the lack of any real economic activity in these tax haven countries, multinationals are able to claim that the lion’s share of their profits should be taxed there rather than in the United States or Europe.

Of the US Fortune 500 companies, 290 have revealed that they have sent $1.6 trillion offshore in 2011 alone in order to reduce their tax burden.

The figures come from the companies’ own annual filings with the Securities and Exchange Commission. Of those 290 corporations, the top 20 alone are responsible for half of that unrepatriated income with General Electric topping the list at over $100 billion in untaxed profits.

Since 2009, the scale of the problem has grown in the United States. According to research

by pressure group Citizens for Tax Justice, the amount of unrepatriated profits held by the fortune 500 companies has grown by nearly a third. In that time Apple has more than trebled its unrepatriated profits, from $17 billion in 2009 to $54 billion in 2011, while Microsoft and Google have more than doubled their offshore profits, from $30 billion to $61 billion and from $12 billion to $25 billion respectively.

According to Anne Singer of Citizens for Tax Justice, it’s impossible to estimate just how much tax these corporations are paying. “Only 47 of the 285 companies with foreign profit hoards were willing to disclose, in their annual 10-K reports, even a rough estimate of the amount of income tax liability they would face upon repatriation.

Although accounting standards require such disclosure, many companies hide the facts behind a statement that estimating the US tax on repatriation is ‘not practicable.’” Where figures are available they show that the effective rates of tax paid by corporations like Eli Lily and Nike are far below 5%.

Taking a Trip on the Money-Go-Round

There are a number of ways in which multinational corporations can avoid paying taxes. Tax avoidance, unlike tax evasion, is legal although it usually requires some complicated footwork to get it to stay that way.

For example, in the United Kingdom a widely-used property tax loophole is about to close. Until recently it was possible to avoid Stamp Duty (a transaction tax of up to 7% on the purchase of real estate) by the creation of a company called a Special Purpose Vehicle (SPV) which exists solely for the buying and selling of a particular property. It works like this: if I had a property worth more than $2 million to sell, the purchaser would be liable for Stamp Duty of 7%. But if I created a company, domiciled in a tax haven like the Isle of Man, whose only asset is that property, I can then sell the company rather than the property and the new purchaser wouldn’t pay any Stamp Duty on the acquisition. In 2012, the British Chancellor of the Exchequer, George Osborne, closed this loophole by imposing a new, higher Stamp Duty band of 15% of all properties bought

by SPVs. Another frequently used approach is the disproportionate

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tax avoidance leveling the playing field

royalty payment. In this dodge, a corporation sets up a subsidiary in another country – preferably one with low or no taxes – and sells some of their intellectual property to that company for a nominal fee. For example, Ernst and Young advised publishing group Illife News and Media to declare the mastheads of its newspapers as “intellectual property”. The company then sold those mastheads to a sister company in the group for £1 and leased them back for £51 million, significantly reducing its tax burden until the UK Revenue and Customs tribunal declared the scheme unlawful.

Starbucks, too, significantly reduces its tax burden by paying royalties of 4.7% to a company in the Netherlands for use of the corporation’s logo. This revenue payment is just large enough to drive the company's UK operations out of profit.

The UK Government’s Public Accounts Committee called on representatives from the corporation to explain how it has made a loss in 14 out of 15 years that it has been trading in the UK “We found it difficult to believe that a commercial company with a 31% market share by

turnover, with a responsibility to its shareholders and investors to make a decent return, was trading with apparent losses for nearly every year of its operation in the UK,” concluded the committee, calling the claim “inconsistent with claims the company was making in briefings to its shareholders that the UK business was successful and it was making 15% profits in the UK.” The UK Public accounts committee also found that the company was placing a 20% mark-up on the cost of its supplies that it buys from a wholly-owned supplier based in low-tax Switzerland, and that the UK operation was paying unusually high interest rates on loans from the US business.

“We suspect that all these arrangements are devices to remove profits from the UK to these areas with lower tax,” the committee said.

Another gambit is to create a sister company in a low-tax jurisdiction – or to negotiate a special tax break with an overseas government, as Starbucks has in the Netherlands, and to then classify the company’s operations as

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taking place in that particular organization. For example, Amazon pays virtually no corporation tax in the UK despite having over 15,000 employees and generating 25% of its international revenues there. Instead it channels the transactions through Amazon EU Sarl – a corporation registered in Luxembourg, and Amazon Europe Holding Technologies S.C.S. In 2011, the holding company’s accounts showed a profit of €301.8 million but the company made no tax payments on that money.

Tax Avoidance Hurts Business Too US tax policy is designed with anti-trust measures as much as social justice in mind. When the statutes were first conceived, the aim was to prevent newlyglobalizing corporations from benefiting from tax rates that are lower than those experienced by their entirely domestic competitors. The concern that legislators had was this: a multinational may use profits that are made and (lightly) taxed overseas to invest in their US operations. This would lead to an unfair advantage over corporations paying tax on

profits generated in the US As a result, corporations must pay the difference between the foreign and US corporation tax rate on any profits repatriated to the US “The effect of the investment in US property rules, when they work properly, is to protect the US income tax base by preventing a US multinational from using earnings not taxed by the United States in its US business. These rules also restrict the advantage a US multinational would have competing against a domestic US business that will not have available low-taxed offshore earnings for use in its business," Harvard Professor Stephen Shay told a Senate investigation of offshore profit shifting and the Internal Revenue Code in September 2012 The investigation found that some corporations are deliberately flouting the spirit of this law. Hewlett-Packard has, over a period of two and a half years, taken advantage of a loophole that allows for short term loans. The senate investigation heard that HP alternated "loans" amounting to billions of dollars from two subsidiaries based in tax havens.

Between 2008 and 2010 the

corporation made an unbroken series of 60 day loans from the subsidiary to the parent company. Senator Carl Levin called the arrangement “the ultimate example of form over substance.”

The Winners and Losers “It’s impossible to know how much income tax would be paid, under current tax rates, upon repatriation by the 285 Fortune 500 companies that have admitted holding profits overseas but have failed to disclose how much US tax would be due if the profits were repatriated," says Anne Singer of the US Center for Tax Justice.

"But if these companies paid at the same 27 percent average tax rate as the 47 disclosing companies, the resulting one-time tax would total $328 billion for these 235 companies.

Added to the $105 billion tax bill estimated by the 47 companies who did disclose, this means that taxing all the ‘permanently reinvested’ foreign income of the 285 companies could result in $433 billion in added corporate income tax revenue.”

At a time when the Whitehouse is proposing a $487 billion cut in defense spending to try to reduce

the deficit, this one off payment would come as a welcome relief.

But corporations argue that tax avoidance is not a moral failing, but a moral duty. Microsoft issued a statement pointing out that “In conducting our business at home and abroad, we abide

by US and foreign tax laws.”

To do otherwise would be to put themselves at a competitive disadvantage and to neglect their duty to shareholders. And the rights of shareholders are, of course, the primary obligation of any corporation.

The only way to ensure that multinational corporations pay a fairer share of tax in line with that paid by their domestic competitors is to enshrine the principle in law and level the playing field. So far there have been piecemeal attempts to close individual loopholes but as US economist Alan Blinder wrote, “Every tax ‘gimmick’ has an engrained constituency. I shake my head in disbelief when I hear politicians claim to be able to raise huge amounts of revenue by closing loopholes. Arithmetically, that’s easy. Politically, it’s almost impossible.”

Realistically the only way to

change the unfair advantage that offshoring profits creates is to carry out a root and branch reform of the way global operations are taxed. A taxation system that was built nearly a century ago, when it was possible to identify how much economic activity took place in a given location, is completely unsuitable for a technology and service led economy, argues Sol Piciotto. In a report published in December he wrote: “Currently, multinationals are taxed under an international system whose basic structures were devised a century ago.

It has become clear that we need to take a fresh look at how transnational corporations (TNCs) are taxed... Under unitary taxation, they would be taxed not according to the legal forms that their tax advisers create for them, as is currently the case, but according to the genuine economic substance of what they do and where they do it. This would be far more legitimate and simpler to implement than the current system."

The problem is that global corporations currently treat parts of their organizations as

completely separate entities when, in reality, as the HewlettPackard case shows, the reliance on cross subsidiary is often very significant indeed.

According to Prof Piciotto, the solution lies in something called Unitary Taxation.

“Unitary Taxation directly addresses both problems. It does not allow the TNC to be taxed as if it were collection of separate entities in different jurisdictions, but instead treats a TNC engaged in a unified business as a single entity, requiring it to submit a single set of worldwide consolidated accounts in each country where it has a business presence and apportioning the overall global profit to the various countries according to the genuine economic presence in each country. Each country involved sees the combined report and can then tax its portion of the global profits at its own rate.”

Unitary taxation is something that, so far, only the most hardcore fiscal geeks are discussing. It could find its way into the policy discussions of the governments of the major economies soon, however, if the problem of tax avoidance continues to grow unchecked.

“

It’s impossible to know how much income tax would be paid, under current tax rates, upon repatriation by the 285 Fortune 500 companies that have admitted holding profits overseas but have failed to disclose how much US tax would be due if the profits were repatriated,

”

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international Brand licensing Report

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UK Licensing – The Global Business Activity That’s Making a Name for Itself What would you say if you could identify a new field of business activity that knows no geographical boundaries; can be a centre of profit for companies large and small; can be utilised by almost any category of enterprise whatsoever; and that enjoys an existing infrastructure ready to welcome you into the fold with open arms? Such a thing does exist, and it is known as licensing.

I’m the first to acknowledge that licensing does not have a high profile as a business tool.

For instance, stop a person at random in the street today and ask them to define the term ‘marketing’, and there’s a very good chance that you’ll get a response that makes some sort of sense. The definition that person gives you will probably be wrong, but it will reveal, at least, awareness that something called ‘marketing’ exists, and that the average person is familiar with the term.

Then try the same thing with the term ‘licensing’. If you get a response at all, it’s likely to be an assumption that it is something connected to alcohol or local authorities. Certainly, that’s the response I routinely get if I’m asked about my profession at parties, for example. Now, it could be reasonably argued that it doesn’t really matter that ‘the man in the street’ doesn’t understand licensing.

However, in the 21st century I would assert that for a business not to have a grasp of licensing would be a significant weakness, cutting off that company from a whole world of potential revenue, brand extension, brand protection and brand awareness.

OK then, so what is licensing?

Licensing defines transactions in which the owner of a piece of intellectual property (generally known as a licensor) grants a third party (a licensee) the right to use such intellectual property in conjunction with a

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product, service or promotion, typically in exchange for some form of financial consideration.

The property can be a name, likeness, logo, graphic, signature, character, or a combination of several of these elements.

Although the licensing business as it exists today only became a significant sector from the 1960s, its roots lie in much earlier history. According to Greg Battersby and Danny Simon (Basics of Licensing, Kent Press 2010), there is some evidence that medieval Popes granted licenses to local tax collectors who paid ‘royalties’ to the Vatican for the right to be associated with the Catholic Church. Peter Rabbit was probably the first licensed character, designed and patented as a soft toy by the author Beatrix Potter herself, before her publishing agreement with Frederick Warne & co. A very significant milestone in licensing was the famous (or infamous) Mickey Mouse watch.

The Disney icon first appeared

on a wristwatch in 1933, five years after his film debut in Steamboat Willie. It is reported that the watch licensee, IngersollWaterbury, was able to stave off bankruptcy on the strength of its MICKEY MOUSE license. In one day, Macy's New York sold a record 11,000 timepieces.

Enough history. Today, licensing is a thriving business enterprise, estimated to produce sales of consumer goods and services worth $180 billion worldwide annually. What’s more, licensing is a powerful marketing tool that can be used by virtually any business. Manufacturers and

marketers can acquire licenses for use on their products to boost their business (what we call licensing-in) while brand owners can license out their brand to third parties (licensing-out), with many concomitant benefits.

Why do brand owners get involved in licensing-out their IP? There are several key benefits to this process. Firstly, licensingout can boost awareness of the core IP. The very existence of consumer goods in retail outlets bearing your brand means new eyeballs getting your brand message – often in retailers where the brand has never been seen before. An amusing example was a birthday cake licensed by what was known as the ‘Crazy Frog’, a ringtone phenomenon, thus taking ‘The Annoying Thing’ – a brand that existed only in the digital world – into high street grocers.

off, by allowing you to trade in the many areas of trade mark classification much more quickly than you ever would by internal growth. All of this activity will be accompanied by royalty revenue from your licensees, which can be substantial. License Global magazine estimates that the world’s biggest licensor is The Walt Disney Company, whose licensing business generates retail sales of more than $30 billion each year.

Lastly, for some brand owners, more important than revenue is the way that licensing can allow them to touch consumers much more frequently than they can with the company’s core products. Take Michelin, for instance. The tyre giant acknowledges that consumers consider their core products only in times of necessity. By licensing appropriate consumer goods – from pressure gauges to electric inflators – from air fresheners to safety jackets – the consumer is likely to encounter the Michelin brand on a daily basis, reinforcing the brand’s values for that time when the purchase of a tyre becomes top of mind.

Licensees often also aid in the marketing of the core IP, by spending their own marketing budgets on promoting their licensed products, ultimately benefiting the brand.

Secondly, licensing can also be seen as an alternative to brand extension. Instead of investing time, money and infrastructure entering new business areas, why not ‘borrow the competence’ of companies already established and skilled in those new areas – and get paid for it if by your licensees? Licensing-out your brand can also help to protect it from infringement and passing-

Kelvyn Gardner Managing Director LIMA UK 500M Avebury Boulevard Milton Keynes MK9 2BE T: 01908 802 863

Now let’s consider how and why manufacturers can benefit from licensing-in IP rights from third party licensors. The most straightforward benefit is quite simple – to increase sales. If you are a maker of fashion clothing, or cups and

saucers, or chewing gum – in fact, a maker of anything – you might well understand that having permission to put images of Homer Simpson, or Manchester United, or The Olympic Games, on your products, will considerably boost their desirability in the eyes of consumers who are already attracted to and aware of these third-party IPs. In fact, getting a key license may well even open up distribution that has been off-limits to you before. An Argos or a Tesco may well have been uninterested in your own designs for T Shirts, but would almost certainly take a different view of opening an account with you if you can offer them garments licensed by Moshi Monsters, or Doctor Who. This brings us to a second area of benefit – increasing your profile.

Get in the door of the high-street retail leaders by offering them ‘must-have’ licensed brands, and then you can exploit that opening to the benefit of your entire product range. Earn the trust of retailer and brand owner alike, and many more licensed opportunities will be presented to you.

This then leads us to consider a third and possibly most important benefit of all – licensing truly is a first-class alternative to developing your own brands. Most manufacturers aspire to own a household brand of their own, but establishing a new consumer brand takes a long time and costs a lot of money. Certainly we’re talking years and hundreds of thousands, if not millions, of pounds. Buying a license for an already established brand, either a ‘hot property’ like pop band, One Direction, or a long-term classic like Michelin or Dennis the Menace gets you instant brand awareness, consumer desirability and marketing power – sometimes huge

marketing power. You have to pay for the rights, of course. The basic component of this payment is the royalty – in most cases a percentage of the licensee’s sales of products covered by the license. Most deals also include a ‘guarantee’ or ‘minimum’ – a sum that the licensee is required to pay to the licensor in all circumstances. I would contend that, in a well-managed licensing acquisition programme, the value acquired and the profit generated should easily surpass your royalty outlay.

Therefore, both IP owners and IP rights acquirers have much to gain from engaging in the business of licensing. In fact, I take the view that for every brand there is the right consumer good or service waiting for that license, and that equally, there is a right licensed brand for every form of consumer good or service. The trick is to put them together.

That’s where LIMA comes in.

As the trade association for licensing, with membership from all sides of the industry, including the agents, consultants and other experienced practitioners who enable the whole business to function smoothly, we help create a platform through education, networking, and information services to enable the licensing business to grow. Our sponsorship of major trade conferences and exhibitions around the world regularly brings together established operators, and allows newcomers to take a first look at this exciting business field. If you’re not taking advantage of what we believe is the business opportunity of the 21st century, it’s high time that you took a closer look.

E: kgardner@licensing.org W: www.licensing.org/uk

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WORLDWIDE Licensing Your Brand in the Global Marketplace Global brands require global licensing programmes. Global licensing can help establish a brand presence in new markets, and reinforce brand loyalty in markets where the brand is already introduced. Through licensing, brands can gain market exposure that ultimately results in building a loyal customer base.

How does a company decide which markets to pursue, and which markets make a good match for the brand’s value proposition? These are important questions that must first be asked before undertaking a global licensing programme.

Is the brand known in foreign markets? If so, is it perceived differently than in its country of origin? How dense is the regional field of competitors? Are there cultural preferences and consumer lifestyle habits to take into account? These questions require critical analysis before taking the steps to license into foreign markets.

Internationalising your brand licensing efforts can be daunting but it also yields major benefits.

One of the primary benefits of global licensing is that it allows the brand owner to explore foreign markets with minimal risk. If the brand has no exposure in a particular market, a brand owner can initially test that market’s response to the brand via licensed product extensions.

This lays a foundation of brand awareness, engaging with consumers and establishing a relationship with customers, that in the end creates an affinity for the brand. Licensed products can articulate the brand message in advance of introducing the core product. It’s a smart way to introduce the brand to new consumers and new markets, without the demands and expense of a product roll out taxed on the core business.

If the core product is already represented in a foreign market, licensing allows a brand

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owner to explore and test new categories. Brand extensions, if successful in generating broad consumer acceptance, can pave the way for core product expansion abroad.

and promotion; therefore, care must be taken in translating consumer communication from one language to another, as expressions may not mean the same thing in every language.

Brand licensing is an integral part of the marketing mix, and is an invaluable tool that builds brands in a way that is unique compared to other marketing disciplines. The use of licensing as a means of powerful brand exposure, allows consumers to truly interact with a brand. This creates personal engagement and exposure with the brand – for the life of the product.

Another key factor of successful licensing is the proper selection of manufacturing partners for the brand owner. It is essential that the partnership be based on core compatibility. The licensed products must mirror the essence and fundamentals of the brand, even though they may be in entirely different product categories. Conducting a thorough prospect evaluation and assessment is an important stage in the partner selection process, or else the potential end-result can be marketplace failure for the product and loss of integrity and equity for the brand. The licensed partner involved must also genuinely share and understand the vision and enthusiasm of the brand owner, to deliver the ‘brand promise’ to new markets and audiences. An agency’s creativity and high-level strategy to identify and secure ideal partnerships is indispensable to the brand owner.

Licensing also protects the trademark. By showing use of the trademark in a new market, it prevents others from claiming the brand in similar categories that could compete with or even damage the brand. Many countries don’t allow a brand owner to bring infringement proceedings against piracy or unauthorised usage unless their trademark is registered. Licensed products establish the exclusivity of the brand’s trademark in that particular market, thereby eliminating the threat of ‘Likelihood of Confusion.’ Also, the local licensee is empowered to take action against trademark infringement instead of, or in addition to, the brand owner.

Partnering with a qualified licensing agency that has the bandwidth to initiate global deal flow is essential to the licensing process. The agency must be capable of not only covering all major international markets, but be able to offer localised offices with professionals who fully understand the culture and language. Responsibility for quality control is in the hands of the agency. When establishing brand extensions for foreign markets, great attention must be paid to cultural differences and nuances of language. Licensing involves strategic messaging in areas such as naming, packaging

In any kind of marketing endeavour, a brand owner must ask itself whether it is better served by an in-house team or an outside agency. With the unique discipline of brand licensing, a qualified agency brings specialised experience.

Few companies have the internal expertise and resources required to address the complexities required for successful licensing campaigns. An agency provides an entire team of seasoned experts who have devoted their careers to brand licensing.

An agency has the collective database of lead contacts with licensees and retailers around the world. An agency has categoryspecific sales experience, and takes on the responsibility of all stages of the licensing process such as market research, strategic

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planning, partner identification, contract negotiation, product development, quality control, collections and reporting, and legal enforcement of any licensing infractions.

In global markets, an agency can manage and advise on handling territorial regulations and compliance standards.

Repatriation of funds from foreign countries can be a brand owner’s greatest vulnerability if not handled by experts. A company must be able to navigate the local banking and legal systems to ensure an unobstructed flow of royalties. Staying abreast of currency exchange rates prevents unnecessary erosion of margins. Knowledge of local labour laws is important to monitor best practices on the part of the licensees. Working with a capable agency will help a company avoid these potential complexities, and inherit a stress-

free, turnkey licensing solution – allowing the brand owner to focus on the core business.

Although the brand licensing process is multifaceted and challenging, it can yield a compelling return for brand owners. A robust licensing programme stretches the power of corporate brands into new product areas and consumer groups – domestically and globally. It raises brand awareness in personal and profound ways, creates brand loyalty across generations and across cultures, and it does all this without requiring a marketing budget. It generates its own incremental revenues and bottom line profits. As a result, licensing elevates a brand globally in ways traditional marketing disciplines are not able to achieve.

