Looks Pretty Good Compared to Some Countries

Okay, from time to time, we all have complaints about airlines, airports and all things aviation. This is usually based on our own experiences, a bad in-flight meal, the galley running out of booze, having to climb over someone to get to the toilet or rude and indifferent staff.

But stop complaining. It could be worse. You could be relying on service from a national carrier operated by any of the following countries: North Korea, Sudan, Afghanistan, Cambodia or Rwanda. All of these airlines are banned from flying into the European Union because of doubts about their safety.

Then throw in carriers from Angola, Benin, Congo, Equatorial Guinea, Gabon, Indonesia, Kazakhstan, Kyrgyzstan (a landlocked country in Central Asia), Sierra Leone, Sao Tome and Principe, Swaziland and Zambia to name but a few. In fact, a total of 228 companies are banned. This makes for a pretty sorry picture. Maybe Thailand isn’t so bad after all.

Of course almost all of these countries are in Africa and none, apart from Siem Reap Airways International from Cambodia, fly into Thailand and then only into Bangkok and not Phuket. Also, of course, the European Union ban is a bit academic for most of the airlines affected since they don’t have routes into Europe anyway.

What the ban does underscore, however, is how important safety considerations are to the airline industry. This year, three new countries were added to the list of banned airlines – the African countries of Djibouti, the Republic of Congo and Sao Tome and Principe.

Thailand is not entirely without a history of such bans either. At one stage a couple of Thai airlines were grounded because of safety concerns. However, Asia, with the exception of Cambodia and some airlines in Indonesia, has been improving its record compared to Africa, the former Soviet states and some Middle Eastern countries.

At least the countries mentioned here have airports. Imagine living in a country where there is no airport! Well there are five of them. Leading the way is the Vatican City, which is plum in the centre of Rome. Then there’s Monaco, but it does, however, have a heliport for all those billionaires to drop by. Liechtenstein, likewise. Its nearest airport is Zurich in Switzerland. Andorra near Spain is the largest country not to have a facility. Its nearest airports are Girona in Barcelona and Toulouse in France. Finally there’s tiny San Marino in Italy, which also boasts only a heliport.

So it just goes to show that you can run a country successfully without an airport. Of course, Phuket’s tourist industry would be severely constrained without our airport and to be fair it’s a facility which is improving customer service and facilities virtually every month. We’re getting a VIP air terminal, a single-engine aircraft strip and, yes, you guessed it, we now have a helipad (not a heliport) about three to four kilometres south of the airport. Of course Phuket also has its own mobile helipads, those on the larger super yachts that moor off places like the Amanpuri Resort in Surin during the high season.

Finally, Phuket Airport is looking to welcome its sixth millionth visitor. It just missed out last year because of the airport closure and other political unrest in Thailand.

However, Phuket Airport has a long way to go before it matches the busiest airport in Asia, Beijing Capital International, with a throughput of almost 37 million people from January to July this year.
Suvarnabhumi in Bangkok was the busiest airport in the region, handling 22 million passengers over the same period. This, in fact represented a drop of 9.4% over the same period last year. This was the biggest drop ‘year-on-year’ for any international facility in Asia. Suvarnabhumi has certainly had more than it’s fair share of problems. Let’s hope that there are no more airport occupations, as any interruptions in service impact adversely on Phuket – the vast majority of visitors to the island still pass through Bangkok en route.

Alastair Carthew, a Phuket based writer and communications advisor.

Posted under Lifestyle, Travel & Tourism

The types of offshore bonds (sometimes referred to as professional portfolio bonds) are varied and offer different advantages to investors to match their individual requirements.

TAX FREE GROWTH OF FUNDS
The underlying investment funds linked to a bond are owned by the life insurance company. All income and capital gains which the funds generate are reinvested into units. Many such instruments are based in the Isle of Man or Guernsey (the world-leading jurisdictions for offshore insurance) and therefore don’t pay tax on income or capital gains.

TAX DEFERRAL
Because income and gains grow free of tax, the policyholder can defer any tax liability on their capital until the benefits are taken. In most countries, bonds are considered non-income producing.

