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PhD in Economics, LLM, Managing Partner, AMBER Law Company, Attorney at law, Honored Lawyer
Semen Khanin possesses practical experience in the areas of finance and banking law, currency regulation and control matters, investment operations, taxation. He is the managing partner of the AMBER Law Company, providing comprehensive legal support for business. AMBER Law Company is represented abroad by its two branches in Cyprus and Israel.
Semen Khanin is the team’s leading expert in taxation, banking, and finance. With over 25 years of practical experience in the Ukrainian banking system and foreign exchange control system, as well as strong personal charisma and a sense of humor, he has gained great popularity among his colleagues and clients, offering unusual and innovative approaches to matters of concern for them.
29 Lesi Ukrayinki Blvd., Office 75,
Kyiv, 01104, Ukraine
Tel.: + 380 67 325 9582,
Fax: + 380 44 285 42 99
AMBER Law Company is a multi-function team of experts each possessing significant practical experience in various fields of law and business. The joint efforts of all team members, as well as the ability to analyze all matters from multiple viewpoints, ensure the most efficient and cost-saving case solutions. Established in 2013 and based in Kyiv, Ukraine, AMBER is a rapidly developing law company with its affiliates in Chernivtsi (Ukraine), Tel Aviv (Israel) and Limassol (Cyprus). It renders a wide range of legal services offering innovative solutions to its clients, and it is always among the first who master cutting-edge technologies and up-to-date best practices. AMBER is particularly effective as an anti-crisis team in cases of emergency, when its clients require quick decision-making and a high level of responsibility. AMBER always practices a result-based approach. The AMBER team also includes highly-skilled criminal lawyers who handle defense on white-collar crimes and economic crimes. The company primarily specializes in banking & finance, tax law, corporate law, compliance, commercial litigation, criminal law.
Banking & Finance
There are Finders Agreements executed between AMBER and several foreign banks which provide that AMBER brings clients to the bank and verifies them in order to provide evidence that all taxes are duly paid in the country of their incorporation and/or where business is conducted. AMBER is constantly advising top managers of Ukrainian commercial banks on how to properly implement compliance procedures and on financial monitoring-related matters. The lawyers at AMBER are also involved in credit-related disputes and litigation.
The AMBER team renders legal advice on tax-related matters on an everyday basis by providing guidance as to correct implementation and interpretation of applicable acts, regulations, rules and administrative instructions. And furthermore, there are many similar VAT-related cases where the fiscal authorities violate the rights of clients by blocking registration of their tax notes, groundless challenges against the legitimacy of their economic transactions, accrual of additional amounts of taxes and imposition of financial penalties. AMBER clients also face illegal seizures by so-called VAT limits (the term invented by criminal elements and adopted by employees of the Ukrainian fiscal service).
AMBER has rich experience of providing legal assistance in the area of corporate law and corporate disputes pursuant to multi-level businesses with a complex ramified structure. Top corporate experts of the AMBER team possess serious practices in the protection of minor shareholders, handling conflicts between shareholders in legal entities incorporated in Ukraine and other jurisdictions.
AMBER Law Company acts as an external counsel for several Ukrainian and foreign banks. As combating illicit enrichment and money laundering is one of the main global development trends at the present time, paying close attention to beneficiaries as a result, one of the current key practices of AMBER is provision of legal support for the development of protective instruments clearly structuring the admissibility of relevant financial transactions and protecting its clients from possible penalties. Such instruments are also helpful for conflicts of interests, market abuse, the “Chinese Wall” approach (strict differentiation of powers), insider lists, watch lists and lists of restrictions, complaints processing and litigation, violation of rules, etc.
The AMBER team possesses significant practical experience in commercial litigation related to disputes arising from business transactions performed by its clients. It practices a client-focused approach based on achieving efficient and cost-saving solutions to complex commercial disputes in diverse industry sectors, including, in particular, disputes over complex construction contracts and/or implementation, ownership, recovery of debts for goods delivered/services rendered/works completed, corporate disputes between shareholders and/or partners, as well as other kinds of disputes in various commercial contexts.
AMBER Law Company has broad experience of defending companies and their officials/representatives at every stage of criminal proceedings (criminal investigation, trial, appeal, cassation, execution of sentence) and at each level of the court system, or representing such companies/officials/representatives that are victims of crimes. Some criminal lawyers of AMBER also have significant practical experience of work in prosecution services, which means they definitely know how the system works from the inside. They are able to anticipate all possible legal nuances and to react appropriately so as to ensure that clients are always protected from violation of their rights. AMBER Law Company is mainly involved in rendering legal assistance on white-collar crimes and business-related crimes.