Global Icons Jeff Lotman CEO Tel: 1+310-820-5300 jlotman@globalicons.com www.globalicons.com Questions/Enquiries Global Icons Francesca Pascolini Executive Director, Marketing & Retail Development Tel: 1+310-820-5300 x212 francescap@globalicons.com www.globalicons.com

By Jeff Lotman CEO/Founder, Global Icons

January 2013 • Global Business Magazine • 11

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WORLDWIDE Managing Licensing Income & Compliance Licensing is permission granted by the brand owner (licensor) to third parties (licensees) for the use and exploitation of their brand in return for a license fee or royalty. Whilst this can be a relatively quick route for brand owners to expand into new product lines and territories, many brand owners do not always manage their processes effectively to ensure that their licensing income from royalties is maximised. The licensing model is based on trust between the licensor and licensee.

However, in our experience, this trust model in itself is not sufficient to protect the brand owners’ intellectual property, and ensure that all royalties are correctly reported and received by the licensor. Transparency and regular monitoring of the licensees is key to ensuring accurate reporting, maximising the royalty due and verifying compliance with the terms of the license agreements. Failure to address these may result in significant loss in royalty income, loss of control and disputes.

define the ‘net sales price’ on which the royalty should be based. As a consequence, the licensees may interpret this to mean that they are allowed to deduct all sorts of unrelated customer rebates and offinvoice discounts from the sales price, before calculating the royalty payable. However, if the licensors never intended for many of these deductions to be allowable, the accumulated loss in royalty income to the licensor could be substantial over a number of years.

Relevant and Specific License Agreements

Regular Analysis of Royalty Income

Although standard off-the-shelf license agreements can be a good starting point, all agreements must be tailored in order to reflect the commercial reality of the relevant industry. Failure to do this, or the use of ambiguous language, will invariably lead to misunderstandings and misinterpretation by one or both parties, resulting in reduced royalties being reported by the licensees. For example, a number of license agreements poorly

Once the license agreements have been signed, many licensors perform little or no on-going analysis on the level of royalties submitted by their licensees, and just accept the amounts reported as being correct. Some licensors do not check to ensure all the royalty statements are received from all their licensees, thus resulting in incomplete invoicing of the royalties due. Brand licensors will have deals with multiple licensees in multiple

Agreements need to be specific with clearly defined key terms. Use of words such as ‘reasonable’ or ‘general’ should be avoided, as one side’s opinion of what constitutes ‘reasonable’ may be completely different to the other’s. Throughout the drafting phase, licensees need to be transparent. This is to ensure that the information the licensor needs to determine the royalty is operationally compliant, and that all relevant reporting requirements are clearly captured in the final agreement.

ILS Rights Raj Trivedi Partner Tel: +44 (0) 203 291 1827 raj@ilsrights.com www.ilsrights.com

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territories, and as the number of licensees grows, many of the basic internal processes needed in order to manage the receipt of royalties are often overlooked by the licensors due to resource constraints. Simple internal control procedures can quickly identify many anomalies in the licensees’ reporting, and prevent royalty leakage in the long-term.

These include regular followup with all licensees to ensure that the royalty statements are submitted and invoiced on time, as well as periodic analysis to forecasted targets.

Routine Royalty Audits All good license agreements will have a ‘right to audit’ clause in them, which provides the licensor with the right to conduct an independent royalty audit to verify the accuracy of the licensee’s previous royalty reporting, and their compliance with the terms of the license agreement. Whereas in the past, royalty audits were seen as a sign of distrust by the licensor towards the licensee, nowadays they are increasingly viewed as best practice by all parties in any licensing relationship. From our experience of hundreds of royalty audits performed for brand owners globally over the past 15 years, almost every audit has identified some misreporting of royalties by the licensees. The main causes of this are clerical or administrative errors in the licensees’ royalty accounting and misinterpretation of key terms by licensees that result in significant additional royalties payable.

The benefits of such audits far outweigh the costs, both in

LONDON | LOS ANGELES | HONG KONG Experts in Royalty Audits Worldwide

monetary and non-monetary terms. Experience shows that brand owners that have implemented a strategy of routine royalty audits of their licensees, have benefited from significant additional royalties collected, which can be several times in excess of the cost of the audits. For the licensees too, such audits can be educational and can facilitate in clearing out areas of interpretational differences, thus resulting in better compliance and accurate future reporting to the licensor.

Generally, we recommend that licensors conduct royalty audits of all their licensees at least once every two to three years, as part of their brand management and corporate governance best practice.

While some large brand owners have their own internal teams for conducting royalty audits of their licensees, many use the services of independent royalty audit specialists. Choosing the right royalty audit specialist with relevant industry experience is important. The audit must be fact-based, objective and nonconfrontational. Where there are interpretational differences identified, the auditor must independently report on all aspects of such differences, so as to facilitate an informed discussion of the issues between the licensee and licensor. Audits that are conducted objectively with sensitivity to licensor/ licensee relationships often lead to amicable resolution of the issues, which results in better compliance, increased royalty income and healthier licensing partnerships in the long-term.

Ella Cheong (Hong Kong & Beijing) Greater China (China, Hong Kong, Macau) 5001 Hopewell Centre 183 Queen's Road East Hong Kong T: +852 2810 0558 F: +852 2810 0933 E: echk@ellacheong.com W: www.ellacheong.com Areas of Practice: Prosecution, Commercialisation and Enforcement of all Intellectual Property Rights (IPRs), including Patents, Designs, Trade Marks, Copyright and Domain Names

Ella Cheong LLC (Singapore) Southeast Asia & Indian Subcontinent (Singapore, Malaysia, Brunei, Indonesia, Philippines, Thailand, Vietnam, Cambodia, Laos, Myanmar, India, Pakistan, Sri Lanka, Bangladesh, Nepal) 300 Beach Road #31-04/05 The Concourse Singapore 199555

T: +65 6692 5500 F: +65 6298 0818 E: mail@ellacheong.asia W: www.ellacheong.asia

Areas of Practice: Prosecution of Trade Marks, Designs, Copyright and Domain Names Commercialisation and Enforcement of all Intellectual Property Rights (IPRs), including Patents, Trade Marks, Designs, Copyright and Domain Names

Advocates & Solicitors

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Notaries Public

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Commissioners for Oaths

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Intellectual Property Agents January 2013 • Global Business Magazine • 13

oThing QuALiTy cL

Greatest Hits 2013

inteRnational BRand licenSing RepoRt 2013

TURKEY How to Create a Strong and Successful Licensing Programme for your Brand If you have a brand, or would like to represent a new brand in your market, you should take the necessary steps to apply vital rules and develop strategies that have been experimented and approved worldwide for many years. Here are the fundamentals of licensing your brand, so you too can become a key player.

Add Value to Your Brand Adding value to your brand means making it happen so that it is noticable amongst others on the same floor. Touch the meaning and give soul to the body, because people must see something precious in order to choose your brand.

Differentiate, Refresh and Polish Stay away from always presenting your brand in the same way. Always look for new ways to differentiate the look, refresh the content and polish the surface so that people are automatically attracted to its vitality.

Find a Memorable Motto Every brand has a special motto or tag line, to help people to remember and recall the function and the message. Brand names and mottos should be mutually complementary to each other.

This means that when only the brand name appears somewhere, people must see the motto in mind – or the other way round.

Create Necessity and Demand You must have heard the expression, ‘Necessity is the mother of inventions’ many times. Bear this in your mind as it’s true – necessity brings the inventions and inventions bring the demands. Just like necessity,

the other thing you need is to reveal the demand which is hidden somewhere close to you.

Place your brand in the correct place and correct time, aimed at the correct target, and you will create demand.

Promote it Until it Becomes Well-Known – Then Keep Going You cannot make your brand recognised without spending time and money on advertising.

Promotion is the crucial point for attracting publicity to your brand. However, you must have a proper planning for your promotional activities, all the while taking into consideration the optimum budget for creating a long-term presence. No matter how small your budget is, you can always try to make a promotion plan based on efficiency and longevity.

Think About Longevity and Sustainability Successful brands cannot be invented overnight from nothing.

If you think of today’s major brands, they must be at least 10 years old – maybe even 25 or over 50 years. Never expect an easy and fast return if you are expecting a long-term return.

Only by believing in longevity, will you keep your brand alive.

That’s why you must have the capacity to support and maintain your brand in order to maintain sustainability. Remember that easy come, easy go.

Try Benchmarking Apply a benchmarking strategy into your plan, in order to try and see what’s happening around you. Think of today’s successful brands, where they were in the past, where they are going to, and where they will

be in the future. What have they done to create success? How have they managed to keep their brand alive? What is less and what is more? Ask yourself these questions, and find out how others succeeded under what conditions, and what obstacles they had to overcome.

How to Start and Manage Licensing Your Brand.

Identify Your Licensed Brand While it is vital to give a catchy name to your brand, you must also associate the name with a function, value and philosophy.

When people see your name or logo, they should be able to identify the meaning behind the name.

Understand Core Brand Values and Programme Objectives Clearly define the core values that your brand stands for, and people will understand the benefits. Roughly plan and schedule an intensive licensing programme for at least two years, and then try to develop it by adding more things day by day.

Create a Rich Style Guide You should always anticipate future needs when designing elements. This means ensuring your brand is comprehensively represented art-wise, by way of a rich style guide or art bank with plenty of materials, attractive elements, glamorous designs, imageries and instructive guides.

Refresh it and renew it from time to time, to allow new things to appear.

Enrich the Licensing Power of Your Brand You should always try to attract and tempt people to prefer your

Lisans Medya Ltd. Sti. – License Time Magazine TURKEY Hamdullah Yalvak Brand & Licensing Director Tel: +90 555 6964545 hyalvak@lisansmedya.com www.lisansmedya.com

14 • Global Business Magazine • January 2013

licensed brand. It’s by making sure the real value and content is as luxurious and rich as the look, you stimulate the brand and keep it firmly in the spotlight everytime.

Market Your Licensed Brand Learn how to market your licensed brand. This means using all necessary applications and guidelines, to find the best target and field to sell it at the highest possible price. Try to find tools that will help you demonstrate or present your brand impressively and efficiently. You must never treat it as a regular brand – instead stand proud and be ready to answer all questions (including the tricky ones).

The Step by Step Guide to Making Your Brand a Profitable Champion in the Licensing Arena 1. Plan a long-term licensing programme for your brand 2. Focus on brand extension 3. Promote your licensed brand 4. Push your brand in retail – be in close contact with retailers 5. Use analysing methods all the time (SWOT/GAP Analysis) 6. Organise meetings, events and workshops with your agents and licensees 7. Coordinate qualified staffing 8. Consider quality and compliance 9. Attend trade shows 10. Protect your brand legally 11. Follow the relevant sectoral publications 360° Brand Marketing and Licensing Strategies

LICENSETIME BRAND, LICENSING & MEDIA MAGAZINE

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IZZETTINBEY CAD. ATALAR SOK. NO: 15/1 34696 USKUDAR-ISTANBUL-TURKEY TEL: +90 (216) 532 78 11 info: magazine@licensetime.com advertisement: ads@licensetime.com www.licensetime.com

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inteRnational BRand licenSing RepoRt 2013

USA The Ws of Licensing Licensing, either as a manufacturer or a brand owner, has significant benefits to offset what can seem like an incredibly complex industry. As you navigate the licensed industry, it is important to understand the who, what, where, when and why of licensing, while you determine the how.

Who As you begin in licensing, first understand if your role is as a licensor or a licensee. Is your intention to allow other manufacturers to create product using your intellectual property, or are you focused on acquiring intellectual properties for use on your products? If you intend to play both roles, then understand in what order those things should happen.

What Once you know whether you are the licensee or licensor, it is important to figure out what you are licensing. If you are licensing out, which pieces of intellectual property do you want to license?

If you are acquiring licenses, should you be targeting ‘A’ or ‘B’ properties? You don’t want to enter the licensing industry without a plan.

Where Where do you plan to sell your product or licenses? Are you focused on high volume big box retailers, specialty retailers, online retailers or some combination thereof? If you plan to sell to multiple channels of distribution, you need consider a separate plan for each, or the timing for each.

When If your plan involves more than one step, in what order should each step happen? Understand that not everything will happen at once, nor should it. Make sure the order of your steps aligns with the direction and goals for your brand.

16 • Global Business Magazine • January 2013

Why Perhaps the most important question of all is why license?

The answer is that licensing generates additional excitement and leads to impulse purchases.

Manufacturers across different categories are all supporting the same license you’re trying to sell to retail, and licensors are also driving home the same message. You can even leverage any placement you get with your licensed product, based on the popularity of the license to expand distribution of your own brand. Additionally, a licensed product generally commands a higher retail price and higher margins for retailers and manufacturers.

How The how is where companies like ours comes in. Licensing Unlimited is a full-service company that offers everything from business planning to retail distribution. Our team provides excellent creative development; manages creative approvals; creates style guides; monitors business analytics; provides forecasting; conducts general partner business updates; engages in contract negotiation and property acquisition; and gains your product placement at retail. We also have experience in manufacturing, licensing, graphic development and many other aspects of business. By engaging us, we can do what we do best, which allows you to do what you do best.

Karen Sahetya President and CEO Tel: 888.591.5552 ksahetya@licensingunlimited.com www.licensingunlimited.com

airmail MEXICO Versalicensing: From the Manufacturing Industry to the Licensing Business Thirty years ago we founded Versatex. Now a successful company with multiple functions, originally Versatex participated in the productive life of Mexico through providing high quality fashion items in various categories. It succeeded in becoming one of the leading high quality menswear manufacturers. Having consolidated the company and products in the best distribution centres in the country, department stores, warehouse clubs, speciality stores and

wholesalers, the company then started offering logistics and marketing services.

However, if this wasn’t enough, Versatex wanted to add more value to these products. We did this by ensuring the highest quality of design in the world, making sure our work was not only for employees and customers, but for the prestigious brands we were handling. A good design team working with some of the best brands, can result in quality products that

bring value to the market.

Capitalising on this success, we also decided to found our own licensing agency – Versalicensing. Nowadays, this division has over 80 licensees in 17 different brands and in many different products – not just the fashion world and clothing. Brands we own or represent include Ecko, Ecko Unltd, Marc Ecko, Fubu, New Man, Cubavera, Ted Lapidus, Natural Issue, Marina yachting and Candie´s, aswell as national brands such as Grypho, Black, Corazón de Melón and Dream Big. Having achieved a good presence in many market levels – from mens and ladies fashion to stationery and BTS products, accessories, novelty items and the addition of the Sharper Image license to our repertoire – we have now entered the world of electronics, appliances, furniture, gadgets and more.

Jaime Meschoulam – Versalicensing´s CEO contacto@versalicensing.com.mx

With such considerable experience, Versalicensing has a great deal to offer. We always provide our licensees our knowledge and professionalism, adding value that can only come from being one of the most important and profitable businesses in the world. As we confidentally carry the brand and reputation in every product manufactured or imported, our licensees have found that the value of their business has increased, and the potential to produce and position their products has grown. This success is down to working in collaboration with a company who not only have experience in design, brand positioning and brand strategy, but the unrivalled reputation to grow and expand.

January 2013 • Global Business Magazine • 17

Spotlight on BRaZil

Embassy of Brazil Tel. 020 7399 9000 E: secom@brazil.org.uk W: www.brazil.org.uk

Brazil today The economy Over the past fifteen years Brazil has built a new development model underpinned by monetary stability, fiscal responsibility and social inclusion. This effort has led the country into a cycle of economic growth and a new position in the international arena, with growing interest in investments.

Maintaining the economic capacity to provide increased business opportunities has been a priority for the country. There is a permanent commitment not only to the consistency of the economic foundations and social justice, but also to the overall soundness of our institutions. Brazil has endeavored to ensure universal, stable and clear rules for the productive sector, ensuring predictability and transparency for those who seek to invest in the country. Dilma Rousseff, the first female president in the history of the country, was elected at the end of 2010 on a platform of continuity with regard to the economic and social achievements of her predecessor Luiz Inácio Lula da Silva.

Brazil has become the world’s sixth largest economy in nominal terms (in terms of purchasing power parity it is the seventh largest), as in on course to be in fourth place by 2030. By far the largest economy in South America, in 2010 Brazil’s GDP grew 7.5%, the best performance since 1986.

This was due to an accumulation of good

18 • Global Business Magazine • January 2013

practices over recent years, with effective public policies directed at strengthening the macroeconomic foundations of the economy. These are comprised of inflation targeting, a primary fiscal surplus, a floating exchange rate regime, expanding domestic demand, encouragement of investment and exports, increasing international reserves, and attracting foreign direct investment (FDI). Data for December 2011 from the Central Bank showed that Brazil’s net public debt stood at 38.5% of GDP – well below the average for most of the developed countries affected by the international crisis.

Such figures have contributed significantly to reducing the risk profile of Brazilian government bonds.

With a population of 194 million, Brazil has a large and fast growing consumer market.

Since 2002, mostly as a result of social programmes implemented by the Brazilian Government, over 40 million Brazilians have moved up to the middle of the social pyramid, now enjoying access to health, education, credit and formal employment.

The average income of the Brazilian population has been increasing and since 2003 real average wages have increased by 35%, while inequality in income distribution has been decreasing.

The stronger demand in the domestic consumer market has had a marked impact

on the Brazilian economy. First, it was the vital force helping the country to avoid the worst effects of the 2008 economic crisis.

Second, it has instigated investment in productivity: of the total imports in 2010, 46.2% were of raw material and intermediate goods, whereas only 22.6% were of consumer goods. This economic expansion trend is likely to continue, with 2010 figures showing that Brazilian industrial production reached its highest level since 1986. In 2010 the rise in industrial production was of 10.5%, in relation to 2009, when a retraction of 7.4% was noted caused mainly by the world economic crises.

Brazil has been able to keep inflation under control, allowing it to rescale sovereign debt that had previously been contracted under difficult conditions and with extremely volatile interest rates. At the same time, since 2001, the trade balance surplus has allowed Brazil to build its international reserves reaching a level of US$351.5 billion in December 2011.

The external market has also played an important role in Brazil’s development and its strong macroeconomic stability. In 2010, total trade reached US$383.6 billion, a 36.6% increase in relation to 2009, when it was US$280.7 billion. Exports reached US$201.9 billion and imports peaked at US$181.6 billion. For the first eleven months of 2011

(Jan/Nov) exports have reached US$233.9 billion and imports peaked at US$207.9 billion, compared to the same period in 2010, these numbers mean that exports have risen by 29.2%, and imports by 25.1%.

Total trade reached US$441.9 billion an increase of 27.3% to the same period in 2010.

Over the past years, Brazil has become an important supplier of agricultural products and commodities, as shown in the rankings below. In 2011 (Jan/Nov), manufactured (35.8%) and semi manufactured (14.2%) products accounted for 50% with basic products accounting for 47.9% of total exports.

Brazil in the world – production and exports of selected products Products Sugar Coffee Orange juice Ethanol Bovine meat Tobacco Iron ore Soybeans Leather and fur Poultry meat Footwear Soybean residue Maize Soybean oil Airplanes Pork meat Cotton Cars Aluminium Steel

world world production exports 1 1 1 2 2 2 2 2 2 3 3 4 4 4 4 4 5 5 6 9

1 1 1 1 1 1 2 2 4 1 5 2 3 2 4 4 5 12 6 10

Brazil attaches great importance to a successful conclusion of the Doha Development Round of the World Trade Organization (WTO). The country has made a huge effort during the negotiations to ensure a positive outcome for all WTO members. At the regional level Brazil is working closely with its neighbours to create a peaceful and prosperous space in South America. Regional integration is a top priority of Brazil’s foreign policy reflecting the confidence shown by international markets in the region.

With the economic outlook improving, Brazil’s immense market remains the largest recipient of FDI in Latin America and one of the top ten FDI destinations in the world.

According to the recent FDI Global Outlook Report published by the FDiIntelligence, Brazil moved rapidly up the rankings of the leading FDI locations in the world in 2010.

With 28% growth in greenfield FDI projects, Brazil was the seventh leading location for

projects in 2010, up from 11th place in 2009.

Capital investment into Brazil increased by 19.7% and job creation by 64.5%, making it the fourth biggest country in the world for greenfield investment and jobs. The country experienced very strong growth in inward investment in the renewable energy, electronics, chemicals and food and beverages sectors in particular and in 2010 the flow of FDI into the country reached US$48.4 billion. For the first eleven months of 2011 (Jan/Nov), the FDI inflow has reached US$60 billion, an increase of 82% in comparison to the same period in 2010. With the incentives for long term financing, the private sector is expected to play a key role in long term investment initiatives. Brazil does not impose any restrictions on foreign capital repatriation and continues to be an attractive investment destination for both FDI and portfolio investment. In recent years Brazil has earned investment grade status, according to the evaluation of rating agencies such as Standard & Poor’s, Moody’s and Fitch.

Many challenges remain for Brazil.

One of the most important is to expand infrastructure in order to maintain its economic development. Introduced in January 2007, the Growth Acceleration Program (PAC) is a set of long-term public investments in economic and social infrastructure in the sectors of transportation, energy, water, sanitation, and housing. The programme also includes several measures to encourage economic development, such as stimulus to credit and financing, improvement in the investment environment, tax relief, and long-term fiscal measures.