TIME APPORTIONMENT RELIEF
This means that tax can be reduced proportionately for time spent as a non-resident and additional investments are always deemed to be made at the initial investment date, even if made when resident again. Regular investments are treated the same.

How it works:
The A/B Rule. A = Number of days spent in UK. B = Number of days policy has been established.

For example: Mr. Jones has a policy worth £200,000 and his gain is £100,000. He started this plan when he was offshore 10,000 days ago, and he returned to the UK 1,000 days ago.

Calculation: 1000/10,000 x 100 = 10%. Therefore, 90% of the policy can be encashed in the UK with no tax liability.

TAX EFFICIENT ACCESS TO CAPITAL VIA WITHDRAWALS
In the UK, an amount equal to five per cent of the premium paid can be taken each year, for a maximum of 20 years, without incurring an immediate income tax liability. With portfolio bonds, this avoids the necessity of selling units to obtain an income.

INVESTMENT CHOICE
A bond offers the ability to restructure and change investment policy within the bond, without changing the investment vehicle.

BETTER TERMS
As an institutional investor, life offices can generally obtain better discounts/terms from investment houses than an individual and these savings are passed on to the policyholders. For example, if an individual were to buy units in a fidelity fund, then he’d pay a 5% bid/offer spread, but this could be reduced to as little as 0.25%, if purchased via a bond.

INVESTOR PROTECTION/PEACE OF MIND
In the unlikely event that a company should go into liquidation, the Isle of Man Life Assurance (Compensation of Policyholders) Regulations Act 1991 covers up to 90% of an insurer’s liability to the policyholder. The same applies for moneys held in Guernsey, as all investments there have to be held by a secure third party custodian. There’s no upper limit to the amount of compensation that can be paid. This makes the Isle of Man and Guernsey two of the best regulated international finance centres in the world.

CGT FREE SWITCHES
By actively managing a portfolio of funds the investor can switch between funds without incurring any tax liability. Normally, if investments are held directly, any disposals incur a capital gains tax liability.

ADMINISTRATIVE CONVENIENCE
Regular valuations keep the investor informed about the progress of the bond via a comprehensive statement detailing all transactions and the value of funds held. Centralising assets based in different countries under a bond wrapper may be attractive, as on death this would only involve obtaining Manx or Guernsey Probate. A professional administration service performs all transactions, relieving the client of the burden of time-consuming paperwork.

TRUSTEE INVESTMENTS
Offshore bonds are ideal trustee investments as they’re non-income producing and offer true tax deferral and little administration burden to trustees. We’ve several trust solutions for our potential clients.

POLICY ASSIGNMENT
It’s also possible to change the policy ownership, by assignment. In general, the new policy owner can then surrender the policy, and any tax liability will fall on him. If the new owner is a non-tax paying spouse, she can offset her unused personal allowances against any gains and pay less tax. This is also very useful for university fees funding.

NON RESIDENCE RELIEF – UK EXPATS
Any periods of non-residence will be relieved of income tax on final encashment. Top-slicing relief may be used for any periods of UK residence if the tax payer is within the basic rate tax band. This may save 18% tax on any chargeable amounts.

CGT V INCOME TAX
Until recently, it has been a feature of UK tax law that individuals who made capital gains were not liable for CGT, if the gain was realised while they were ‘non-UK resident’ or ‘ordinarily non-resident’. Clause 127 of the Finance Act 1998 changed that position. Under the new rules, individuals who have been UK resident for at least four out of the previous seven tax years prior to the tax year of departure will continue to be liable for UK CGT, on disposals they make whilst non-resident, if they return to the UK within five years. The new rules apply to individuals who leave the UK after 17th March 1998 and apply to assets they held prior to their departure. If the individual is UK domiciled, the charge would be on worldwide assets.

An alternative, and potentially much safer approach, would be to contribute to investments which are not subject to CGT i.e. offshore regular and single premium life assurance policies. They’re fully portable, as the investor moves from jurisdiction to jurisdiction. In most countries, no tax charge arises until the benefits are taken.

George Lindsay, Wealth Manager at Expat Solutions

Posted under Lifestyle, Property News