Deoffshorization and Transparency: An Escape Guide
The Sleep of Reason Produces Monsters
Offshore, as is generally well known, is not a dirty word. It’s just that one territory provides a more preferential tax regime than another. Those who lose taxpayers and their share of tax revenue are angry and mischievous, giving the word “offshore” a toxic connotation. Offshore, like tax planning, is not a crime at all. Criminals are only those who break the current law. The rest are competent specialists, armed with knowledge, experience and skills, who are trying to reduce the tax burden legally, considering schemes/structures of business and differences in the legislation of various countries. The largest countries in the world, namely the G20, decided to put an end to such planning, describing it as aggressive.
The things that the largest countries have to do to in their fight! We can recall the initiatives of the OECD, the BEPS plan, the so-called tax amnesty and the exchange of tax information, the register of beneficiaries, transfer pricing, CFCs, actual presence, various kinds of confirmations of tax payment and the origin of funds, declaration of income and expenses, etc. In this merciless battle, they somehow forgot what a tax is. And a tax means funds forcibly collected from individuals and enterprises to ensure the state’s activities. And their total size is fundamentally important. Exceed a certain bar — and work immediately turns into slavery. Man is doomed to work in order to live, and to live in order to work.
Unfortunately, this milestone has long been irretrievably passed. The state, being, in fact, just a group of people, management, which received the country to control over it, is diligently trying to win over not only the entire bureaucracy and members of their families, but also all hired employees (+ members of their families), including private companies, promising them unprecedented social standards by robbing employers. With the allegedly democratic structure of modern society, employers are in a clear minority. Constituting no more than 1% of the world’s population and despite their billions, they are more and more on the hook of the state machine.
At first, while the state machine was being formed, employers tried to bribe, negotiate, and appoint state management. But no matter how much you feed the racketeer, you should anyway. Even the managers appointed by the oligarchs, eventually, like arachnids (spiders), begin to engage in matriphagy, that is, they feed on the juices of the mother who gave birth to them until her death. Officials no longer want miserly handouts. Incorrectly interpreting state interests, they are trying to take everything in order to manage everything. As the saying goes, you can’t earn big money — you can only take possession of it. Employers, being a scattered force, and sometimes trying to profit from the problems of a competitor, lost their battle completely.
And the press, which was held on counterweights, broke off and rapidly flies down, kneading everything under it. A certain collective state reason, united in the G20, only substitute mugs in order to collect freshly squeezed juice. Instead of chasing and putting separate jurisdictions on the FATF blacklist, the evil genius came up with a much more effective tool — banks. In fact, control over banks is control over any form/structure of business, regardless of jurisdiction. And it turned out to be extremely easy to control banks at the expense of correspondent banks. Today, a pair of currencies — the dollar and the euro — occupy almost 85% of international savings and payments, and control over transactions in these currencies enables control of the world.
Offshore banks were the first to fall in such a struggle, deprived of the opportunity to open correspondent accounts. SWIFT surrendered, revealing data on transfers to American intelligence. And slowly, step by step, the rest of the world lay down. You can create any structure, any form of ownership, but go open an account for it, and then make a payment in dollars or euros. With such a simple but very effective means, the G20 has achieved a situation where only a resident can open an account, primarily a corporate one, in the country of their residence. Attempts to find exotic jurisdictions where banks still supposedly can do something, or go into cryptocurrencies only briefly prolong the agony, dramatically increasing the risks. Moreover, the supervisory authorities are vigilantly watching that each company is a fully-fledged resident with residents in the form of hired personnel, shareholders, beneficiaries, and God forbid, does not act as a hidden offshore for an individual/legal entity from another country. This is the kind of transparency we have obtained, dear comrades.
Behind the scenes, the G20 solves another problem. In the new reality, the ability to have foreign representative offices with accounts in foreign banks, with an eye on the requirement of actual presence, is a task feasible only for the largest global businesses. There are a few thousand such companies in the entire world, hardly more. The rest of international business must return to local business, delivering goods/services to the border of their state as much as possible. Megamonsters in this way “vacuum-clean” out of the blue the lion’s share of income, and the G20 will milk them on their own without special searches and efforts. What is happening to us now, neither George Orwell, nor Stephen King, nor anyone else could have foreseen.