The second phase of the programme (PAC 2) launched in March 2010, plans to invest up to US$ 571 billion in the period 2011-2014 and US$ 376 billion after 2014. The plan is focused on the areas of logistics, energy and urban infrastructure, but extends priorities to social areas such as housing, health and public safety. The largest share was allotted to developing transportation and logistics, with a view to expanding and connecting Brazil’s highways, railways, waterways and airports, and also to secure and increase energy supply. The Brazilian Development Bank (BNDES) predicts that between 2010 and 2013, US$51 billion will be invested in electric power, US$37 billion in telecommunications, US$22 billion in sanitation, US$16 billion in railways, US$33 billion in roads and US$14 billion in ports.

The capacity to innovate in science and technology has also enabled Brazil to lead the way in deep-sea oil exploration. In addition to exploring deposits in other parts of the world, the state-owned energy company Petrobras is now embarking on a new challenge closer to home: that of exploring

potentially enormous underwater deposits in the ‘pre-salt’ layer beneath the seabed off the coast of southeast Brazil. This could double Brazil’s reserves and place it among the top five oil-producing nations in the world.

The oil and gas sector alone is set to receive investment of around US$224 billion between 2010 and 2014.

Tourism and sports events This brief overview of the state of the Brazilian economy would not be complete without mentioning tourism, one of its fastest growing industries. Many different types of tourist are attracted by a unique confluence of factors in Brazil: amazing natural beauty and a superb climate, cultural diversity, biodiversity, world heritage sites, fabulous food and eponymous events combined with the added value of the much admired warmth and hospitality of Brazilian people.

International airlines are increasing their scheduled flights and there is significant development taking place in the hotel, catering and other tourist service sectors, including renovation of the major airports.

Tour operators have been expanding their business in Brazil as well as broadening their portfolios of destinations and holiday types in Brazil to cater for the swiftly growing tourist market. This trend is likely to expand further with the forthcoming 2014 World Cup and the 2016 Olympic and Paralympic Games.

A wide range of business opportunities arise from the fact that Brazil will be hosting the world’s two biggest and most prestigious sporting events in the next four years. Both public and private investment in sports facilities, infrastructure and services have been growing significantly, which is expected to accelerate in the next few years leading to the World Cup and the Olympic Games.

Brazilian and international industries and companies specialising in stadia development, communications and security systems, transportation and accommodation, marketing, insurance, relevant sports and hospitality services are set for huge expansion in demand for these major sporting events and, therefore, major gains.

Further information on Brazil can be found on the following sites: www.brasilglobalnet. gov.br (Ministry of External Relations); www.mdic.gov.br (Ministry of Development Industry & Commerce); www.bcb.gov.br (Central Bank of Brazil); www.apexbrasil. com.br (Investment and Export Promotion Agency); www.ibge.gov.br (Brazilian Institute of Geography & Statistics); www. brazil4export.com (Brazilian National Confederation of Industry); www.fazenda. gov.br (Ministry of Finance); www.embratur. gov.br (Tourism); www.brazil.org.uk (Embassy of Brazil in London).

January 2013 • Global Business Magazine • 19

Spotlight on BRaZil

Sue Ash/ Victoria Blackman / Hannah Klepper 46 Bedford Row London WC1R 4LR Tel: 0207 831 1954 M: 07973 147036

EcoHouse delivering for communities and investors in Brazil UK company, EcoHouse Group, was established in June 2009 by British born Anthony Armstrong Emery to provide investors worldwide with some of the best available real estate products for investment.

Today it has offices in five countries, UK, Brazil, Dubai, Canada and Singapore, and employs over a thousand staff.

Its business includes a large construction operation in Brazil with a focus on building high standard social housing as part of the Government’s public–private housing initiative as well as several smaller projects and an expanding estate agency business providing investment properties. It also markets its properties through a range of selected real estate companies across the world.

EcoHouse’s core purpose is to deliver strong investment yields with a low entry level and an easily-defined exit. Its first projects were part of the Brazilian Government’s largescale social housing scheme, Minha Casa

20 • Global Business Magazine • January 2013

Minha Vida (My House, My Life), which was launched in March 2009 to tackle the chronic housing shortage in the country.

There is a seven million unit housing deficiency in Brazil and a predicted 20 per cent rise in population expected over the next decade. The initiative was backed by public investment of over R$34 billion of government funds and also set out to raise significant private investment.

The government scheme aims to build three million properties in Brazil by the end of 2014 and enable people on modest means to own their own homes with the help of specially designed domestic mortgages. Under this initiative, EcoHouse is attracting funding from international investors and building social housing units near Natal, in the North Eastern state of Rio Grande do Norte for such families.

The company’s first development was Arco Iris, a residential development of two bedroom, one bathroom homes sold for around R$25,000*. Each unit was pre-sold to lower middle income families of the

area, who had registered to take part in the programme. Such was the demand that it sold out prior to build. EcoHouse reached out to private investors from Singapore, Malaysia, China, Scandinavia, UK, Canada and USA worldwide to raise money for the construction, all of whom received their investment with promised returns within twelve months.

The company then embarked on a second development in the same region – Casa Nova - currently in construction and also sold out. Each property has its own garden and parking space as well as several other features, including communal facilities such as a swimming pool, children’s playground, barbecue area, a dedicated cycle path and communal toilets (in addition to the bathrooms in each house).

EcoHouse is now on its third and biggest development, Bosque Residencial, which is the largest urban development of its kind in North East Brazil. The development of 2,200 units offers the convenience of onsite shopping and facilities such as a leisure

club with tennis/ basketball courts and cycle paths.

is set to run for five years offering investors continued investment potential.

Investment

Throughout construction, investors are kept fully informed of developments at the sites via the EcoHouse Group website and through their initial estate agency or property partner contact.

EcoHouse has been risk assessed by CAIXA bank and registered with the Brazilian government as a developer for projects under the Minha Casa, Minha Vida scheme.

Investors’ funds are fully secured and protected by UK legislation because they are placed in an escrow account with Lloyds of London, which is overseen by a lawyer with the Lloyds legal team. The lawyer has to be satisfied about build quality, the progress of the project and the requirement for release before funds are transferred to the developer.

The terms relating to investment in Bosque Residencial are the same as those employed in the previous projects. Investment starts from £23,000 and a return of 20 per cent is promised. Repayment of the capital and payment of the interest is made 12 months from the date of the first investment.

Investors are also offered early options on the next phase of the Bosque project, which

As one of the BRICS countries, Brazil has enjoyed continued growth, whilst much of the world has battled with recession, and has attracted the attention of investors worldwide. This is set to continue over the next few years with its hosting of the 2014 FIFA World Cup and the Olympic games in Rio de Janeiro in 2016. Business Monitor International (BMI) is forecasting a 25 per cent increase in tourist arrivals in Brazil by 2016.

EcoHouse is committed to helping to build Brazil’s future through its participation in the ambitious social housing programme and also through its involvement with the local community in Natal. This is seen in its support of the children’s hospital Varela

Santiago, where the company contributes R$100 for every investor, and of the local orphanages, where it asks buyers to pay R$1 as well as buy a large can of powdered milk, both of which are then donated.

In addition, the company sponsors Alecrim Football Club and Alecrim Rugby Club, helping to promote these sports and particularly rugby which is still a new sport in Brazil.

“I am a keen sports fan and especially of the role it can play in bringing communities together and inspiring people,” says Armstrong-Emery. “As the main sponsor of the football team, EcoHouse is rebuilding the stadium and helping it to compete on a level footing with the other teams in the league throughout Brazil. It’s great to be able to give supporters and the community something to be proud of. “ (* Brazilian Reals Approximately £80,000)

January 2013 • Global Business Magazine • 21

Spotlight on BRaZil

The Firm Arena Alvarez Advogados is a law firm which was established in the State of São Paulo, Brazil in 1994. Specializing in insurance and reinsurance law in the fields of aviation (third party liability claims, purchase and sale contracts, aircraft finance, repossession, regulatory and airport law), recovery of local and international debts and other issues related to export credit insurance, Directors and Officers (D&O) liability, international trade, marine and non-marine claims, cash in transit claims, rail and road transportation claims, real estate law, energy, corporate law, labor law, arbitration and mediation.

Our office settles claims and defends legal actions brought by airline passengers and victim’s families, as well as cargo and baggage claims, subrogation suits (recovery) on behalf of insurers, reinsurers and other relevant proceedings involving general transportation companies, credit insurance and large organizations of the most diversified segments of the market.

Arena Alvarez Advogados has wide international expertise and, with its team of highly qualified professionals, specializes in assisting domestic and foreign clients both in Brazil and abroad.

Arena Alvarez Advogados has its main office in state capital city of São Paulo, and a branch office

Clyde & Co: Unrivalled Knowledge and Services in Emerging Markets

Luiz Eduaro Arena Alvarez São Paulo-SP Rua Oscar Freire, 379 - 18º andar Brasil – CEP 01426-001 Tel: +55 11 3082 2521 Fax: +55 11 3061 3515 Bauru-SP Avenida Getulio Vargas, 21/51 - 5º andar Brasil – CEP 17017-383 Tel: +55 14 3202 9664 Fax: +55 14 3202 9653 luizeduardo@arenaalvarez. com.br www.arenaalvarez.com.br in the city of Bauru, (São Paulo state).

The Firm’s founder, Luiz Eduardo Arena Alvarez is a former director of the British law firm Clyde & Co Consultores S/C Ltda.’ as well as a founder member of the Brazilian Association of General Aviation (ABAG), member of the International Bar Association, of the Aviation Legal Committee of the Brazilian Bar Association and holds a private pilot’s license.

22 • Global Business Magazine • January 2013

Clyde & Co is a global law firm with a pioneering heritage and a resolute focus on its core sectors of energy, infrastructure, trade, marine, aviation and insurance. With over 1,400 lawyers operating from 30 offices and associated offices in six continents, the firm advises corporates, financial institutions, private individuals and governments.

Clyde & Co was amongst the very first international law firms to set up offices in Brazil and Latin America, and has enjoyed a longstanding reputation for delivering knowledge and services there. With an unrivalled reputation in emerging markets, the firm is now the largest international firm in the Middle East, and has a rapidly expanding network across Asia, Latin America and Africa.

Today we have English law partners in Brazil, and are also

Stirling Leech Clyde & Co Rio de Janeiro, Brazil Tel: (5521) 2217-7716 Fax: (5521) 2217-7739 Mobile: 44 7879 032 042 stirling.leech@clydeco.com

associated with a significant Brazilian law practice. This enables us to not only advise Brazilian entities, but also procure inward advice for clients looking to invest, trade and do business in the region. We offer a full service team and work extensively in the offshore oil and gas, marine, trade, insurance and aviation sectors, as well as general corporate investment and dispute resolution.

Aronis Advogados – The Brazilian Law Firm with an International Outlook

Valuation, Financial Projects and Corporate Finance Consulting

The law firm of Aronis Advogados (‘Aronis’) adopts a tailor-made approach in relation to legal matters, all the while adhering to the unique and noble idealism of professional ethics. A member of the Brazilian Institute of Criminal Sciences and the São Paulo Lawyers’ Association, Aronis focuses on criminal and international law.

Valuation

In the criminal sector, Aronis acts for both the prosecution and the defence in police enquiries and criminal actions, as well as the preparation of reports and compliance with requests by companies. Traditionally renowned for its performance, bespoke service and modernism, the firm also prides itself on keeping the client informed at all times.

Since 1986, Aronis has been operating in this international sector, focusing on trade relations between Brazilian and foreign companies. The firm provides intermediate solutions for conflicts, on matters relating to the collection of export and import transactions concerning services or goods. Within the judicial or extrajudicial scope, Aronis acts as attorneys-in-fact of creditor clients in companies’ recovery proceedings. The firm also acts on behalf of international insurance companies that subrogate in the right of recovering credits resulting from credit insurance.

Aronis not only represents Brazilian companies with credits receivable from abroad, but also foreign companies with outstanding invoices originated by trade transactions of various kinds – the latter including judicial collection or execution of extra-judicial settlements in Brazil, or in other countries through partnerships.

Aronis seeks to designate a corresponding firm abroad with the intermediation and monitoring of all of the proceedings for effective recovery of credits. To do this,

Aronis Advogados Rua Afonso Braz, 579, 12º andar - conj. 125 04511-011 - Vila Nova Conceição São Paulo - SP - Brasil Tel: 5511 - 3053 3036 Fax: 5511 - 3053 3034 octavio@aronisadvogados.com.br www.aronisadvogados.com.br Aronis has, through its owner, been participating in a number of congresses abroad, by way of attorneys specialised in this segment of recovery of credit.

Furthermore, this important network has opened up possibilities for operations in more than 80 countries.

Aronis is the official representative in Brazil of Global Credit Solutions Group, a company headquartered in Australia with offices in the most important cities around the world. Aronis is also affiliated to the following international associations: American Collection Association International, League International for Creditors, Commercial Law League of America, International Association of Commercial Collectors Inc, and the Credit Services Association.

Owner Octavio Aronis graduated from the Faculdades Metropolitanas Unidas with a post-graduate degree in the US at the University of California, as well as specialist courses at the Getúlio Vargas Foundation College, GV Law. Currently, he is the legal director of the Jewish Federation of the State of São Paulo, director of the Brazilian Israelite Confederation and vice-chairman of Corpore-Brasil.

He is also a board member of the Albert Einstein Hospital.

The best way to achieve maximum results when presenting your company is to estimate its potential market value. At Guilherme Aguiar, we provide services to assist clients with mergers, acquisitions and dispositions; taxation planning and compliance; financial reporting; bankruptcy and reorganization; litigation and dispute resolution; and strategic planning.

Guilherme Bastos de Aguiar www.gbaguiar.com.br guilherme@gbaguiar.com.br

Corporate Finance Consulting Our services include fund distribution (through certified financial institutions) and financial restructuring. We also give advisory services to medium to-large companies seeking funding from financial and economical viability projects, which are built through analytic tools, market research and feasibility studies. With a focus on implementation, expansion, production modernization, infrastructure and debt management plan, we create bespoke solutions with specific benefits. Our services also include long-term financing, secure debt financing, receivables securitization, private equity, due diligence, strategic planning, and mergers and acquisitions.

Guilherme Bastos de Aguiar is a financial manager and consultant. Specialized in financial business investment projects and valuation, he advises companies looking for capital resources and for restructuring. He is a lecturer at private and governmental institutions – and example of the latter being EletrobrásEletronorte. Former founder and director of Company Financial Services, Guilherme Bastos de Aguiar has forged a reputation in his own right, acting as a partner for Brazilian financial agencies and institutions.

January 2013 • Global Business Magazine • 23

tRip adviSoR

Hot New European Hotels of 2012 2012 was a memorable year, the ‘Jubilympics’ celebrations that took place will go down in history as one of Great Britain’s most triumphant achievements. Last year also saw the opening of some exciting new hotels in Europe and here, TripAdvisor presents its list of some of the hottest hotels that have opened their doors in Europe this year.

“While they may have only been open for a year, these hotels have already made a lasting impression on many TripAdvisor travellers. And given the positive feedback they are receiving from guests, these hotels look likely to see continued success in 2013,” commented TripAdvisor spokesperson Emma Shaw.

hot new european hotels of 2012 1. Monastero Santa Rosa Hotel & Spa – Amalfi Coast, Italy

3. K+K Hotel Picasso – Barcelona, Spain

5. Castello di Casole – Casole d'Elsa, Italy

This striking hotel is surrounded by botanical gardens sweeping across four levels. Featuring sun terraces offering panoramic views overlooking the Amalfi Coast, this property is a wonderful base to unwind.

The avant-garde K+K Hotel Picasso is situated in the lively city of Barcelona, in the exclusive El Born district. Travellers can discover the Santa Maria del Mar cathedral and the beach promenade which are both close by.

Set as the centrepiece of a remarkable 4,200-acre estate, Castello di Casole is a restored castle featuring breath-taking views of the Tuscan countryside. The hotel’s suites are styled to mirror old world Tuscan charm.

As one TripAdvisor traveller said, “Monastero Santa Rosa is paradise found. Everything is absolute perfection; the service is impeccable and our room had an amazing view of the Amalfi Coast.”

As one TripAdvisor traveller said, “The location of K+K Hotel Picasso is absolutely perfect and it’s within walking distance of pretty much everything. Overall we had an amazing stay and would highly recommend it to anyone.”

As one TripAdvisor traveller said, “The property is impeccable, the views are peaceful and beautiful and the food is spectacular.”

4. The Ampersand Hotel – London, UK

Set in a historic building composed of four former palaces from the 19th century, The Ritz-Carlton is a stylish retreat located in the city's most elegant boulevard, the Vienna Ringstrasse.

2. Apex Temple Court Hotel – London, UK Located in the heart of London’s legal district, in the Inner Temple which is enriched with a long history stretching back to the middle of the 12th century, Apex Temple Court Hotel boasts 184 luxurious bedrooms and suites, each designed with soft and stylish furnishings.

As one TripAdvisor traveller said, “I thoroughly recommend staying here if you want a beautiful and modern hotel that is in a great location for most tourist attractions.”

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Featuring 111 rooms and suites, The Ampersand is uniquely designed taking inspiration from the local London neighbourhood and referencing five concepts – botany, music, geometry, ornithology and astronomy.

As one TripAdvisor traveller said, “The hotel interior is exceptionally well designed; the rooms and bathrooms are comfortable, elegant and spacious.”

6. The Ritz-Carlton, Vienna – Vienna, Austria

As one TripAdvisor traveller said, “This is without doubt the best hotel I have stayed in in Vienna. The rooms are great and the staff are exceptional.”

7. Jumeirah Port Soller Hotel & Spa – Majorca, Spain Designed with natural wood and rock, Jumeirah Port Soller Hotel & Spa is nestled along the rugged coastline of northwest Majorca, where guests can enjoy views of the Mediterranean Sea. As one TripAdvisor traveller said, “This hotel certainly has the wow factor with fabulous views of the mountains and sea, and the hotel building is beautifully designed.”

8. ARCOTEL Onyx – Hamburg, Germany Located in the hip and lively district of St. Pauli, ARCOTEL Onyx offers unique architecture and design, in particular through the hotel’s exterior which resembles the popular and rare semiprecious stone, the onyx.

9. W Paris – Opera – Paris, France Set in an elegant 1870s Haussmann era building, near the Palais Garnier opera house, restaurants and museums, W Paris – Opera is a stylish hotel finished with custom made furnishings.

As one TripAdvisor traveller said, “This hotel features terrific modern metropolitan design and the staff give attentive service.”

10. Le Meridien Istanbul Etiler – Istanbul, Turkey Featuring contemporary architecture designed by Sinan Kafadar, Le Meridien Istanbul Etiler is a striking hotel located within Istanbul's popular shopping and entertainment destination, Etiler.

As one TripAdvisor traveller said, “A beautiful modern spacious hotel, with well-designed rooms and a fantastic view.”

For more information on these hotels, including reviews and travellers photos, visit http://www.tripadvisor.co.uk/ InfoCenter-a_ctr.newhotelsEurope

As one TripAdvisor traveller said, “I loved this hotel. It’s new, modern and quirky.”

8 2

4 9 6 5 3 7 1 10

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lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

hotels & resort s 2013 26 • Global Business Magazine • January 2013

DISCOVER RESTAURANT M64’S NEW CHEF...

Hôtel InterContinental Paris avenue Marceau 64 avenue Marceau - 75008 Paris Tél : +33 (0)1 44 43 36 50 - contact@m64-restaurant.com www.m64-restaurant.com

January 2013 • Global Business Magazine • 27

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

InterContinental Paris avenue Marceau Located 64, avenue Marceau, in the heart of the most exclusive area of Paris, a short stroll from the worldwide famous ChampsElysées avenue and the Arc de Triomphe, close to some of the finest, trendiest French restaurants and the avenue Montaigne's fashion designers, at walking distance from the main touristic attractions, the InterContinental Paris avenue Marceau is the ideal address for your stay in Paris. It is also the place for business' stays, with an easy access to Porte Maillot, La Défense, le Palais des Congrès, Orly and Roissy Airports.

space and the contemporary style of the room.

The art of the difference

The kitchen is open on the dining room and you can choose to eat casually at the counter or in comfortable Club armchairs in a lounge atmosphere. A cosy and welcoming restaurant where a talented and passionate Chef takes care of his customers as if he was inviting them at home.

Imagine a place you simply don’t want to leave or you are longing to see again. Such a place exists....

Harmony of modernity, comfort, design, a metaphorical jewellery box of unique furniture, the InterContinental Paris avenue Marceau is the place to be of the capital.

This luxurious boutique hotel mingles periods with audacity and originality. This former private mansion owned in the past by the “Count of Breteuil”, known both as a great swordsman and a seducer, displays an Haussmannian facade which hides from glances two other buildings of surprising architectural style. Once the porch has been passed through, discover the masterpiece of Raymond Moretti, a student of Picasso, as well as the vertical garden and the Renaissance turret of the hidden patio. In such atmosphere, the guests feel immersed in a universe mingling warm colours, immaculate white, works of art and noble materials.

Designed by Bruno Borrione, a member of Philippe Starck’s team for more than 20 years, the decoration of this luxurious hotel of 55 rooms and suites plunges the guests into a warm and comfortable atmosphere.

