The International Tax Implications of Brexit: An Interview with Jeremy Cape

The International Tax Implications of Brexit: An Interview with Jeremy Cape

This is the ninth in our series of articles looking at some of the topics to be discussed at our November 2018 conference, Beyond Borders: International Taxation into 2020. This is an exclusive interview with Jeremy Cape who will be talking to us about the international tax implications of Brexit. Book your early bird ticket HERE before it’s too late!

Jeremy Cape, a Partner with Squire Patton Boggs in the UK, will join us in November 2018 and tell us all about what he thinks will happen to the international tax sector as a result of Brexit.

We reached out to him to get a preview of his thoughts on this and other matters, and here’s what he had to say!

Taxlinked (TL): How did you become interested in international taxation?

Jeremy Cape (JC): I qualified as a solicitor in 1999 and was originally focused purely on UK domestic tax matters. However, in the course of working on a number of deals, I found myself touching on international tax issues, and thought those issues were far more intellectually stimulating, and enabled me to be more creative, than the purely domestic issues. That said, being an international tax specialist is no excuse for not striving to be a brilliant lawyer in the jurisdiction in which one is primarily qualified. I wouldn’t claim to be brilliant, but some of my practice is purely domestic, and I enjoy helping UK clients with tax issues but who do not have an international tax issue for me to solve.

TL: What has been your greatest professional achievement to date?

JC: Seeing the success of numerous tax associates who have worked for me over the years.

TL: What are some of the main trends in international taxation that have caught your eye during recent years?

JC: I thought the brief dalliance of the US with the destination-based cash flow tax was fascinating. BEPS was a remarkable achievement, but I genuinely don’t know how the current system, and the current fetish for “value creation” can adapt to the challenges of the modern economy. This includes digitalisation, artificial intelligence, the blockchain and the rise of the robots, but also more mundane issues. And I’m still surprised in the age of climate change, that the majority of tax systems often still require directors to fly offshore to attend board meetings to avoid accidental residence.

TL: How will Brexit affect international taxation? What scenario would be the best for financial service providers and businesses in general?

JC: Hard to say (at least, at the time of writing). Although direct taxation is a member competence, decisions of the European Court of Justice have certainly had a significant impact on the design of the UK tax system. Ironically, the required changes have generally made the UK tax system more attractive for international business, for example, resulting in the dividend exemption. Although I’m generally rather dismissive of the need for corporation tax reductions and tax incentives, in a “no deal” scenario, I am beginning to wonder if the UK may not be best served by going down a radical low-tax route, if its democracy can stomach the short-term consequences.

TL: What are some of the best tax opportunities available to individuals and companies in the developing world? Are there any specific countries or regions that are setting themselves apart?

JC: The key thing for a business looking to invest in the developing world is certainty. It is easier to advise a client looking to invest in a country that has a clear and mature tax code, an honest and transparent revenue authority, an independent judiciary and a non-populist government. Tanzania is a country that has set itself apart in recent years, and not in a good way.

TL: What should businesses take into consideration when planning for the recently introduced value-added tax (VAT) in the United Arab Emirates?

JC: The key thing is to understand that VAT is not a simple tax and is highly dependent on contractual arrangements. In my experience, a number of businesses have seen VAT as purely a matter of invoicing and accounting. VAT is highly litigated in the EU, and I expect it to be an ongoing area of contention and uncertainty for many, many years.

TL: Is there anything else you would like to share with our members and conference attendees?

JC: Looking forward to being back in Cyprus!

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