Are there still loopholes in this web of madness that will, sooner or later, throw the world back, destroying business, the banking system, and capitalism itself to the ground? (As a refresher, capitalism is an economic system of production and distribution based on private property, legal equality, and free enterprise). Perhaps, yes. Of course, the way out is not cheap, but what is cheap now? And this way out is the creation of fully-fledged foreign companies with local staff, directors, shareholders, and even beneficiaries.
Of course, there is a subtle aspect here. For the role of a shareholder/beneficiary, it is desirable to find a resident sibling of the desired country or change the citizenship of the real beneficiary. But if there are no brothers in the desired country, and the real beneficiary does not want or cannot change citizenship and place of residence, you can only find fiduciary shareholders/beneficiaries so that neither banks nor other authorities can feel the fiduciary nature of such relations. Today, such an unrelated foreign company that can look like an ordinary non-resident company is the only way to get out of the lair of local banks, taxes, and laws. And I really want to get out. And the question is not only and not so much in taxes, although, of course, in them.
Our country is one of the few in the world where there is still currency regulation, and its own currency is not freely convertible. That is, it is not enough to earn money by having paid all kinds of taxes. If you intend to use them abroad or transfer them to hard currency, be kind enough to go through a number of formalities, in fact, which are a hidden additional tax and a deterrent. What can we say about the condition of our banking system with a portfolio of NPL (bad loans) of 50% on average in the banking system and other problems!
But the real misfortune is not even this, but the lawlessness of law-enforcement, which has acquired an unprecedented scale. If a successful company has not become a defendant in a dozen criminal cases in a year, has not gone through a search, or has not got into a legal dispute with state authorities, it means that the American embassy is behind it. Now, it is no longer balance and reporting, but the register of court decisions is the company’s calling card. Law-enforcement officers interpret the powers entrusted to them so deftly that, going to work every day, the entrepreneur does not know who he is: whether they are financing terrorism, stealing electricity, cheating on VAT, or smuggling potent substances. Only an immediate search will reveal everything.
It is worth noting that Ukrainian business is extremely toxic. And not at all because there are only criminals in the country. This toxicity is created by law-enforcement officers with their insane activities and, accordingly, millions of requests abroad, from which banks and other institutions are horrified, being unable to separate the wheat from the chaff. Cyprus, Spain, Poland, Czech Republic, Switzerland, Singapore, Hong Kong, Great Britain, Ireland, habitually offshore US states, not to mention the classic offshore jurisdictions or the Baltic States, which suffered the most, are no longer welcome to us. They shy away from payments to/from Ukraine, fearing that tomorrow they will receive a request within the framework of the fight against the financing of terrorism.
Summing up all the difficulties and problems, adding up the pros and cons, tax regulations, territorial remoteness and so on, I would most likely choose Switzerland. I will try to briefly explain why:
- Reliability of the banking system;
- Lack of currency regulation;
- Integration of Switzerland into the SEPA (Single Euro Payments Area) euro transfer system;
- Swiss franc as a rescue currency;
- Ease of opening/running a business;
- Simplicity of the tax system;
- Moderate tax rates.
Let’s stop and have a detailed look at them. Depending on the location of the company, the general income tax rate, including the federal, cantonal and municipal levels, varies from 11.9% to 21.6%. The standard VAT rate is 7.7%, but reduced rates of 2.5% and 3.7% apply for certain goods and services. And by comparison, for individuals: in relation to annual income in the form of wages of CHF 150,000 for a taxpayer without a family, the total effective tax rate, including federal, cantonal and municipal, will be about 9% in Zug, 13% in Zurich, 14% in Lucerne, 16% in Geneva, and 18% in Lausanne. There are no CFC (Controlled Foreign Corporation) rules in Switzerland. Tax is withheld from dividends paid at the rate of 35%. And, of course, legal entities and individuals there have the right to a preliminary tax assessment of planned projects.
- Extremely correct behaviour on the part of the law-enforcement system;
- Well-established judicial system;
- Stability, high rating and neutral status of the state;
- High awareness and education of citizens, social standards, and excellent pension provision.
The only drawbacks, perhaps, include the obvious difficulty of obtaining citizenship, a residence permit, the right to work, tax residency, or finding/paying for local beneficiaries/shareholders.
By way of conclusion, I will say only one thing: survival is the ability to change. In biology and in business. Let’s not forget about this.