Once in the room, the eye stops at the ceiling reproducing Venetian Renaissance frescos, an elegant contrast with the brightness, the

28 • Global Business Magazine • January 2013

On the top floor, the suites offering a view on the Eiffel Tower and the Arc de Triomphe, inspire harmony and intimacy.

The restaurant the M64 At the M64, the Chef Hiroaki Edward Uchiyama proposes an authentic culinary experience, refined with a simple and healthy card, based on products coming directly from the market.

It is also the Business trend In an emblematic area where the available meeting rooms are getting a growing demand, the new InterContinental Paris avenue Marceau features a flexible room of 300 m2, divisible into 3 areas, equipped with the latest technology (integreted wall screens, video conference, video projector...) so as to ensure the full success of your business seminars or private events.

What if the real luxury was simplicity?

Hôtel InterContinental Paris avenue Marceau – 64 avenue Marceau, 75008 Paris – contact@ic-marceau.com – Tél +33 1 44 43 36 36 – Fax +33 1 42 84 10 30

January 2013 • Global Business Magazine • 29

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

Hotel Royal Taipei Hotel Royal Taipei is located on Chung Shan North Road, in the heart of Taipei’s commercial district. It has convenient access to airports, Metro and railway stations, tourist spots, and business zones, such as Regent boutique arcade, National Palace Museum, Shilin Night Market, and Taipei 101.

The hotel is a 12-storied structure with 3 basements. The 202 exquisite guest rooms and suites are all furnished with internet access and auto wash toilet. The fusion of modernistic European architecture and unique oriental ambience has earned high reputation both local and abroad. In 2011, Hotel Royal Taipei received five-star certification from Taiwan Tourism Bureau.

Access Taiwan Taoyuan International Airport: 45 minutes by car, around NT$1,200 Taipei SongShan Airport: 15 minutes by car, around NT$150 Airport transfers available at a fee Facilities • Number of guest rooms : 202 • 12 above ground floors

30 • Global Business Magazine • January 2013

Services & Amenities • Pool (May-Sep.)/ Gym / Sauna / Massage / SPA • Business Center / Premier Lounge • Gift shop / Boutique / Tailor • Parking Lot

37-1,Chung Shan North Road, Section 2,Taipei,R.O.C TEL:886-2-2542-3266 FAX:886-2-2543-4897 www.royal-taipei.com.tw

January 2013 • Global Business Magazine • 31

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

Sofitel So Mauritius A TIMELESS LUXURIOUS EXPERIENCE In the heart of the Indian Ocean, imagine a fragrant Eden on the shores of the Indian Ocean. Mauritius has preserved its natural treasures and offers an unforgettable experience at a cultural crossroads.

the luxury of contemplation, drawing energy from the sight of flourishing vegetation and brilliant tropical flora.

Designed on a human scale, totally original in style, this is more than a new concept; it’s a unique sensory experience.

A prime destination for scuba diving, the island is also a golfer’s paradise, with superb golf courses framed by purple mountains and overlooking the crystalline waters of the Indian Ocean.

Thai architect Lek Bunnag and fashion designer Kenzo Takada; two talents concerted creativity and “savoir faire” to conceive a hotel that is fundamentally different and unique.

A luxuriant garden of flowering hibiscus, paradise of exotic colorful birds.

A NEW VISION OF CONTEMPORARY LUXURY IN THE HEART OF NATURE

On the south coast of Mauritius, Bel Ombre is a tranquil haven exemplifying the island’s natural character. Sophisticated and sincere, with brilliant green sugarcane fields, lengthy white beaches, and turquoise water offering striking panoramas.

Exoticism, relaxation, wellbeing, comfort and 5-star service in incomparable surroundings are assured at Sofitel So Mauritius, a hotel that personifies a new vision of contemporary luxury set in a lush natural landscape. This new SO address comes to meet the demands of a sophisticated clientele who appreciate authenticity and refinement. Advancing and confirming brand values symbolizing the French art de vivre.

Delicate flavors, typical warm-hearted Mauritian welcome and elegant service, heady fragrances of plants fresh from the garden in this exceptional environment, in the heart of a 34-acre landscaped park, Sofitel So Mauritius welcomes you into a fragrant, luminous tropical paradise highlighted by modern architecture and fine materials.

AN EXTRAORDINARY ENCOUNTER BETWEEN TWO CREATORS Imagined by Thai architect Lek Bunnag, the 92 Suites and Villas are intimately nestled within luxuriant Eden-like gardens.

Architect Lek Bunnag has designed a radiant venue that celebrates the magnificence of nature and brilliantly blurs barriers between indoors and out. Exclusive creations and collections by Kenzo Takada superbly highlight the purity of Lek Bunnag’s modern décor. Inspired textiles, decorative objects, tableware, and beach accessories contribute vibrant touches of color to this immaculate paradise.

Discover the incomparable tropical delight of outdoor bathtubs and showers. Savor the tranquility of a private patio and indulge in 32 • Global Business Magazine • January 2013

In the most protected region of Mauritius, bordering a 520-metre white sand beach, this eco chic resort offers 84 Suites Prestige - 60 square meters in size, 6-100 square meter Beach Villas and 2-230 square meter Beaulieu Villas, hidden away in the luxuriant tropical

vegetation.

Suites and Villas are all detached and single storey to ensure complete seclusion, with individual gardens, outdoor bath tub (and private pools for the villas), patios with open air showers, and superlative comfort with highest quality amenities (Sofitel “MyBed” concept with king-size bed, dressing room, separate toilets, mini-bar, Espresso machine, Complimentary Wifi, LCD TV as well as 24hour personal butler service) and much more.

ENTER A WORLD OF REFINEMENT SET BESIDE THE LANGUID WATERS OF THE INDIAN OCEAN La Plage Making sublime use of local ingredients, the inspired chef has created imaginative tapas and aromatic main dishes. Chic, relaxed, and facing the lagoon, La Plage is the ideal place for memorable meals.

Flamboyant In the center of the hotel grounds, overlooking the infinity pool, Le Flamboyant celebrates contrasts: French dishes and Mauritian spices, an intimate atmosphere in a wide open space, modern shapes using traditional wood and stone. Striking décor is enhanced with exclusive Sofitel So Mauritius tableware by Kenzo TAKADA.

Le Takamaka Trendy and chic, Le Takamaka is the perfect place to indulge in sweet or signature and molecular cocktails and other fantastic drinks. Sleek design and a laid-back atmosphere.

The fine art of French-style living has been subtly enhanced by the rich local culture, resulting in a unique and intense celebration of all the senses.

pool, snorkeling, golf, tennis, and scubadiving.

To ensure your kids also have the time of their lives, So Kids offers creative and funfilled activities designed just for them.

Discover or rediscover Mauritius in a new way, at a resort where modern design enhances natural paradise.

Sofitel So Spa offers poetic, naturally rejuvenating treatments enriched with local fruits and spices.

Organic beauty products and harmonyinspiring pleasures by Clé des Champs, French organic cosmetology innovator.

Revitalizing hibiscus flower treatments and unique Céline Claret-Coquet gold needle anti-age acupuncture. Come to So SPA for natural pleasures and deep benefits.

At So Fit, work out with state-of-theart fitness equipment in lush tropical surroundings. Enjoy the alluring infinity

Sofitel So Mauritius Royal Road, Beau Champ Bel Ombre Mauritius H6707@sofitel.com Tel: +230 605 5800 Fax: +230 615 1049 www.sofitel.com/gb/hotel-6707-sofitel-somauritius/index.shtml

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

Anantara Bangkok Riverside An Urban Oasis of Riverside Tranquility Escape to a tropical refuge and bask in a serene river breeze, watching snapshots of age-old river life unfold. Soak up a luxurious waterfront lifestyle before setting out in search of ancient treasures and a cosmopolitan urban vibe. Spread out over 11 acres of magnificently landscaped grounds, Anantara Bangkok Riverside Resort & Spa offers the best of both worlds, with a hideaway of spacious riverside tranquillity that provides a seamless gateway to extraordinary journeys in Thailand’s bustling capital.

Nestling the majestic Chao Phraya River, a rare combination of experiences appeal to business and leisure guests, romantic couples and families alike. Guests are welcomed by a blend of Thailand’s warm hospitality and Anantara’s intuitive, personalised service.

While opening a window to Thailand’s authentic river culture and embarking upon voyages of exciting discovery, stems from an urban paradise that seems a world away, yet is only minutes from the city’s colourful contrasts.

407 rooms, including 97 suites, reflect the natural grace of Thai culture, and feature an in-room bar, tea and coffee making facilities, internet access via LAN and WiFi, an LCD TV, DVD player and iPod dock. Guests enjoy 24 hour in-room dining and a choice of breathtaking river and garden views from private balconies, while the Suan Luang 34 • Global Business Magazine • January 2013

Suite is situated and designed as a palatial penthouse sanctuary.

At Anantara, days can be deliciously lazy or filled with adventure cushioned by indulgence. Work out with a garden view in the fitness centre and revive tired muscles in the sauna. Competitive tennis matches can be followed by time spent languishing at the generous swimming pool and Jacuzzi, all enhanced by glimpses of the Chao Phraya River and the opportunity to sip inventive cocktails at the swim-up bar. Younger guests are kept safely entertained at kids’ club or with a baby sitter whilst parents recreate one of the world’s most popular cuisines with a master chef cooking class, or step into the sanctuary of the Anantara spa to experience sensual relaxation through the healing arts of

ancient remedies.

Call upon an experienced concierge to book trips of a lifetime and unforgettable local experiences, perhaps getting acquainted with the city’s pulsing street life on a customised tuk-tuk escapade, or soaking up the kaleidoscopic sights and sounds of the river’s canal culture aboard a traditional longtail boat. Stroll down to the jetty and hop on the resort’s complimentary shuttle boat for a 20 minute journey to the Saphan Taksin sky train station, which connects to prime shopping districts. Though lazier shoppers need only take a few steps to the resort’s adjoining shopping centre, or to the Jim Thompson boutique within the resort itself.

10 restaurants and bars dish up culinary

diversity. Wake up to a breakfast buffet of world flavours at The Market. Replenish at Numero Uno with a coffee and freshly baked pastry, or the finest handmade chocolates. Enjoy sunset cocktails on the pier at Longtail Bar. Delve into Pacific Rim traditions at Trader Vic’s, where unique flavours are cooked in Bangkok’s only woodfired Chinese oven. The Japanese steakhouse Benihana delivers lively “eatertainment” through theatrical Teppanyaki style. Savour the Italian way of life in Brio’s Tuscan villa setting. At Riverside Terrace an international buffet and BBQ is accompanied by Thai dance performances overlooking the river.

Step aboard a beautifully restored antique rice barge to dine on delectable Thai cuisine and glide past the city’s famous cultural sites

with a luxurious Manohra Dining Cruise.

For the ultimate in secluded intimacy, Dining

by Design invites guests to collaborate with a personal chef and choose an idyllic location, such as a candlelit meal along the river or a picnic under the shade of a banyan tree.

Special functions and weddings take place in a range of elegantly appointed indoor venues and scenic riverside spaces. Business travellers balance work with pleasure, courtesy of impressive recent enhancements to the resort’s meeting venues and facilities, and the ability to practice their swing at eight nearby golf courses.

Discover urban sophistication and calming waterfront scenery at Anantara Bangkok Riverside Resort & Spa.

For all resort enquiries and reservations, please call +66 (0) 2476 0022 or email bangkokriverside@anantara.com. For more information, visit www.anantara.com.

Anantara Bangkok Riverside Resort & Spa 257/1-3 Charoennakorn Road, Thonburi, Bangkok 10600, THAILAND Tel: +66 2 476 0022 Fax: +66 2 476 1120

January 2013 • Global Business Magazine • 35

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

Conrad Dubai UAE The Conrad Dubai – Taking Luxury to Another Level From the speed of the elevator – the 553 rooms – to the largest event venue with natural daylight in Dubai – the imposing 54-storey Conrad Dubai hotel offers everything that is synonymous with the worldwide brand – and more.

The Location An inspiring destination for the most refined leisure and business traveller, Conrad Dubai is strategically located in the heart of Dubai's financial and shopping district, within easy reach of the international airport, the Dubai Mall, the world’s biggest shopping mall, and the world’s tallest tower – Burj Khalifa.

The Rooms With pampering rain showers and the latest in-room wireless technology, the stylish modern design rooms and suites provide all the comfort you expect, with subtle sophistication at every turn. Each one of the luxuriously appointed rooms has breathtaking views along the shining facades of Sheikh Zayed Road, or out to the sparkling waters of the Arabian Gulf.

The Grounds Indoor luxury integrates with outdoor tranquility, as guests can enjoy a heavenly 5,500 m2 open landscape pool surrounded by desert garden palms, succulents and grasses overlooking the Arabic Gulf, a children’s wet play area, and an exclusive pool bar corner.

Conrad Dubai is not just a hotel; it is an experience.

The Dining Whether you want fine dining or a relaxed cocktail and snack, at Conrad Dubai you can

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choose from seven contemporary restaurants and bars, including a South American supper club, a Steakhouse & Grill, and a modern, funky outside lounge with a bohemian feel.

Whether for work or leisure, our refined cuisine and impeccable service promises a stand-alone experience that you will never forget.

The Spa One of the best and largest spas in Dubai, Conrad Spa is a destination of tranquility, offering a wide variety of signature

treatments in a picturesque setting. The 2,000 sq. area features eight multi-purpose treatment rooms; two couple suites offering hydro baths; guest consultation rooms and relaxation lounge; a thermal lounge with experience shower, an ice experience, a sauna and steam room and a hydro and relaxation pool with sunken loungers. A state-of-the art gym offers Technogym®, while an outdoor terrace garden and yoga pavilion elevate up to higher spheres. The Spa provides the perfect environment so you achieve the desired results.

The Event – Business or Pleasure Luxury design and flawless personalised service makes Conrad Dubai the perfect location for every kind of event, whether you are planning a wedding, a conference, or even – thanks to a car-fitting lift – a car launch. The hotel has the largest naturally lit pre-function space in the city, two spacious ballrooms with capacity for 1,630 people theatre-style, car parking for 1,000 cars, and a panoramic pool deck. Given the size and sumptuous surrounds, Conrad Dubai

is the ideal venue for Arabic or Indian weddings. It is also a perfect choice for your work event, with a fully equipped Business Centre that offers you the space and the scalability to tailor the surrounds to your specific requirements. With 14 different meeting rooms, comprehensive audio/ visual equipment, and numerous elevators, whatever you had in mind, the hotel has both the resources and the vision to ensure a seamless event.

Conrad Dubai, PO Box 115143, Sheikh Zayed Road, Dubai, UAE www.conradhotels.com

January 2013 • Global Business Magazine • 37

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

La Réserve Ramatuelle – SPA On a private domain overlooking the Mediterranean, La Réserve Ramatuelle is a hotel and spa that offers luxury and escape in equal measure. Designed by internationally renowned architect Jean-Michel Wilmotte, there are 9 bedrooms, 20 suites and 12 private villas, complete with an onsite restaurant and bar. Each one of the well appointed rooms has floor-to-ceiling windows, and a full sea view terrace to make the most of the majestic views: Some even have their own private garden.

• 9 Bedrooms – 50 sqm (540 sq ft.) – including two with disabled access • 11 Junior Suites – 55 to 72 sqm (590 to 775 sq ft.)

• 2 Deluxe Junior Suites – 80 sqm (860 sq ft.)

• 2 Suites – 75 to 95 sqm – with separate bedroom • 5 Prestigious Suites – 90 to 100 sqm (970 to 1075 sq ft.) – with one or two separate bedrooms La Réserve Ramatuelle is the only spa in France to offer Crème de la Mer beauty treatments, the Spa has exclusivity in France and is the only SPA Crème de la Mer. Ultimate Regenerating Experience 6 Day / 7 Night Programme Welcome to a refined, sensory universe where luxury and discretion reign. In an exceptional setting that harmoniously blends in with the surrounding landscape, 38 • Global Business Magazine • January 2013

the Ultimate Regenerating Experience is designed to restore overall balance, through weight loss, sculpting, and the revitalisation of the body.

How you physically feel often relates to what’s going on inside. At Réserve Ramatuelle our healthcare professionals establish a personal profile to understand your true objectives. You then receive a tailormade programme using natural methods, to help you achieve your specific goals.

Our 6 day / 7 night programme specifically focuses on maintaining and optimising your health through boosting several factors namely, slimming and toning; balancing the flow of energy; reducing stress; reestablishing physical and psychological fitness through regular exercise; and increasing stamina through a wholesome diet. We also mobilise complementary prevention strategies to help you maintain such health and lifestyle changes long after your stay. This programme is a complete experience that promises to improve your quality of life.

La Réserve Boot Camp 5 Day / 5 Night Programme Now that winter is over and sunny days beckon, are you looking forward to taking on a physical and mental challenge? Our sport-walking programme will meet your expectations every step of the way. Set in a breathtakingly beautiful landscape between the sea and the mountains, La Réserve Boot Camp is a 5 day / 5 night programme designed for groups of four to eight people.

On your arrival, our consulting doctor will carry out a medical check-up and assessment of your aptitude for physical activity. The following day, after yoga and breakfast, a guide will take you through the countryside and coast to explore this exceptional region on a Nordic-style walk, keeping pace with individual abilities. Our team have several planned itineraries ranging from 15 to 20 kms, at varying degrees of difficulty. In the afternoon, the Spa will welcome you with a programme of pampering treatments.

Last, but by no means least, our chef Eric Canino will introduce you to the delicious and healthy flavours of his ‘Mediterranean Regime’.

HEALTH AND WELL-BEING PROGRAMMES SPRING 2012 ENERGY PROGRAMME 7 days / 6 nights - Medical check-up at beginning and end of programme - Health and wellbeing follow-up every two days - Personal trainer consultation to establish a personalised sport programme - 3 x Personal training sessions - Therapeutic natural drinks according to prescription - Daily ‘Sport & Health’ activities: Pilates, yoga, aqua-energy/strengthening, cardio, nordic walking, & cooking lessons etc - 3 x La Réserve Better Aging body treatments - 1 x Therapeutic treatment: massage, reflexology, acupuncture, shiatsu & osteopathy

- Tailor-made health plan at the end of programme - Tailor-made energy diet (Full board) WEIGHT LOSS PROGRAMME 7 days / 6 nights - Medical check-up at beginning and end of programme - Health and wellbeing follow-up every two days - Personal trainer consultation to establish a personalised sport programme - 3 x Personal training sessions - 1 x Cellu M6 session - Therapeutic natural drinks according to prescription - Daily ‘Sport & Health’ activities: Pilates, yoga, aqua-energy/strengthening, cardio, nordic walking, & cooking lessons etc - 1 x La Réserve Better Aging body treatment - 1 x Hydrotherapy session: bath, body wrap & shower jet - 1 x Therapeutic treatment: massage, reflexology, acupuncture, shiatsu & osteopathy - Tailor-made slimming diet (Full board) - Tailor-made health plan at the end of programme BEAUTY AND WELL-BEING BREAK 5 days / 4 nights - 1 x Crème de la Mer Excellence facial - 1 x Crème de la Mer Excellence body treatment - 1 x La Reserve Better Aging face massage - 1 x Manicure - 1 x Pedicure treatment - Daily ‘Sport & Health’ activities: Pilates, yoga, aqua-energy/strengthening, cardio, nordic walking, & cooking lessons etc - 1 x La Réserve Better Aging body treatment - 1 x Hydrotherapy session: bath, body wrap & shower jet - Tailor-made ‘well-being diet’ (Full board) EXPRESS FIT & BEAUTY 4 days / 3 nights - 3 x Nordic walking sessions - 1 x Hydrotherapy session: bath, body wrap & shower jet - 1x Therapeutic treatment: relaxing massage, reflexology, acupuncture, shiatsu & osteopathy - 1 x La Réserve Better Aging body treatment - 1 x Crème de la Mer Excellence facial treatment - Daily ‘Sport & Health’ activities: Pilates, yoga, aqua-energy/strengthening, cardio, nordic walking & cooking lessons etc - Tailor-made ‘well-being’ diet (Full board) We look forward to welcoming you to La Réserve Ramatuelle.

La Réserve Ramatuelle – SPA www.lareserve.ch sparamatuelle@lareserve.ch Tel : + 33 4 94 44 94 44

January 2013 • Global Business Magazine • 39

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

Sofitel Vienna Stephansdom Vienna, Austria The Sofitel Vienna Stephansdom is an outstanding 5 Star luxury hotel, ranking amongst Austria's very best addresses. An avant-garde masterpiece, the Sofitel Vienna Stephansdom is far more than an average luxury hotel; it is an artwork that blends its sculpture into the multi-faceted city of Vienna.

Built by Pritzker awarded French architect Jean Nouvel, with splendid views over the Gothic cathedral that lends it its name, the hotel is the embodiment of the 21st century and one of Vienna's most outstanding modern constructions. The building stands out, thanks to its puristic design and its contrasting works of art, which include the colourful ceilings by the Swiss artist, Pipilotti Rist, and the vertical garden by the French landscape architect, Patrick Blanc.

This artistic impulse has produced 182 elegant guestrooms and suites all employing the single colour of their façade – black, white or gray – for every surface and piece of custom-designed Nouvel furniture. Each room has been given a distinctive signature by subtile wall drawings of French graphic designers Alain Bony and Henri Labiole.

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While artfully conceived, these rooms with their panoramic views also feature highspeed internet access, Nespresso machines, Bose Wave music systems and iPod docking stations, giving a new dimension to the sense of wellbeing and luxury.

The first choice for special business events or celebrations, the Sofitel Vienna Stephansdom features nine flexible conference/banqueting rooms for up to 130 people, all flooded with daylight and equipped with modern audiovisual technology. This inspired meeting concept makes every event and every business meeting a memorable one. Even before you start you will see what five-star service means, with a private planner who is available around the clock to help you plan and develop customised concepts. Nothing is left to chance, to ensure your event produces the desired results.

Offering a sensorial experience of luxury and wellbeing, the elegant day spa So SPA has space for five treatment rooms including private steam rooms, a top-of-the-range fitness area, two hammams and whirlpools with panoramic views, and several spa lounges where guests can relax and admire

the wonderful vista over the Stephansdom.

There is also a gourmet menu designed to fit everyone’s needs and create an individual experience. From Japanese facials – to Oriental massages and Indonesian body scrubs with the cosmetic partners Cinq Mondes and Carita – the So SPA offers a broad range of unique beauty rituals and wellness treatments.

It is the 18th floor at the top that is the crowning glory of this artwork hotel.

Here, high above the city, is the Le LOFT restaurant, bar & lounge, where Raphael Dworak serves the best of French and Austrian cuisine. Based on the concept of Alsatian master-chef, Antoine Westermann and with a rating of two Gault Millau Chef's Hats, Le LOFT is the perfect setting for a memorable gourmet experience.

In addition to its luxurious and contemporary décor, the Sofitel Vienna Stephansdom also offers that distinctive 'bit extra' in terms of service and caring for its guests. Each one of our guests experiences the french ‘art-devivre’ blended with a perfect service known as 'Cousu Main' – french for tailor-made service.

The Sofitel Vienna Stephansdom is a modern way to experience the enduring beauty of the opulent capital. Within walking distance to the city center, the luxury hotel is an easy 15-minute ride from the Vienna airport via the CAT (City Airport Train). Furthermore, it is the most comfortable address to explore the medieval city by foot, bus, tram, underground or boat.

Sofitel Vienna Stephansdom Praterstrasse 1 1020 Vienna, Austria Tel: (+43) 1/906160 Fax: (+43) 1/906162000 h6599@sofitel.com www.sofitel.com/Vienna

lUxURy BRand SeRieS – hotelS & ReSoRtS 2013

Grand Hotel Miramare Santa Margherita Ligure / Portofino Coast This historic hotel stands between lush green hills and deep blue sea in the heart of the Italian Riviera. Overlooking the promenade to the beautiful village of Portofino, the elegant liberty building is one of the region’s most exclusive venues. The impeccable service and culinary delights attract an international clientele with its wellness centre, comfortable blend of traditional style and modern amenities.

Among other amenities each of the 84 rooms, including 5 Junior Suites and 4 Suites, offers complimentary Wi-Fi and security safe.

Mr. Flavio Ravagnati: flavioravagnati@grandhotelmiramare.it Sales & Marketing Manager Mr. Pier Paolo Panzeri: paolopanzeri@grandhotelmiramare.it Reservation: reservation@grandhotelmiramare.it

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January 2013 • Global Business Magazine • 43

inteRnational tax

international Tax The tax challenge – and the responses Tax advisers, tax managers, tax agents, tax accountants – whatever the job title and description, one thing is clear: in a world which is becoming ever more complex and ever more interconnected, expert tax advice has never been more essential for business.

That is one reason why the membership of professional bodies such as the Chartered Institute of Taxation (CIOT) continues to grow. The CIOT was founded, as the plain Institute of Taxation (it didn’t get its Royal Charter until 1994), back in 1930 with just 12 members. The idea of tax as a separate profession was a novelty back then. As recently as 1991 the CIOT had fewer than 8,000 members. Now its membership is more than double that, and tax has become so complex that most tax professionals seek to master only a fraction of the total tax code.

(For example, the members of the Institute’s corporate taxes committee alone count some 33 different specialisms between them.)

The need for advice The complexity and bureaucracy of the tax system is frequently cited by smaller businesses as an obstacle to their growth and development. For example, a survey of small and medium-sized firms carried out during 2012 found that simplifying the tax system and making it more proportionate was the single thing its respondents most wanted the Government to do – getting twice as much backing as the next most popular option.

Occasionally commentators, in the UK at least, can appear to suggest that tax advice is some kind of nefarious plot, got up to cheat the Exchequer out of its rightful dues. This is seriously misguided. As every business person knows (or if they don’t they find out the hard way) tax planning is essential to the operation of a successful business. Businesses need to know what their tax liabilities will be just as they need to know what their other costs will be. Sensible businesses will want to be in a position to take advantage of appropriate reliefs and allowances, put in place by governments to help them grow and prosper. Not to do so would be to put them at a disadvantage to their competitors.

Of course sensible businesses will also want to be certain they are operating fully within the law – which means complying with every line of the tax law. This is currently somewhere between 5,000 and 18,000 pages in the UK, depending on how you define 44 • Global Business Magazine • January 2013

it – and that is without considering the legislation from other jurisdictions which a company trading internationally will need to take account of. No wonder that all but the very smallest and simplest companies see a need to take professional advice on their tax affairs, either from in-house advisers or an external tax practice.

Governments depend on tax advisers too.

The official who then headed up the UK tax authority’s business taxation division observed in 2011 that what she called the Government’s “partnership with tax agents” was “essential for successful tax administration in the UK”. “Without tax agents,” she added, “customers [that is, taxpayers] would need to understand the tax and benefits legislation applicable to their circumstances and be able to compute their liabilities correctly.” Many would simply not be able to do this, she acknowledged.

Or, as another senior UK tax official put it during a webinar with tax agents in 2009, “Basically ladies and gentlemen, we couldn’t do it without you.”

The tax challenge – the CIOT response The internationalisation of business has added further complexity to tax matters.

Multinational corporations experience many changes with tax consequences, due to acquisitions, mergers, reorganisations and regulatory updates. Employees are increasingly required to work across countries and continents.

While continuing to remain an Institute primarily for UK tax professionals, the CIOT has responded to the internationalisation of tax in three main ways.

First of all, in recognition of the need to support our members based outside the UK, we have established more branches outside the UK. In the last two years alone we have held launches for new branches in North America and the Asia-Pacific region.

Secondly, the CIOT is continuing to develop the Advanced Diploma in International Taxation (ADIT), the leading qualification for international tax professionals, wherever in the world they are based. ADIT now has papers covering ten tax jurisdictions, representing roughly two thirds of the global economy. India and Ireland were additions last year. A record number of candidates

passed the ADIT qualification in 2012. In a world where a higher and higher proportion of tax managers and advisers are being required to carry out cross-border work, establishing an internationally respected global benchmark of international tax expertise is a valuable way to give business confidence in the advice it is receiving. ADIT is already a global qualification with 1,400 candidates, holders and affiliates living and working in more than 90 countries, including every continent, major market centre and business sector, and is growing with each year.

The third way in which the CIOT has responded the internationalisation of tax is to work more closely with tax professional bodies in other countries. The CIOT has entered into a number of partnerships with other bodies to licence them to award the coveted Chartered Tax Adviser (CTA) designation within their country, where we are clear the qualifications, professional standards and other requirements for membership of that body are equivalent to the CIOT’s own, and where we are sure that it is the ‘gold standard’ in the relevant jurisdiction. Initially this has been done in Ireland and Australia.

This is being done in recognition of the fact that, while the CTA brand is highly recognised and respected in the UK, it is less well known elsewhere in the world. With tax becoming increasingly globalised, and more of our members working internationally, we believe it will benefit business to have a global ‘go-to’ brand for high quality tax advice, which guarantees them no diminution of professional standards.

The tax challenge – the government response Of course, internationalisation of tax presents issues for governments and tax authorities too. It is at the centre of the tax avoidance controversy currently prominent in the UK media and political debate. It is posing challenging questions about how we tax

Patrick Stevens President, Chartered Institute of Taxation

multinational corporations – and internet trade in particular – in the twenty first century, and what is acceptable, and unacceptable, tax planning.

In some ways this debate has been predictable. We are all going through a time of austerity and so it is, perhaps, not surprising that everyone wants to know if all taxpayers are paying their fair share (to be defined) and suffering equally. The news that apparently successful companies are paying very low – and in some cases non-existent – amounts of corporation tax was bound to raise eyebrows and indeed hackles.

But what have we learned from the debate so far? As far as I can tell, no one has suggested that any of these corporations have not played by the rules or that they have not disclosed all the relevant information to the tax authorities. Also, it is hard to argue that HM Revenue and Customs (the UK’s tax authority) has not been doing their job of challenging the companies and getting the best tax result for the UK within the rules.

Indeed, there was evidence from one of the companies grilled by Parliament’s Public Accounts Committee that they had been challenged on the size of a deduction and a lower amount had been agreed. That is how the system is meant to work.

It leaves the question of whether the rules

are fit for purpose.

The tricky bit here is that the UK rules are almost completely based on the OECD international model which is used by all major developed countries.

If we were to move out of line by ourselves it would be a step towards losing the battle to attract companies to come to the UK and bring jobs and spending that should help our economy. The OECD transfer pricing rules are being reviewed at the moment to see how they need to be changed. They probably do need some revision to make sure they are not being abused. But it would help if politicians remembered that we are a relatively small nation fighting for foreign investment and trying to show, as the Government often says, that we are open for business. Of course, part of the deal is that the business plays by the (tax) rules.

Another effect of the tax avoidance debate has been to intertwine corporate reputation with corporate taxation ever more closely.

It is clearer than ever that reputational risk is now a factor to be taken into account by every sensible business in the management of their tax affairs.

Business taxes in 2013 are likely to be caught between two conflicting imperatives. On the one hand the demand for more revenue for the Exchequer; on the other ever more intense competition between nation states for businesses to locate there and contribute to growth. The approach of the UK Government in this environment is instructive – they are reducing the overall rate of corporation tax and increasing (temporarily) investment allowances, but are also more focused on increasing compliance rates.

The tax challenge – the taxman’s response At a personal tax and self-employed / small business level this has led to a stream of anti-evasion taskforces and other initiatives, as well as a new ‘Affluence Unit’ to target wealthier individuals. These will undoubtedly be built on and extended in various ways over the course of the year.

During the course of 2013, the UK Government will be introducing a general anti-abuse rule. Many businesses and their advisers are worried about this. If implemented badly it could decrease certainty, which is so crucial to business planning. There is some good news. The GAAR will be overseen by an independent advisory panel. The Government have now published a document setting out 15 situations with HMRC’s views on whether or not the GAAR applies, which is constructive and something the CIOT had called for. The Government have also delayed the GAAR’s introduction until the summer of 2013 which should allow extra time to develop more examples and draft guidance. This is important as guidance is needed to reduce the areas of uncertainty that will inevitably arise under the GAAR. Those involved in international business should also note that the UK will get its first statutory residence test in April 2013. This test has been developed over a number of years through extensive discussions between business, tax advisers and the tax authorities.

It has been a long hard road to get to a proper statutory test for UK residence but we are almost there. It is important for the UK: we are an open economy that depends on trade and international movement so we need to have clear rules over when people fall – or don’t fall – into our tax net.

The result A trend that is likely to continue is that, as tax becomes more complex, more international and more closely examined, tax professionals will have the potential to speak with a louder voice at the board table. Scrutiny of the tax profession is unlikely to go away so advisers must continue to demonstrate integrity and the highest professional standards.

Wherever tax is raised according to the rule of law, tax professionals will remain an essential part of that process, raising government income – essential to their clients, who depend on their advice, and essential to governments, who depend on their help to make sure the right amounts of tax are paid.

January 2013 • Global Business Magazine • 45

THAILAND

inteRnational tax

Thailand – Reducing Corporate Income Tax Rate & Moving Towards AEC The long-awaited reduction to corporate income tax rates was finally legislated in 2012, changing from 30% to 23% for 2012, and down to 20% for both 2013 and 2014. However, no compensatory increase in VAT or reduction in investment incentives was introduced to minimise the impact on the government’s revenue.

According to PwC ‘Tax policy and administration: Global trends/June 2012’, examples of global tax policy trends include moving toward a lowering of corporate tax rates and a broadening of the tax base, shifting from direct tax to indirect tax, online processes, CFC (Controlled Foreign Corporation) and GAARs (General Anti Avoidance Rules). Thailand is well in line with the global trends. With 23% corporate income tax rate, Thailand would be in the third place in term of lowest corporate income tax rate in ASEAN after Singapore (17%) and Cambodia (20%). Amongst ASEAN countries that adopt VAT system, Thailand 7%’s VAT is the lowest as the countries mostly have 10% VAT rate.

The CFC rules will impact local companies that have sheltered their earnings in tax havens, or in low tax countries such as BVI, Singapore or Hong Kong. While thin capitalisation rules already exist for BOI (Board of Investment) and foreign business license purposes, there is currently no disallowance of interest as a deduction for tax purposes, regardless of the ratio of the taxpayer’s debt to equity. It is expected that a 3:1 debt to equity limitation may be imposed to limit the deductibility of interest.

However, it is unclear whether this applies to all taxpayers, or only those who are related entities.

The BOI, which provides tax exemptions of up to eight years, is working on revamping its incentives to be based on value added, as opposed to zoning or where the business is located. While the Regional Operating Headquarters (ROH) incentives have been around for many years, the government is focused on making it more attractive, together with the incentives for International Procurement Offices (IPO).

The personal income tax exemption on capital gains, which was previously only available for investments in the Stock Exchange of Thailand (SET), has been extended to include capital gains from investments in the ASEAN trading link, comprising of six countries and seven exchanges in Singapore, Malaysia, Philippines, Indonesia, Thailand, Vietnam (Hanoi and Ho chi Minh). Thailand has 46 • Global Business Magazine • January 2013

joined the ASEAN trading link in the third quarter of 2012. Thailand has tax treaties with more than 50 countries, with quite a number of them providing exemptions on capital gains for corporate as well as individuals.

With the arrival of the ASEAN Economic Community (AEC) in 2015, Thailand is expected to benefit from having an ideal location with easy access to ports and landlocked countries such as Laos. In addition, the Daweii mega project will also enhance access to Myanmar. One of the key objectives of AEC 2015 is to create a single market within ASEAN (comprising Thailand, Singapore, Vietnam, Malaysia, Indonesia, Philippines, Cambodia, Laos, Myanmar and Brunei) seeing the free-flow of goods, services, investments, skilled labour and freer flow of capital.

In terms of the free flow of goods, members of the ASEAN Trade in Goods Agreement (ATIGA) have already seen steady progress in the reduction or elimination of tariffs and nontariff barriers (e.g. import and export licenses) between ASEAN members.

Currently under the ATIGA, duty rates between ASEAN member states for most products have been eliminated or reduced to 5%. By 2015, all rates should go down to zero – with the exception of Cambodia, Laos, Myanmar and Vietnam, which will be in 2018. However, unlike the EU single market where goods can move freely without going through the customs formalities and documentation, goods moved between ASEAN countries must still be presented with import declarations and Certificates of Origin (CO) to claim the lower duty rate.

Lower preferential import duty rates are available on goods from countries that have a preferential free trade agreement (FTAs) with Thailand. Currently Thailand has 11 FTAs in place, including FTAs with New Zealand, Australia, India, Peru, China, Japan and Korea – either individually or as part of ASEAN. In addition to using FTAs to reduce the duty burden in Thailand, Thailand also has various customs incentives schemes that can reduce the import duty burden such as Free Zones, bonded warehouses, duty

drawback schemes or duty exemptions under BOI. In terms of future FTAs, Thailand has recently decided to join the Trans-Pacific Partnership (TPP) negotiations (FTA including Chile, New Zealand, Singapore, Brunei, Australia, Malaysia, Peru and Vietnam), as well as entering into FTA negotiations with the EU. Thailand will also be engaged in the negotiations for the Regional Comprehensive Economic Partnership (RCEP), comprising the 10 ASEAN members and the ASEAN

Thavorn Rujivanarom PwC | Lead Partner Direct: 66 (0) 2344 1444 (Bangkok) thavorn.rujivanarom@th.pwc.com PricewaterhouseCoopers Legal & Tax Consultants Ltd. FTA-Partners (Australia, China, India, South Korea, Japan and New Zealand), thereby becoming the largest regional trading arrangement globally. These negotiations are expected to commence in 2013, and are scheduled to complete by 2015.

The introduction of the AEC will ease the foreign ownership restrictions on a number of businesses, and the relaxation of the work permit rules will reduce the shortage of labour faced by Thailand. We have also seen a significant increase in mergers and acquisition, as well as inbound and outbound investments in 2012, in line with the increased efforts by ASEAN countries to synchronise their rules and regulations. In addition, the efficacy of filing the corporate income tax returns and review of the same is also expected to be eased as a result of the Revenue Department’s move to encourage electronic filing of tax returns, with the issuance of new tax identification numbers compatible with electronic filing.

Over the past few years, the government has appointed the Office of the Public Sector Commission (‘OPDC’), whose mission is not only to facilitate the continual development of the Thai Public Sector for sustainable results, but to liaise and work with various government agencies and the private sector in order to improve Thailand’s ranking in general as well as ‘paying taxes’. The OPDC has an ongoing practice of organising various seminars and workshops among government agencies, educational institutions and the private sector, to discuss and brainstorm the problem areas in order to improve Thailand’s

competitiveness. PwC, as the firm who has participated in the ‘Doing Business survey and Paying Taxes Survey’ since 2006, has been working closely with the OPDC on improving Thailand’s tax system.

179/74-80, 15th Floor, Bangkok City Tower, South Sathorn Rd, Bangkok 10120, Thailand

In summary, there have been many improvements in the Thai tax system in recent years as a result of a significant effort by the authorities. Nevertheless, companies should still be aware of the pitfalls of carrying on business in Thailand without an appropriate tax strategy. Thailand has onerous domestic withholding tax and VAT rules, and whereas any excess is refundable in theory, it would be prudent to manage the company’s transactions and contracts, such that the corporate income tax liability matches the income tax withheld and the input VAT does not exceed the output VAT. Efficient tax management strategies should also take into consideration the various exemptions available for acquisitions or mergers, as well as the optimal structuring options for setting up a company. This is while keeping in mind the special incentives also provided under BOI, ROH, IPO and favourable countries to invest in Thailand, based on the attractive tax treaties the country has entered into with countries such as Hong Kong, Singapore and Mauritius.

Thavorn Rujivanarom PwC Thailand

January 2013 • Global Business Magazine • 47

CHINA, HONG KONG AND MACAU

inteRnational tax

Answering the age-old tax question: How much?

Agnes Chan Regional managing partner Hong Kong and Macau Ernst & Young China 22/F CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, Hong Kong Office: +852 2846 9888 Direct: +852 2846 9921 Fax: +852 2118 4339 agnes.chan@hk.ey.com www.ey.com/hk

Tracy Ho Country tax leader Hong Kong and Macau Services Ernst & Young Tax Services Limited 22/F CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, Hong Kong Direct: +852 2846 9065 Office: +852 2846 9888 Fax: +852 2118 4354 tracy.ho@hk.ey.com www.ey.com

All taxpayers ask the same bottom-line question about their taxes: “How much are we going to pay this year?” For global companies, that question is harder to answer than it has been for many years. And it’s not just how much they owe, but also: “How much of a disagreement are we going to have with the tax authority in order to agree on that final figure?”

According to a new survey-based report from Ernst & Young, ‘tax risk’ and ‘tax controversy’ are both rising rapidly. Tax risk is what companies face when they are unsure of filing correct tax returns; tax controversy is a polite term for the disputes that arise, alas, with greater frequency, between tax administrators and corporate tax directors over calculations of tax liability.

Ernst & Young asked more than 500 senior tax and finance executives and audit committee members in 18 countries a wide range of questions about their recent experiences and predictions for the future. To gain a fuller picture, audit committee members, plus several dozen tax administrators and policymakers, were also interviewed.

The consensus is that the enforcement landscape is now more challenging than it has ever been. All of the parties also agreed that governments will continue to lean heavily on companies in the coming years as tax authorities everywhere strive to collect every bit of cash due to them.

Companies around the world told Ernst & Young that changing practices of tax enforcement are causing them considerable stress and uncertainty: The traditional tax audit: It is now more frequent and aggressive, and the resulting assessments and penalties made against the largest companies have entered the realm of billions of dollars. In a relatively new development, companies find themselves being audited by more than one nation at a time.

These enforcement trends are apparently here to stay- 97% of tax administrators say they

48 • Global Business Magazine • January 2013

will increase their focus on international structures and cross-border transactions over the next three years.

Large increases in the volume of taxpayer information being shared: Governments rarely shared taxpayer data until recently, but the number of formal agreements to share that data has exploded, reaching 200 per year over the past few years.

That makes it much more likely that a dispute in one country will become a regional or global dispute.

New disclosure and transparency requirements: Tax administrators are focusing on cross-border transactions and insisting that companies disclose when and where they have used planning techniques that may be defined as ‘aggressive’.

Additional attention to indirect taxes: The complexity of transfer pricing has long been a bone of contention between taxpayer and tax authority, but the tax community now reports rising levels of risk and controversy over indirect taxes, especially value-added taxes, reflecting the increasing use of this type of tax by governments.

Hot spots for stricter tax enforcement: The increasingly global nature of business has directed the attention of tax authorities to other issues, including the movement of intellectual property, the disposal of assets via a holding company in a low tax jurisdiction and the movement of global workers between countries.

These trends in tax administration are challenging for taxpayers, but tax authorities are not the only source of greater risk and uncertainty. Tax policymakers have been issuing new tax laws and regulations at a staggering pace, adding greatly to the uncertainty of tax executives.

Why is there so much more tension now?

Ernst & Young says the dramatic shift in the global economy has changed tax policy and enforcement, forcing companies and governments into more disputes.

Despite all these escalating tensions, governments and companies are taking steps to improve their relationship. Ernst & Young believes the role of the corporate tax director has changed fundamentally over the past few years. They now have to serve as ‘tax diplomats’ who build relationships with a host of internal and external institutions.

Internally, they have to shuttle between the C-suite, the audit committee and the company’s numerous divisions around the world. Externally, there are hundreds of local, national and regional tax authorities to deal with, as well as business analysts and the media.

A key objective of this new tax diplomacy is certainty and consistency, goals shared by governments and taxpayers alike. In pursuit of certainty, many businesses are becoming more open about their tax calculations, and they are preparing for challenges before the traditional audit process even begins. In return for that demonstration of transparency and cooperation, governments are giving taxpayers far higher levels of certainty at the time of filing, enabling them to answer that question: “How much are we going to pay this year?”

At Ernst & Young, we are aligned to the globalisation of your business and industry. Our borderless approach in the AsiaPacific Area assist businesses in every industry sector achieve their potential by helping them manage global tax risks, uncover tax savings opportunities and meet cross-border reporting obligations.

Our dedicated tax professionals in Hong Kong can help our clients with their cross-border tax structuring, planning, reporting and risk management. We work with our clients to build proactive and truly integrated tax strategies that address the tax risks of today’s businesses and achieve sustainable growth. It is how Ernst & Young makes a difference.

To read the new report ‘2011-12 Tax risk and controversy survey: A new era of global risk and uncertainty’, go to www.ey.com/taxrisksurvey.

Australia is an attractive jurisdiction for foreign investors because of the strength and stability of its economy. From its highly lucrative natural resources industry to a strong property investment market, Australia continues to attract foreign investors at a high rate.

Investment into Australia can be achieved through a variety of different structures, each of which have different consequence for tax purposes.

Under Australian law, an investor could make an investment directly or through an investment vehicle such as a company, a trust, a joint venture, a managed investment scheme or other collective investment vehicle, or a partnership. The appropriateness of any one of these methods is dependant on the desired commercial requirements of a transaction, and the taxation implications that result from each structure.

Recently, the investment vehicle of choice, both for foreign and domestic investors, has tended to be a managed investment trust (MIT). Tax reforms introduced have increased the popularity of the MIT, particularly for non-residents investing in property. Foreign investors making such investments receive a concessional withholding tax rate of 15% (or 10% for eligible clean building MITs), rather than a withholding rate of 30% for distributions of rental income and realised capital gains, paid from an MIT to an investor that is domiciled in a country with which Australia has an exchange of information agreement.

Another advantage of making an investment through a MIT is that MITs may elect to hold certain assets, including shares, units and land, on capital account, ensuring that distributions arising from its disposal are taxed under Australia’s capital gains tax (CGT) regime. Under this regime, individuals and trusts are entitled to a 50% reduction, and superannuation funds are entitled to 33.33% reduction, on a taxable gain on the disposal of assets that have been held for more than 12 months.

For non-resident investors, having the investment treated as a capital gain rather than a revenue gain means that there are only limited instances in which Australia tax the amount of the gain. Non-residents are only liable to CGT on disposals of real property (directly or indirectly), and of business assets of a permanent establishment located in Australia. Australia’s taxation of gains on revenue account is not so restricted, and the application of any applicable double tax agreement is usually the determinant for whether a non-resident has a liability to Australian tax on these gains.

To qualify as an MIT a fund must meet several requirements, including: (1) The trustee of the fund must be an Australian resident, or alternatively the central management and control of the fund must be in Australia; (2) The fund must be a passive investment vehicle – it cannot be a trading trust; (3) A substantial proportion of the investment management activities for the funds’ Australian assets must be carried on in Australia (although this requirement only applies to the withholding tax concession); (4) The fund must be a managed investment scheme which, under Australia’s Corporations Law, is an arrangement where people pool funds for a common purpose to make a profit – the investment vehicle usually being a unit trust with an external company manager; (5) The fund must be widely held – in the case of a wholesale fund this means that the fund must have at least 25 members. Tracing through the funds members is allowed to calculate the number of members; (6) A foreign individual investor must not own more than 10% of the fund – in the case of a wholesale fund, 10 or fewer investors (other than eligible widely held investors) cannot own more than 75% or more of the fund.

AUSTRALIA

Investing into Australia through Managed Funds through the country. This brings Australia into closer alignment with other jurisdictions with an IMR, including Hong Kong, Singapore, the United Kingdom and the United States.

Under the new IMR regime, where a non-resident investor uses an Australian independent resident investment advisory fund manager, broker or exchange agent, all investments in foreign assets will be exempt from tax in Australia; and investment in Australian assets will be treated as if they had been made directly by the non-resident, disregarding the Australian intermediary for tax purposes.

This tax treatment also extends to include foreign residents that invest through one or more interposed trusts or partnerships.

This measure now ensures that foreign funds, which have a permanent establishment in Australia solely for the reason of using an Australian intermediary, will not be taxed on profits made on foreign assets in Australia.

Betsy-Ann Howe Partner Sparke Helmore Lawyers Level 16, 321 Kent Street, Sydney NSW 2000. Australia Tel: +61 2 9260 2556 Mobile: +61 437 130 901 betsy-ann.howe@sparke.com.au www.sparke.com.au

About Sparke Helmore Lawyers Sparke Helmore is a full service nationally integrated Australian law firm, offering a range of services and practical advice to meet your needs when investing into Australia and the funds management market.

Our highly experienced tax and funds management team have extensive expertise in advising on inbound and outbound investment in Australia, and work closely with foreign legal and accounting advisors to ensure that the objectives of our clients are met.

Investment Manager Regime As part of its new Investment Manager Regime (IMR), Australia recently introduced reforms to address the previous uncertainty in relation to the tax treatment of offshore transactions undertaken January 2013 • Global Business Magazine • 49

inteRnational tax

ISRAEL

Transfer Pricing in Israel

By Adv. Yariv Ben-Dov and Adv. Sivan Henik, Bar-Zvi & Ben-Dov, Law Offices

Offices. Bar-Zvi & Ben-Dov main@bbl.co.il www.bbl.co.il www.transferpricing.co.il.

Israel has long been considered to be at the cutting edge of the high-tech industry. As such, it has attracted numerous multinational corporations (such as Microsoft, Intel, etc.) that have established subsidiaries that acted mainly as research and development centers and was the epicenter of local companies that have also grown and sprang subsidiaries throughout the world.

In September 2010, Israel was admitted as the 32nd full member of the OECD. As part of its initiation process, Israel had to carry out numerous economic and social reforms, one of which is the adoption of the arm's length principle with regard to international transactions between related parties.

Main Transfer Pricing Legislation Section 85A of the ITO, Israel’s main transfer pricing legislation came into effect on November 2006. The arm’s length standard, as stipulates in Section 85A(a), applies to cross border transactions the parties to which have a “special relationship”, have to be conducted at market value. A broad interpretation to the following terms was given by the tax ITA: “Cross border” – although seemingly clear, the ITA stated on several occasions that intracountry transactions between related entities shall be subject to transfer pricing rules if found to be part of tax avoidance schemes.

“Transactions” – this broad definition includes all transactions involving tangible and intangible assets, financial transactions, services, etc.

“Special Relationship” - a special relationship between parties shall be deemed to exist if one party to the transaction “controls” the other party or are mutually “controlled” by the same individual or corporation.

Although “control” is defined as direct or indirect ownership of at least 50 percent of the parties’ means of control (e.g. voting rights, stock, etc.), the ITA, in Circular 03/2008, stated that the 50 percent threshold is not to be viewed as a hard ownership cap. Consequently, each transaction shall be evaluated by the ITA on a case to case basis and parties may be deemed to satisfy the “special relationship” criteria even if their factor of “control” is below the threshold.

Documentation Requirements Section 85A stipulates that a taxpayer should maintain and submit within 60 days upon demand all documentation with regard to its transactions that are subject to the provisions of Section 85A. Such documentation should include a transfer pricing study, intercompany agreements and any other

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material that may be deemed relevant by the taxpayer or by the auditors of the ITA. Furthermore, a taxpayer is required to s obliged to submit a compliance form (Form 1385) along with its annual tax returns.

Form 1385, in which the taxpayers declares that its intercompany transactions are conducted in accordance with the arm’s length standard as stipulated in Section 85A, is signed by the taxpayer’s officer (generally the CFO) and may bear general tax and criminal implications on the taxpayer and on the signing officer who may be criminally liable for giving false statement (perjury) regarding the taxpayer’s compliance.

Unique Transaction The Regulations provide an exemption for a single intercompany transaction that is not a major part of the taxpayer's routine business activity. Such exemption is subject to the ITA's prior approval and applies only to the execution of a full scale transfer pricing analysis. Notwithstanding the foregoing, the taxpayer is still required to file the transfer pricing documentation with regard to the Unique Transaction, as set forth in Section 5 of the Regulations.

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Global Real Estate INVESTMENT GUIDE 2013

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SOUTH AFRICA

South Africa is one of the fastest developing countries in Africa. One consequence of this growth is an extraordinary increase in the number of property related transactions, both in the commercial and residential sphere.

All land and ownership in land in South Africa is recorded and registered by a Registrar of Deeds in terms of the Deeds Registries Act. South Africa is regarded as having one of the world's finest land registration systems, through the Deeds Registries Offices together with the office of the Surveyor General, which poses a high degree of certainty, accuracy and completeness. Disputes regarding ownership in and to property, as well as registered real rights, are alleviated by the security of title and protection which is afforded to owners of immovable property in South Africa.

One may own immovable property wholly, jointly in undivided shares or it may be owned by a separate juristic entity such as a company, close corporation or a trust.

Immovable property may be freehold, sectional title ownership or leasehold.

Leasehold ownership was created as a result of the previous political dispensation and there is a strong movement to convert all existing leasehold properties to freehold ownership.

Freehold property refers to the land, which includes everything above, below and attached to the land.

Such land may consist of an Erf or Agricultural Land or Farm or any portion thereof.

Sectional title property refers to sections together with an undivided share in the common property where a building has been erected on the land, the section together with the common property is known as a unit.

Limited real rights such as mortgage bonds and usufructs are also registered in the Deeds office against the title deed of the immovable property. Any existing bonds

registered over the property in the name of the Seller are cancelled simultaneously at the Deeds Registry by bond cancellation attorneys appointed by the Bank in whose favour the mortgage bond was registered.

Before land may be registered in the Deeds Office, a land surveyor must identify, measure and plot on a general plan or surveyors diagram the exact position of the property, its extent, width, length and location as well as servitudes which burden or benefit the land. The Surveyor General's office maintains a cadastral system of maps and diagrams which records all land diagrammatically in South Africa.

If a seller of immovable property is married, which marriage is governed by the laws of a foreign country the spouse of such seller must assist him/ her by signing the sale agreement and the transfer documents as well. The reason for this is that the conveyancer cannot be expected to know the marital consequences of the country that governs the couple's marriage, so in order to avoid the potential of one party to the relationship "stealing" the proceeds of the sale from the other when they would have otherwise have been entitled to a share of the proceeds, the conveyancer will always insist that both parties sign the relevant transfer documentation and the necessary consents to transfer are obtained.

In South Africa all land and property purchases must have a written sales agreement which must be signed by both the buyer and seller (or an agent acting on their written authority) in order to be valid and legally binding.

The written sale agreement usually takes the form of an agreement of sale or offer to purchase. Once a sale agreement has been signed by both parties, it represents a valid and binding document from which neither party can withdraw without legal consequences. However, there may be certain circumstances where the agreement is subject to certain conditions for example a loan from a bank is to be granted, in such an event the agreement is suspended until the condition has been met, if the loan is not granted, the transaction is automatically cancelled and is of no further force or effect. Also if the purchase price is less than ZAR 250,000, and criteria in terms of the Alienation of Land Amendment Act are present, this would entitle the purchaser to a “cooling off” period.

Transfer documents which are signed outside of South Africa for use in South Africa must have an apostille certificate placed on it or be authenticated either by a Notary Public or authorised officer such as a consulate general at a South African Embassy, the choice of which will depend on the country where the documentation is signed.

In terms of Financial Intelligence Centre Act ("FICA") conveyancers are required to identify the Seller and Purchaser by obtaining documentary proof such as copies of identity documents or passports, proof of address, income tax numbers, and confirmation of marital status, for their records, this requirement is as a result of an attempt by the South African government to curb money laundering and corruption.

Transfer Duty is an acquisition tax which is payable to the South African Revenue Service ("SARS") by the purchaser of immovable property.

The duty payable is calculated on the purchase price or market value whichever is greater. Juristic persons such as companies and close corporations are levied the same transfer duty as individuals.

The amount payable is based on a sliding scale: Purchase Price

calculation

Amount

Up to ZAR600,000.00

Nil

Nil

ZAR600,000 – ZAR1,000,000

3%

Up to ZAR12,000.00

ZAR1,000,000 – ZAR1,500,000

5%

Up to ZAR37,000.00

+ZAR1,500,000

8%

+ZAR37,000.00

The purchaser is also responsible for transfer and bond registration legal costs, whilst the Seller is responsible for bond cancellation legal costs.

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Conveyancers are also required to obtain and lodge with the transfer documentation in the Deeds Office a rates clearance certificate which is issued by the local municipality which governs the area within which the property is located. The rates clearance certificate is acquired upon payment of the rates clearance figures, the calculation of the rates clearance figures are the full outstanding arrears (if any) plus an estimate of 4 (four) months in advance of rates and utilities such as water, electricity, sewer and refuse removal services. This is to ensure that once a purchaser acquires the property there is not outstanding amounts owing in respect thereto.

There is no restriction on foreigners owning immovable property in South Africa. The South African Reserve Bank considers all foreigners (i.e. persons who do not regard South Africa as their domicile or place of natural residence) as non-residents and all legal entities whose normal place of domicile or if registered outside South Africa also as non-residents. Where non-residents do not require funding such as mortgage bonds for property purchases, their transactions can be processed without intervention from the South Africa Reserve Bank. Once funds are received into the Trust account of an attorney’s practise, with the required documentation and authority, an attorney may invest the funds in an interest bearing account until the transfer of the property in the Deeds Registry. Foreign entities wishing to purchase immovable property in South Africa must be registered as a foreign entity or an "external company" with the Companies Office of South Africa.

Non-residents purchasing property in South Africa can obtain funding from South African Banks for up to 50% of the purchase price of the property. The remaining 50% of funding will have to be paid by the purchaser, through a recognised foreign bank, into a South African bank. The South African bank has the discretion to decide on the amount that may be lent by the purchaser.

Any non–resident, who is in possession of a valid South African work permit, will be considered to be a resident for the duration of their work permit and will not be subject to the abovementioned borrowing restrictions.

Non-residents can open a “non-resident” bank account with a South African commercial bank in order to facilitate all future loan repayments and rental income.

The purchaser could fund this account from abroad, or from the rental income received

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on the property purchased (this would more than likely be subject to the local South African commercial bank being in receipt of a copy of any approved rental agreement and they would more than likely insist on a cession of the bank account and the rental, in case of default).

The South African Exchange Control Authorities will consider an application by a non-resident to obtain permanent residence status in South Africa. The authorities will treat the purchaser as a South African “resident”. This will take place upon completion of an immigrant’s Declaration & Undertaking issued through the South African banks. An applicant will then be eligible to borrow up to 100% of the purchase price of their desired property. In these circumstances, the applicant will be incumbent to apply for and obtain permanent residence in South Africa.

Where a non-resident seller has sold his immovable property for ZAR2,000,000.00 or more he or she will be subject to withholding tax. He/she will have to declare such status in the agreement of sale, and upon

registration of the transfer in the Deeds Registry the Purchaser has an obligation to withhold a portion of the purchase price (5% if Seller is an individuals, 7.5% if seller is a company and 10% if seller is a trust) for payment to the South African Revenue Services in lieu of capital gains tax payable on the disposal of the immovable property. On receipt of a directive from the South African Revenue Services, the amount claimed will be paid over and any surplus will be refunded to the seller.

In terms of South African legislation the Seller is obliged to furnish the purchaser of immovable property with a valid electrical compliance certificate which is issued by an accredited electrician which must not be older than 2 years from date of issue. The Seller is also obliged to furnish the purchaser with a gas installation compliance certificate and/or electric fence compliance certificate should there be a gas installations and /or an electric fence on the property.

Sellers of immovable property in coastal regions such as Kwa-Zulu Natal or in the Cape Province are obliged to furnish the

purchaser with an Entomologist Certificate which indicates that the property is free from infestation of pests such as wood-borer and termites.

A conveyancer is a specialist real estate attorney not all attorneys are conveyancers.

A conveyancer is an attorney who has passed two additional national conveyancing examinations as set by the Law Society and who is admitted by the High Court to practise as a conveyancer at a local Deeds Registry.

AGREEMENTS: Negotiation, drafting and supervision of all real estate related work including options to purchase, lease agreements, building contracts, development agreements, shareholders and joint venture agreements DEVELOPMENTS: New commercial, industrial and residential developments including project planning, management and implementation strategies as well as advice on development vehicles through which to process the transaction.

OTHER:- Other services which are offered by our real estate department are change of ownership in property holding legal entities; personal and praedial servitudes registered against immovable property; due diligences; taxation advise relating to immovable property; property finance including commercial and home loan mortgage bonds; general and special notarial bonds; environmental and mining advise;

At Routledge Modise Attorneys, we have a team of Conveyancers with many years of experience who are be able to assist with any property related transaction, with expertise in the following areas:TRANSFERS: Transfers of ownership of commercial and residential transactions including freehold, sectional title, leasehold, fractional/leisure ownership, syndication, deceased estates, divorces transfers, donation transfers, expropriations, rectifications, exchange transfers, subdivisions of land, consolidations of land and partition transfers

Johan Jacobs Head of Property johanjacobs@eversheds.co.za Tel +27 (0)11 286 6964

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ARGENTINA Insight on real estate transactions 1. - general Principles Any transfer of a real estate located in Argentina must be instrumented in the form of a public deed before an Argentine notary public. In addition, to produce legal effects against third parties, the transfer must be registered with the Real Estate Property Registry ("Registry") of the jurisdiction where the real estate is located. The Registry of each jurisdiction keeps a separate record for each piece of real estate. The record shows the history of the property and its current status, containing information such as the owner(s), attachments, mortgages, easements, other encumbrances, and any other "real right" affecting the real estate.

It is typical, but not legally necessary, for the parties to execute a private contract before closing the transaction. This preliminary contract sets forth the parties' intention to buy and sell the real estate, the date of the closing (that is, the date on which the public deed of transfer is to be executed), any conditions precedent to the closing, the designation of the notary public before whom the closing will take place and other miscellaneous provisions. Also, the

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buyer typically advances a portion of the price, usually between 10% and 30%, upon execution of the preliminary contract. Real estate may be purchased using local currency (pesos), in U.S. dollars or in any other foreign currency. However, the use of local and/ or foreign currency and other conditions of payment are subjected to the current exchange control regulations and certain governmental restrictions, and therefore change from time to time.

As indicated above, the transfer document must be executed before (or protocolized with) a notary public. The notary public is customarily appointed by the purchaser.

To authorize the transfer document, the notary public must have previously secured a certificate from the Registry regarding the legal status of the real estate. The effective term of this certificate is generally 60 days, within which the parties must execute the public deed of transfer and the notary public must submit it with the Registry to register the transfer. The Registry's record of the real estate for certain purposes is "blocked" during this 60-day' term following the issuance of the certificate on the formal request of the notary public. That is the

reason why deeds of transfer are generally granted within this term.

The notary public must verify that all taxes and contributions imposed on the real estate are totally paid as of the date of the closing.

If the seller does not have perfect title to the real estate and/or if the real estate is not free from any attachment and/or encumbrance (as advised by the Registry), the notary public must inform the parties before execution of the deed of transfer.

Purchases of Argentine real estate involve a number of taxes and associated expenses.

Briefly they are: (1) a local documentary tax (stamp tax) which varies depending on the jurisdiction where the real estate is located and generally ranges between 1,5 to 4% of

the purchase price. Generally, the buyer and the seller bear the stamp tax equally.

Stamp tax is payable upon execution of the preliminary contract and/or the public deed of transfer; (2) notary public's fees: 1/2% of the purchase price (usually negotiated); (3) real estate broker's fees, if any: generally 4% of the purchase price (usually negotiated) and (iv) other fees and expenses, which will depend on the purchase price, but that generally would not exceed 2 % of it. In general, real estate transfers are not subject to VAT. However, VAT is applicable on construction activities carried on within real estate property and the transfer of such construction at the rate of 21% or 10.5% in some cases Exemptions may apply depending on the construction’s purpose and ownership term.

2. - exchange control regulations.

Argentina has put in place certain exchange control regulations, that have been recently increased and we may expect to have some more changes in the near future. As a general principle, according to applicable local Central Bank's regulations and as a general reference, 30% of the monies to be transferred

into Argentina shall remain in a 365-day non interest bearing US dollar deposit with a local financial entity. Moreover and as a general reference, all monies transferred into Argentina shall have to be in the country at least for a 365-day term to be counted as from their settlement in the local foreign exchange market. The deposit of the 30% of the incoming funds will not bear any interest and should be made in US dollars (however it is worth mentioning that foreign currency entering into Argentina shall first be converted into pesos and re-converted into US dollars for the amount of the deposit, with the consequential loss of differential currency sale/purchase rate). Furthermore, the deposit may not be used as collateral to secure other transactions.

provides that a non resident will be able to purchase foreign currency and transfer it abroad if such monies are related to the definite liquidation of the non resident direct investment in the country in the non-financial private sector. Needless to say, we cannot assure that the current regulatory regime -and the specific exemption to the prohibition to transfer monies abroad referred to hereinabove- will continue to be in place.

In the specific case of real estate transactions, according to a specific regulatory exemption, foreign currency inflows into the local foreign exchange market shall be exempted from the 30% deposit obligation, provided the transfer is related to income from non-resident investment applied to purchasing real estate if the funds are settled simultaneously to the signing of the public deed of transfer.

Notwithstanding the foregoing, as mentioned above, the foreign currency entering into Argentina shall first be converted into pesos. and re-conversion in to foreign currency may not be allowed due to recent controls imposed to the acquisition of foreign currency. These restrictions have in practice made these transactions more complex.

As mentioned at the beginning of this description, Argentina has historically requested a prior approval of a foreign investment in the cases of security areas.

The transfer of monies abroad, is also subject to a regulatory framework which

Also, it is important to note that, while there are several restrictions as explained above that will apply, there are some “de facto” rules that also impact the transactions. These rules vary depending on the scenario at the time the transaction takes place.

3. - security areas

A “Security Area” is basically, all those areas along the border, either terrestrial or maritime, and an area around military or civil buildings which are considered important for the sake of the country’s defense. The width may vary as determined by the Government.

There are specific descriptions for each province described in a Government Decree.

The person of purchaser is important because the requirements vary.

In these cases the foreign investor needs to complete and file a preliminary authorization. Securing these permits has become a long and cumbersome process which may delay any investment.

4. - rural Land Finally, a new restriction has been passed that limits acquisition and possession of rural land by foreigners, as this term is defined in Law 26,737. The Law was passed last December, 2011 and partially ruled after that.

It shall apply to all foreign individuals (whether or not they have a real domicile in Argentina) and to legal entities (organized in Argentina o not, in which more than 51% belongs to foreign individuals or legal entities), that either directly or through someone else acquires land (Rural land is defined as any land located beyond the urban areas) for the use or production either, for forestry, agriculture, tourism and other destinies.

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The reference made to foreign ownership reaches mainly the following: (i) foreign individuals residing or not in Argentina, (ii) legal entities in which 51% of its corporate capital belongs to foreigners. The latter includes: (a) legal entities either related or controlled in a percentage higher that 25% or with enough votes to prevail in the decisions, (b) foreign legal entities that own more than 25% of other legal entities, (c) foreign individuals or legal entities that even without being registered as shareholders, act as such, (d) transfer through a trust when beneficiaries are foreigners in a percentage higher than the above mentioned ones, etc.

There have been some debate in relation to some paragraphs of the Law that seem not to be definitely settled.

A maximum limit of 15% of the argentine rural areas may be owned by foreigners.

Foreigners (individuals or legal entities) of a same nationality may not own more than 30% of the percentage mentioned above. The way in which the above mentioned percentages must be calculated is still uncertain.

The land owned by a same foreign owner shall not exceed 1.000 hectares in total, regardless of its location.

Foreigners, as this term is defined by the Law, cannot purchase rural land if it contains any kind of permanent water within the land or at any border.

A Registry of National Rural Land was created (a survey is being carried out to determine cadastral situation of rural land and ownership). As a condition precedent to acquire rural land, a certificate should be obtained. At the time this article is written, the above mentioned certificate is not being issued but it is expected to have news in this sense during the first quarter of 2013.

The Law has many open issues and lacks definition on certain aspects.

5. - organization of a vehicle For purposes of performing habitually

activities in Argentina, it is necessary to register a branch of a foreign legal entity or either a company under the regulations of the law. The regulatory framework that would apply for the organization of an Argentine legal entity is basically provided

by Law 19,550 and resolutions enacted by the Public Registry of Commerce of the different jurisdictions. The most common types of entities are limited liability companies and stock corporations, while there are some other options that could be advisable in special cases.

From an operational point of view, both a corporation and a limited liability company are not that different.

Argentine law requires least two to organize a company. This may be amended in the near future. It may be either foreign or national individuals or legal entities. In the case of a foreign legal entity, a prior registration before the PRC will be required.

From a tax point of view, corporations and limited liability companies are taxed at 35%. Dividends and revenues distributed are subject to a 35% withholding tax if they exceed the taxable basis and after making certain adjustments. The dividend and revenue income is excluded from the taxable income of Argentine resident shareholders and quotaholders.

The sale of quotas of limited liability companies made by a non-Argentine tax resident individual quotaholder to Argentine purchasers would not be subject to capital gains. However, it is worth pointing out that this could be a debatable issue. baker & mcKenzie-Argentina The Buenos Aires office has increasingly developed a real estate and infrastructure legal practice. Our office has a group of lawyers with relevant special skills in this area. The Firm’s expertise in structuring, negotiating and documenting real estate transactions is supported by extensive experience in tailoring real estate transactions to all relevant legal, regulatory and tax requirements.

Both corporations and limited liability companies are subject to a 0.5% personal assets tax which applies on their equity.

Limited liability companies may be considered pass-through entities in some jurisdictions for tax purposes if the corresponding election is made at that jurisdiction. Regardless of such election, they will still be considered taxpayers for Argentine tax purposes.

The sale of quotas of limited liability companies made by a non-Argentine corporate quotaholder to Argentine purchasers is subject to a 17.5% capital gains

Gustavo Ariel Boruchowicz Tel: +54 1143102200 gustavo.Boruchowicz@bakermckenzie.com Baker & McKenzie Soc. Civil Leandro N. Alem 1110 Floor “13” Capital Federal Buenos Aires C1001AAT, Argentina

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tax withholding on the gross purchase price or, at the option of the seller, a 35% capital gains tax withholding on the gross purchase price less the costs incurred in Argentina to keep maintain and preserve the source of income.

Alejandra Bugna Tel: +54 1143102200 alejandra.bugna@bakermckenzie.com Baker & McKenzie Soc. Civil Leandro N. Alem 1110 Floor “13” Capital Federal Buenos Aires C1001AAT, Argentina

MEXICO Sharing Real Estate: An Overview of the Fractional Ownership in Mexico Fractional Interest or Ownership is a manner of acquiring a residential unit in which each Fractional Owner acquires only a fraction of the ownership of such unit, and shares with other Fractional Co-owners the rights and responsibilities of maintaining and administering real property. In this article, we provide an overview, answering the most frequently asked questions that are raised by prospective buyers of Fractional Ownership. what does Fractional interest or ownership involve?

Fractional Interest or Ownership provides a combination of the rights and benefits of a real estate owner, and the comfort of having a property manager handle the maintenance and care of the residential unit at a low cost. By purchasing Fractional Interest, each Fractional Owner acquires rights to an undivided co-ownership of a specific percentage interest in a residential unit, in addition to an interest in the development facilities and the common areas and assets of the development in which the residential unit is located. what is the difference between Fractional ownership and Timeshare?

The main difference between Fractional Ownership and timeshare is that the latter is not a real property investment. In Fractional Ownership, the owner is acquiring ‘ownership rights’, making a true investment shared by a very small group. what are the Advantages of Acquiring Fractional interest?

The main advantages include: i) the use and enjoyment of a high-end condominium vacation home in a luxury and prime location in an appreciating market; ii) the payment of a percentage of the real property price and the corresponding costs and taxes; iii) the ownership of real property interest in an appreciating asset; iv) the choice between personal use and rent income; v) no management and maintenance responsibilities; vi) real property ownership without the risk of being the sole owner. can Foreigners Acquire a Fractional interest in mexican real Property?

Leobardo Tenorio-Malof ltenorio@tplegal.net Hector Torres-Lopez htorres@tplegal.net Alejandro Pedrin-Cisneros apedrin@tplegal.net Mauricio Tortolero-Gonzalez

Yes. Foreigners may acquire Fractional Interests in a real property in Mexico.

However, based on the Mexican Constitution, if the real property is located within the specific ‘restricted zone’, foreigners may acquire real property only by means of a trust agreement. is it Possible to Lease or Transfer the Fractional interest?

Yes. Fractional Interest may be sold or leased.

Owners may sell or lease part or all of their designated time, and the buyers or lessees will be subject to the regulations for the use and enjoyment of the Fractional Interest.

Are There many rules governing the Fractional interest?

Fractional Interest or Ownership is governed by simple and easy rules. The regulations for its use and enjoyment takes into consideration the most important aspects of the Fractional Interest’s organisation, in order to avoid having Fractional Owners spend time on management and maintenance while they are on vacation. how does the use of the Fractional interest work?

For example, if one residential unit is divided into eight Fractional Interests, each Fractional Owner will acquire at least a one-eighth co-ownership interest in such residential unit, together with the corresponding co-ownership of the common areas and common assets of the condominium or sub-condominium regime in which the unit is located. The Fractional Owner will have nearly six point five weeks of vacation use per year. can the Fractional owner change the vacation dates?

Changing the calendar dates depends on how you schedule your own vacationing patterns.

Fractional Owners contact the real property manager for any such request and receive a written confirmation of the revisions. how are the weeks Assigned to each Fractional owner?

The real property manager will assign all the weeks in a year, and you will always know your dates in advance. Every year, the weeks

rotate and each owner receives an equal share of the holidays, and so forth.

Vacation periods of three weeks or more may be used at any time of the year. However, such requests must always be handled by the property manager, who will negotiate with other owners to trade time. do the guests of Fractional owners have any Type of ownership Privileges?

Yes. Provided they know the policies, it is your home and you may invite anyone you choose. what are the costs associated to the Acquisition of Fractional ownership?

The operating budget is set at a certain level that insures successful operation of the home, including fund reserves for replacements and regular repairs. Monthly fees are set to cover normal costs of keeping the property in good condition. Fees may and will vary over time as costs increase and as the owners’ preferences change. who manages the Fractional interests?

A real estate company specialises exclusively in Fractional Ownership management, and is highly knowledgeable in the extraordinary levels of service required for these homes.

Management takes care of all repairs and maintenance. The management staff handles some of the work, and the rest is contracted out to reliable local companies. While you have the right to make inquiries and inspect the books on a periodical basis, the management company collects and disburses all operating fees. what services or Amenities are included as Part of the Fractional ownership?

The services include the management of all condominium facilities seven days a week and interior and exterior maintenance, among others. Fractional Interest includes the right to use the amenities in accordance with certain rules.

For any questions or comments, please do not hesitate to contact us.

mtortolero@tplegal.net Blvd. Sanchez Taboada No. 10488-701, Torre Platino, Zona Rio Tijuana, Tijuana, B.C. 22010.

641 E. San Ysidro Blvd. Suite B3-808, San Ysidro, CA 92173.

MX (664) 634-2808 / US (619) 270-1120

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AUSTRALIA Urban Renewal in Australia 1. What is urban renewal?

1.1 Aims of urban renewal Urban renewal seeks to deliver economic benefits, environmental enhancement and community enrichment through the rapid, large-scale redevelopment of underutilised land stock.

From a public sector perspective, urban renewal projects have the potential to shift an entire city's commercial foundations, reorient the spatial organisation of an area (for example to align with existing infrastructure or adapt to population movements) and reconfigure service provision to a community.

For developers, the potential to reposition a site's use from, for example, an aged industrial facility to a mix of retail, residential apartments and commercial spaces offers significant opportunities to realise a dramatic increase in value.

And for communities, urban renewal project offer the urbanisation of previously unusable space through the environmental remediation of sites, new employment opportunities and the upgrading of infrastructure and services.

1.2 Targeted sites Urban renewal projects utilise 'brownfield' sites - abandoned, idle or underutilised commercial or industrial properties where past actions have caused known or suspected environmental contamination but where there is an active potential for redevelopment.

Brownfield sites might include abandoned industrial, port or rail facilities, manufacturing plants or a collection of smaller lots acquired as part of a strategy to revitalise a dysfunctional area.

Availability of brownfield sites which have the potential for urban renewal have increased as urban centres in Australia have undergone a dramatic change over recent decades with a shift away from manufacturing, a significant reduction to city harbour port operations and an increasing number of former light industrial sites becoming absorbed by expanding urban centres.

As a result, prospective sites for urban renewal projects are rising, together with the demand for new housing stock and commercial/retail space.

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1.3 Case studies of successful urban renewal projects (a) Toronto Waterfront Project The major revitalisation project currently being undertaking in Toronto’s waterfront area is one of the largest urban redevelopment projects ever undertaken in the world. With an estimated duration of 25 years, the project covers a development area of 800 hectares and will cost approximately $30 billion of private and public funding to complete. The goal is to transform former industrial sites into new mixed-use waterfront communities.

The impetus for Toronto's waterfront redevelopment is more than just giving the area a 'new look'; it serves as a prime example of the significant economic benefits of successful urban renewal projects. A primary objective of the redevelopment is to "leverage the infrastructure project to deliver key economic and social benefits that enable Toronto to compete aggressively with other top tier global cities for investment, jobs and people." The redevelopment is expected to create 40,000 new residences and 40,000 new jobs. These effects are already being felt; between the projects inception in 2001 and March 2010, work on the waterfront had already generated approximately 9,700 full-time years of employment and contributed $1.9 billion to the Canadian economy. (b) Canary Wharf Canary Wharf, on the Isle of Dogs in East London, was launched as part of the redevelopment of the West India Docks in the mid-1980s and is one of the earliest examples of modern approaches to largescale urban renewal.

The West India Docks once formed part of the busiest port in the world, until 1980 when the docks were closed by the British Government. The urban renewal of Canary Wharf included the creation of the London Docklands Development Corporation in 1981, granting the Isle of Dogs Enterprise Zone status in 1982.

The first buildings completed in 1991 as part of the Canary Wharf urban renewal, included One Canada Square, which became the UK's tallest building and a symbol of regeneration and urban renewal.

The redevelopment of the Isle of Dogs was an impressive example of urban renewal, as following the closure of the West India Docks in 1980, unemployment peaked at 40% in this area. This statistic is a stark comparison to today, when 8,500 local residents work at Canary Wharf, showcasing the positive economic consequences stemming from this project. Part of the success of the renewal of Canary Wharf is attributed to the developers' proactivity towards improving transport links to the area including: train, bus, light rail, the London underground and boat - making Canary Wharf an economic and professional hub within London.

Today, Canary Wharf is a 110 hectare area which contains approximately 8 hectares of open landscaped space, 1,300,000 m2 of office and retail space. Around 93,000 people work in Canary Wharf and it is home to the world or European headquarters of numerous major banks, professional services firms and media organisations. (c) Barangaroo The $6 billion transformation of the 22 hectare Barangaroo site will, from 2015, restore public access to a part of Sydney harbour which has been unusable by the general public for over one hundred years. The site was formerly used as docks providing major servicing to stevedoring and other shipping activities as part of Sydney's working harbour.

Like many post-industrial sites, Barangaroo has below-ground contamination including tanks from the two hectare Millers Point Gasworks site which operated between 1840 -1921 and unclassified fill used during reclamation for the port construction (circa 1951-1972).

As one of the first Clinton Climate Positive Development projects in the world, Barangaroo sets a benchmark for green development. As part of the urban renewal project, the private developer will remediate the land and remove contamination including heavy metals, petroleum hydrocarbons and asbestos, opening up new land which previously languished in an unusable state.

Adding to the environmental benefit, material such as building rubble and other waste has been used to fill and

reclaim the wharf area. Once completed, it is anticipated the development will generate and export more water than it uses, deliver zero waste to landfill and achieve carbon neutrality by generating renewable energy.

Barangaroo is divided into three areas. (i) Barangaroo South, a major business, tourism, residential and retail precinct opening onto a public waterfront promenade; (ii) Barangaroo Central, a cultural and civic focal point for recreation, events, entertainment and leisure activities together with some low rise residential; and (iii) Headland Park, a 6 hectare harbour park.

Over time, it is expected that 23,000 people will live and work in the Barangaroo precinct, with an estimated 33,000 visitors each day; deeming Barangaroo an impressive and environmentally friendly urban renewal.

2. Landscape for urban renewal projects in Australia 2.1 Current policy objectives for renewal With the establishment of the Federal Government's National Urban Policy, the policy agenda is set to improve the liveability of Australian urban environments through whole of government initiatives which engage the private sector to develop urban renewal projects which provide mixed income housing, improved housing affordability and access to employment opportunities across major and regional cities.

The Federal Government's Liveable Cities program aims to improve the capacity of the 18 capital cities and major regional centres by supporting the development of projects that facilitate urban renewal

and strategic urban development and encourage partnerships between all levels of government to foster innovative solutions. In April 2012 the Minister for Infrastructure and Transport, approved funding for 25 projects – (18 planning and design and 7 demonstration projects).

2.2 Redevelopment considerations While offering significant opportunities, urban renewal projects, due the utilisation of built up or brownfield sites, involve specific challenges and risks which add to the cost and complexity of carrying out development.

In high density surroundings, planning approvals are necessarily more difficult to obtain owing to the increased number of affected parties and the impact on existing structures.

The remediation of contamination on brownfield sites adds complexities surrounding cost sharing between parties, the management of ongoing environmental risks, delays to construction and of course the technicalities associated with carrying out the remediation works themselves.

In addition, heritage elements, artefact preservation, redirection of services, Foreign Investment Review Board approval, integration with transport infrastructure and the potential for legal challenges to planning approvals are common issues which need to be managed in any urban renewal projects.

As advisors to both public and private sector clients across a range of Australia's largest urban renewal projects, Clayton Utz is uniquely placed to provide the depth of expertise required to bring your project from conceptualised proposal through to completion.

With the Real Estate sector facing unprecedented challenges as a result of the current global economic turmoil, the Clayton Utz team of lawyers are at the forefront, offering clients practical solutions to face these challenges and providing clear advice regarding the new opportunities emerging in this changing market.

Our Real Estate Markets group combines specialist property expertise with a broad range of services, enabling you to rely on us to work through each stage of your real estate project, from initial planning and structuring, through negotiations to closing the deal, in Australia and across international boundaries.

At Clayton Utz, we not only understand market drivers, we work with our clients to manage them.

By: Gary Best, Partner and Eugene Tan, Senior Lawyer

3. How Clayton Utz can help you Clayton Utz is one of Australia's most successful top tier law firms and is recognised as a leading adviser to Australia's major real estate market players.

Gary Best, Partner Clayton Utz Level 15, 1 Bligh Street Sydney NSW 2000 Australia D +61 2 9353 4177 gbest@claytonutz.com

January 2013 • Global Business Magazine • 61

gloBal Real eState inveStMent gUide 2013

PERU

Building Ambition: The Boom of Peru Real Estate Over the last five years, Peru has witnessed a remarkable rise in real estate that has been reflected in several ways. From a subjective point of view, the panorama has changed and continues to change, from low-rise buildings intended for homes and neighbourhood shops; to housing over 10 floors intended for multi-family houses; and malls and entrepreneurial centres looking to provide for the necessities of the local population and beyond.

From an economic point of view, the real estate market in Peru has become one of the most important engines for the economy of the country. As 2012 comes to a close, the construction sector has consolidated to be a dynamic and steady one. In fact, according to the Statistics and Informatics National Institute (INEI) – the rector organ of the National Statistics System in Peru – the sector has risen 19.22%, due to the domestic consumption of cement (19.50%) and the investment of the physical advancement of works (15.74%).

This real estate ‘boom’ is the result of, amongst other important factors, the following: i) the economic growth of the country, which has improved the purchase power of families and the sustainable expansion of the employment (even during the international crisis); ii) the government support through providing the financing, construction and acquisition programmes of social interest housing; and iii) the support of financial institutions in the development of real estate projects with flexible promotions credits, that have led to a profitability above any other sector entrepreneurships.

Due to the nature of our business, we have been able to observe that the present Peruvian real estate market stands out as being focused on constructions intended for the use of housing, offices and general services such as hotels, supermarkets and malls. The market is looking to supply a demand, which in spite of the present real estate growth has not been satisfied yet – an example being the Chamber of Commerce and Construction of Peru (CAPECO), which in December 2012 reported the effective demand for housing (the interested segment with purchase power) rising to 418,438 homes, in front of a real estate offer of 21,872 houses. That is to say, the unsatisfied demand is calculated in 396,566 homes.

62 • Global Business Magazine • January 2013

Housing Prices in US$.

Effective Demand

Immediate Offer

Homes

Houses

Homes

%

4,000 – 15,000

42,381

0

42,381

10.69

15,001 – 20,000

47,802

2

47,800

12.05

20,001 – 30,000

81,623

136

81,487

20.55

30,001 – 50,000

96,858

4,777

92,081

23.22

50,001 – 80,000

104,204

6,537

97,667

24.63

80,001 – 120,000

38,967

4,107

34,860

8.79

More than 120,000

6,603

6,313

290

0.07

TOTAL

418,438

21,872

396,566

100.00

Therefore, in order to cover the existing deficit, the number of real estate projects are increasing and are becoming bigger every time (megaprojects). However, in contrast, land becomes less available every time because there is no space in compatible zones for activities to be developed, or because the lands are not sanitised, or do not have supplemented services (water, sewerage, electric power) which are normally present in lands located in peripheral zones.

Now this lack of land does not affect only people looking for a place to build houses or establish businesses, but the industrial sector, with 25% of 1,200 associated with

Unsatisfied Demand

Rank Participation

the National Society of Industries (SIN) demanding new lands for plants or to expand operations. It goes without saying that such a land shortage increases their value as well.

It is as this point that many companies require our services. They need assurance that the land they are purchasing is compatible with their project, and to quantify

the investment that will be necessary to become the land operative. This due diligence process is more and more necessary, especially because of the high prices that so many of these companies have to pay.

Therefore, in order to not only achieve a rational and sustainable occupation of the national territory, but security and legal stability for the real estate investment, the Ministry of Housing, Construction and Sanitation of Peru has approved some rules at a national level. These provide the framework for which the local governments can, according to the particular conditions, take better advantage of the land, as well as deal with the application of policies, in order to facilitate the investment in the real estate sector. However, we have observed that in practice it is not always like this; on the contrary, it can become another factor

that makes executing any type of real estate project more expensive.

In our opinion, there are several reasons why the national government’s requirements have not obtained the desired results: Firstly, the real estate regulations have not been going hand in hand with growth, showing a gap and/or not being up-to-date; secondly, the lack of congruence among the national rules regulating the urban development and construction as well as the local rules; thirdly, the particular policies some local governments have adopted (at the style of feudal lords); and lastly, the shortage of resources some local governments have, which not only impede the application of what the national government has established, but shows how unreal the provisions of the national rules can be in certain cases.

At the moment, due to the shortage of prepared lands for the development of activities to be developed (housing, commerce, industry), the pressure has been lifted with the new restructuration of the distribution of urban uses. Through the procedure of zoning changes, residential sections have now changed into commercial

ones, and from single-family houses to multifamily ones. According to a report given by the Planning Metropolitan Institute (IMP) of Lima Metropolitan City Hall, it annually receives at least 4,500 files from neighbours, demanding a change to the zoning of their homes, in order to let them develop a real estate project of their own interest.

The truth is that the Peruvian real estate sector is a rising market to be exploited, and such deficiencies regarding the regulations and/or applications of the same do not necessarily present a hurdle that hampers growth. What is going to happen is that there will be an increase in the price of the final product, which will be assumed by the purchaser/consumer. Even though Peru and mainly Lima city is still what a lot of real estate professionals point out, the yard of the real estate market is in which entrepreneurs are willing to invest and not only to make money, but have the opportunity to innovate designs and technology for the benefit of cities and their inhabitants.

Based on our experience, we estimate that as a result of the current growth conditions, the proper handling of the economy and the stability given by the state, the construction sector will continue to grow at the same pace for years to come. However, we believe that such growth would have more significance if there were clear and focused regulations at a local and national level, applicable to the Peruvian reality. When the local authorities know how to monetise and channel the business and investments opportunities in an adequate manner for the benefit of people and local businesses, we as a firm with such real estate expertise, have an obligation to collaborate to make this happen.

Andrea Lozada Zarauz 51 1 618-8500 x 580 andrea.lozada@bakermckenzie.com Av. De la Floresta 497, Piso 5 San Borja, Lima 41 - Perú

January 2013 • Global Business Magazine • 63

gloBal Real eState inveStMent gUide 2013

ENGLAND AND WALES

Playing a Key Overseas Role: Real Estate Investment in England and Wales Introduction This article identifies some of the key aspects of real estate law in England and Wales, and also provides an overview of activity levels in the real estate investment market. In an age that has seen ownership of real estate become increasingly international, it is more necessary than ever to appreciate the basic framework of real estate law in different jurisdictions. Real Estate in England and Wales, and in London in particular, continues to be attractive to investors from around the world, and forms a key part of the global real estate investment market. This article deals only with the law in England and Wales: The laws governing the ownership of real estate in Scotland, Northern Ireland, the Channel Islands and the Isle of Man are different, therefore specialist advice is required where these jurisdictions are involved.

Ownership of Real Estate For all practical purposes, only the two most important forms of land ownership are likely to be of interest to an overseas investor – freehold and leasehold. A freehold is absolute ownership and, generally speaking, is more attractive to an investor. Having said that, long leasehold interests granted at a premium for terms of 99 years or longer are often held for investment purposes. In central London, property may be owned by entities who are reluctant to dispose of their freehold interests, instead granting long leases to investors. However, it is important to distinguish a leasehold property held on an investment basis from an ‘occupational lease’.

An occupational lease is typically granted for

64 • Global Business Magazine • January 2013

between five and 20 years, subject to a market rent, and will normally contain much more onerous obligations on the part of the tenant.

The income generated from the majority of investment properties is in the form of rent paid under occupational leases. Accordingly, the terms and conditions of occupational leases and the ability of the tenant to pay the rent are of fundamental importance to the investment market.

Most freehold and longer leasehold titles are registered at the Land Registry. Although the government’s aim is to provide a comprehensive registration system, a number of unregistered titles remain, including freeholds where there has not been a dealing triggering the need for registration, and shorter leases. Registration at the Land Registry provides a state guarantee of title, and this will apply to the majority of properties acquired by overseas investors.

Documents and other information held by the Land Registry are widely available, but it is much more difficult to obtain information regarding those titles which remain unregistered.

Real estate ownership is subject to a number of obligations, liabilities and rights, which affect an owner’s freedom to deal with his land and buildings as he chooses. These include title matters such as covenants, rights and easements, the majority of

which will be apparent from the registered title. In general, leasehold property – in particular occupational leases – will be subject to a greater number of restrictions, including constraints on the tenant’s ability to sell or otherwise dispose of the property.

In addition to title matters, real estate ownership is also subject to planning control.

In general, planning permission is required for development including material changes of use. If an investor is looking at a potential development site, it is important to ascertain whether the relevant local authority has implemented a community infrastructure levy (CIL) charging scheme to finance local infrastructure. Development in London will also be subject to the Mayoral CIL, which is being used to fund Crossrail, a major new rail link. A number of other statutory regimes affect land ownership, of which the contaminated land regime is of particular significance to investors. Specialist advice should be sought in relation to the impact of both planning and environmental legislation.

Tax Stamp duty land tax (SDLT) is a transactional tax payable by the buyer on the acquisition of an interest in real estate. The rate depends on the value of the transaction, and the highest rate for non-residential transactions is currently 4% where the consideration exceeds £500,000. Residential properties worth

more than £1 million are subject to higher rates, including a top rate of 15% where the property is acquired by a company (whether alone or in partnership), or collective investment scheme, for a price in excess of £2 million. It is proposed that such properties will also be subject to an annual charge with effect from the start of the 2013/14 tax year.

Limited types of transactions are normally exempt from SDLT, and there are also a number of reliefs that may apply. It is always important to consider how best to structure a transaction for SDLT purposes, although the introduction of anti-avoidance measures has made it increasingly difficult to implement tax-saving schemes.

The occupier of a business property is responsible for the payment of business rates, which fund local government expenditure and are calculated by reference to the rateable value of the property. Rateable values are assessed every five years, although the next revaluation has been postponed from 2015 to 2017. Following a significant reduction in the relief available, business rates are generally payable on empty properties. While this has become a significant issue for investors in sectors with high vacancy rates, a recent proposal to exempt newly built properties may help encourage new development. The starting point is that a supply of an interest in real estate will be exempt from value added tax (VAT), although new commercial properties and properties where the owner has exercised the ‘option to tax’ will still be subject to VAT.

Real Estate Investment While there is no restriction on the ownership, sale or leasing of real estate in England and Wales by overseas investors, a legal opinion may be required to confirm that the overseas investor has capacity to enter into the transaction. Overseas investors will, in principle, be liable to pay tax on the acquisition of the property and on any income derived from it. A number

of alternative structures are available for direct or indirect investment in real estate in England and Wales, and the decision how best to structure an investment is likely to be dictated by tax considerations.

In addition to ensuring tax efficiency, an overseas investor’s choice of investment vehicle will be determined by a number of factors including regulatory requirements, confidentiality, liability, control over the asset and the liquidity of the investment. Real estate investment vehicles include various partnership structures, offshore property unit trusts, listed property companies, property joint ventures, offshore vehicles and real estate investment trusts (REITs). A REIT is a relatively new form of tax efficient property-specific investment vehicle, which has benefited from a recent softening of its regulatory regime.

As previously mentioned, the UK real estate investment market is dependent upon the ability of tenants and their guarantors to pay the rent and discharge other liabilities under their occupational leases. The economic downturn means that tenant insolvency – particularly in the retail sector where difficult trading conditions have resulted in high profile tenant failures and significant losses for landlords – has become a significant issue for investors. The continuing use of company voluntary arrangements and prepack administrations to avoid tenant liability has caused particular concern. As a result, in the current market, covenant strength has become of fundamental importance to real estate investors.

Real Estate Activity Overseas investment has to some extent been bolstered by the continuing international economic and political instability – in particular the Eurozone crisis and US fiscal cliff – as investors seek safe havens in the UK property market. Exchange rates have also had an impact and UK property remains

attractive to many overseas investors.

Having said that, the focus is on prime central London properties in the City and West End as well as Docklands, and these markets continue to outperform the rest of the country. Notwithstanding recent stamp duty land tax increases, high-end residential properties in prime central London remain popular with individuals. Outside of these key markets the picture is less positive, and the spread between prime and secondary real estate assets has widened. In addition to the impact of austerity measures, the scarcity of debt finance from the banks has continued to constrain the investment market. While new sources of funds have started to appear, the transition from bank lending to a combination of banks and institutional lenders has been gradual. One area of activity has been the sale by banks of distressed loan portfolios – mainly to US private equity funds at substantial discounts – and this has given the market some welcome liquidity.

Following the conclusion of the 2012 Olympic Games, it remains to be seen whether Stratford will continue to be a success and become a new focus for overseas investment.

Slaughter and May We are well known for our work on high profile real estate transactions, and also for our ability to manage large transactions involving substantial portfolios and multiple parties. With real estate transactions often being complex, our key strength lies in our ability to add value by advising on the right structure for a particular project, to ensure that it meets our client’s commercial objectives in the most effective and taxefficient manner. Drawing on our expertise and resources, we are able to provide a comprehensive real estate service to investors.

For further information about Slaughter and May’s real estate practice, please contact David Waterfield, the head of the Real Estate Group

Slaughter and May David Waterfield Head of the Real Estate Group Tel: 020 7090 5388 david.waterfield@slaughterandmay.com www.slaughterandmay.com

January 2013 • Global Business Magazine • 65

london StocK exchange

london Stock exchange London Stock Exchange Group (LSE Group) today welcomes Alpha Plus Holdings plc (Alpha Plus), a leading provider of private education, to its Order Book for Retail Bonds, with the launch of its secured 5.75% 2019 retail bond, which raised £48.5 million.

19/12/2012 London stock exchange group welcomes Alpha Plus holdings plc to the order book for retail bonds, the first secured bond available to investors

The bond is secured against a portfolio of freehold Central London real estate comprising a number of its schools. Alpha Plus is owned by DV4 Limited which is advised by Delancey Real Estate Asset Management Limited. The Group owns and operates 19 high quality independent schools, nurseries and sixth form colleges throughout the UK. Sir John Ritblat, Chairman of the Board of Directors of Alpha Plus, Chairman of The London Business School and former Chairman of The British Land Company PLC, said: “We are very pleased to be the first privately held and unrated company to have issued a retail bond, as well as the first company to have

66 • Global Business Magazine • January 2013

Graham Able, Chief Executive Officer, Alpha Plus, added: “The Alpha Plus Group has developed a strategy which focuses on organic growth, strategic acquisitions and delivering a ‘Gold Standard’ educational offering for pupils. Parents choose schools on their reputation and place particular emphasis on examination results and the destinations of leaving pupils. We are delighted to have secured financing which liberates us from the restrictive covenants required by banks and which will allow us the flexibility to run the company and look for suitable expansion opportunities.”

London Stock Exchange today welcomed Fusionex International plc ("Fusionex" or "The Group") to open its UK markets, marking the start of conditional dealings in its shares and admission to AIM, today, 18 December.

States and Europe, further capitalising on the market potential within the business intelligence marketplace and most notably in the field of Big Data and look forward to our new life as an AIMlisted company continuing to build shareholder value.”

The Group's shares were priced at 150p each, valuing the company at £64.5 million. The offering raised £12 million and recognised the AIM market as an ideal trading platform for an ambitious, high growth technology business.

Jon Edwards, Deputy Head of Primary Markets - Emerging Markets, said:

Ivan Teh, Chief Executive of Fusionex commented:

18/12/2012 London stock exchange welcomes Fusionex to the Aim market

issued a retail bond with security. We believe the success of the offer is a clear reflection of the quality and strength of the Alpha Plus business, its management team and its reputation for delivering a Gold Standard in education provision. Furthermore, it underlines the attractions to bond holders of securing the bond against a high quality portfolio of London schools.”

“We are delighted with the strong support from shareholders which we believe is a positive endorsement of Fusionex’s business model, product offerings and our market opportunity.

We are well placed to continue to grow our existing business across Asia Pacific, the United

"We are delighted to welcome Fusionex to open trading on our markets today. This is the fourth IPO from the software sector this year and reflects the good pipeline of international companies choosing to list in London. AIM continues to offer ambitious, high growth technology companies an ideal environment to realise their potential."

London Stock Exchange today welcomed Kcell, the leading provider of mobile telecommunications services in Kazakhstan by market share in terms of revenue and subscribers, to mark the first day of unconditional trading in its global depositary receipts on the main market of London Stock Exchange.

17/12/2012 London stock exchange welcomes Kcell to the main market

This followed the sale of 50 million Kcell shares by Sonera Holding B.V., a whollyowned subsidiary of Kcell majority shareholder TeliaSonera AB, which raised US$525 million and reduced its holding to 61.9%.

Jan Erik Rudberg, Chairman of the Board of Kcell, said: “We are delighted that Kcell has joined London Stock Exchange, and proud that Kcell is now a publicly traded company with its depository receipts quoted on the LSE Main Market.

“We extend a warm welcome to the international shareholders who have invested in Kcell equity during the course of this IPO. We believe that Kcell offers a strong investment proposition as the leading provider of mobile telecommunications services in Kazakhstan, underpinned by the robust macroeconomic fundamentals in the country.

“As a listed company, we are strongly committed to international best practice and we will endeavour to further develop Kcell as a public company to increase value for its shareholders.”

The London markets were today opened by Lord Alliance of Manchester CBE to celebrate N Brown Group's 40 year anniversary of being quoted on the London Stock Exchange.

12/12/2012 n brown group plc celebrates their 40-year anniversary of being quoted on the London stock exchange

N Brown Group has been transformed from a small mail order company with a turnover under £9m in 1972 to one of the leading online and home shopping retailers with revenues of £753m and operating profit of £102m in 2012.

The group now has a portfolio of brands specialising in clothing, footwear and home products, including JD Williams, Simply Be, Ambrose Wilson, Jacamo, Fashion World, Marisota, Fifty Plus, Figleaves, High & Mighty and House of Bath.

Veysel Aral, Chief Executive of Kcell, said: “We are pleased that the IPO of Kcell has received such positive support from international investors and very mindful of our responsibilities to all our shareholders as we take our place as a listed company on London Stock Exchange.

“With TeliaSonera’s on-going commitment, we are well placed to benefit from the increase in mobile telecommunications content and development of data services in Kazakhstan as we strive to further grow the value of the Company on behalf of our shareholders."

Kcell has operated since 1998, and as of 30 September 2012 had approximately 12.7 million subscribers, representing a market share of 47.7%, as estimated by the Company.

Its market share in terms of revenue was 57% for the year ended 31 December 2011.

Kcell provides mobile voice telecommunications services, value-added services such as short message services, multimedia messaging services and mobile content services, as well as data transmission services including internet access. It has two brands: the Kcell brand, which is targeted primarily at corporate subscribers (including government subscribers), and the Activ brand, which is targeted primarily at mass market subscribers. The Company offers its services through its extensive, high quality network which covers substantially all of the populated territory of Kazakhstan.

Lord Alliance was Chairman of the group throughout this period until he handed over to Andrew Higginson on 1 September this year, and there have only been three managing directors of the home shopping business since the company was listed, Douglas Hand, Jim Martin and Alan White.

However, like all successful companies the credit for the growth over such a long period belongs to the staff of the business who have skilfully managed the development of the business through the whole range of economic conditions.

January 2013 • Global Business Magazine • 67

london StocK exchange

London Stock Exchange today welcomed OJSC MegaFon to open its UK markets, marking the start of conditional dealings in its Global Depositary Receipts ahead of its admission on 3 December.

28/11/2012 London stock exchange welcomes ojsc megaFon to the main market

MegaFon's shares and GDRs were priced at $20 each, valuing the company at US$11.1 billion on admission. The offering raised US$1.7 billion, making it the largest Russian company IPO in London since 2007.

MegaFon is Russia’s 2nd largest mobile operator with c.63m subscribers, representing a market share of over 27% as of 30 September 2012 (according to AC&M Consulting), and the largest operator in the mobile data segment since 2008, a market which has grown at a CAGR of over 44% from 2009 to 2011 (according to AC&M). The Company believes it is well positioned to exploit potential further growth in Russian mobile data and value added services as smartphone and 3G penetration catch up with Western European levels. It operates an extensive 3G network in Russia, offering high performance and service quality, and was the first of Russia’s major mobile operators to offer LTE/4G high-speed mobile broadband data services to its clients.

London Stock Exchange welcomes The UNITE Group PLC, the UK's leading provider of student accommodation and constituent of the FTSE250 index, to its Order Book for Retail Bonds, with the launch of its 6.125% 2020 debut retail bond, which raised £90 million.

With a portfolio worth £1.3 billion, UNITE delivers high quality modern homes to over 42,000 students in 130 properties in 23 UK cities

13/12/2012 London stock exchange welcomes The uniTe group PLc to the order book for retail bonds

Mark Allan, Chief Executive Officer, The UNITE Group PLC, commented: "We are delighted to have accessed a new source of finance and diversified the profile of our debt. We believe that the positive response from investors, enabling us to raise more than our initial target, demonstrates the strengths of UNITE’s mature business model and its record of income generation.”

Gillian Walmsley, Head of Fixed Income at London Stock Exchange, said: “We are delighted to welcome The UNITE Group’s retail bond to market. ORB continues to go from strength to strength with almost £1.5 billion raised on the platform this year alone. We have seen a growing number of recent issues from a diverse range of

68 • Global Business Magazine • January 2013

To mark the occasion Chris Gibson-Smith, Chairman of London Stock Exchange welcomed Ivan Tavrin, CEO of MegaFon to open trading in London this morning.

Chris Gibson-Smith, Chairman of London Stock Exchange Group, said: "We are delighted to welcome MegaFon to London Stock Exchange today. London remains a deeply attractive destination for Russian companies seeking access to public markets, and Megafon’s offering shows that the City’s ability to supply substantial equity capital to ambitious international businesses remains strong."

Ivan Tavrin, CEO of OJSC MegaFon, said: "We received high quality institutional demand from all regions in which the securities were offered and the successful pricing of our IPO today is a clear endorsement of MegaFon’s investment case and reflects investor appetite for the Russian mobile data growth story. On behalf of the Board I welcome all our new shareholders and look forward to delivering further profitable growth and value creation as we continue to leverage our leadership in mobile data to exploit the significant opportunities we see ahead.”

companies, demonstrating the continued appetite from the private investor community for tradable bonds.”

Chris Babington, Joint Lead Manager, Investec Bank plc commented: “This successful issuance from UNITE achieved exactly what they set out to do: they raised long dated committed capital to diversify their sources of debt funding. The UNITE success is particularly encouraging because the bond was launched at the same time as issues from two other companies, demonstrating that the market is increasingly mature and that demand for retail products that offer investors protection and attractive yields has remained strong.”

Oliver Cardigan, Joint Lead Manager, Numis Securities commented: “We are delighted to have acted on the UNITE £90m retail bond. The success of the offer underlines the attraction of this market for companies looking to stretch out their debt maturity and diversify the sources of funding. It also highlights the depth of retail investors’ appetite for strong corporate yield.

This was particularly the case as the bond offer overlapped with the successful retail bond issue by Tullett Prebon.”

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