The 2019 UN climate change conference began on Monday in Madrid, with leaders looking for solutions to reduce global carbon levels. Leaders originally planned for the conference to be held in Chile, but due to political instability, the conference was moved to Madrid, where it will take place over the next two weeks.
The conference started with statements from prominent leaders, notably António Guterres, the UN Secretary-General. Guterres urged leaders to select the “path of hope.” He characterized this choice as:
A path of resolve, of sustainable solutions. A path where more fossil fuels remain where they should be–in the ground–and where we are on the way to carbon neutrality by 2050. That is the only way to limit global temperature rise to the necessary 1.5 degrees by the end of the century.
The conference begins as new evidence shows record levels of greenhouse gases in the atmosphere. The World Meteorological Organization released a bulletin concluding that carbon levels were at 407.8 parts per million in 2018. Guterres mentioned the report in his remarks, noting that 400 parts per million were once considered “unthinkable.”
Global cooperation on reduced carbon emissions remains an uncertainty. US President Donald Trump ordered the US to withdraw from the Global Paris Climate deal. There is some speculation that the EU and China will be making a climate deal next September.
We are different from other law firms in the way we think, work and behave. Global in our outlook from the beginning, for six consecutive years we have been named as the world’s strongest law firm brand by Acritas, underlining our dedication to being the best. We know the value of our talent in sustaining this success and so we’re committed to offering the platform to nurture this talent.
The KPMG Global Legal Services network is pleased to announce that it has expanded its legal capabilities in Asia Pacific by establishing a new law firm in Hong Kong, known as SF Lawyers.
SF Lawyers is the newest member of the KPMG’s Global Legal Services network. It will initially commence operations with four senior hires and two senior associates joining either now or over the next few months, and with plans for around 20 lawyers in the first year. The four senior hires are Shirley Fu, Rodney Chen, Leo Tian and David Murray, and they will be supported by Alex Ma and Sherman Wong as senior associates. Brief details of the senior hire profiles are included below. An additional launch of legal services in Shanghai is expected in 2019.
Honson To, Chairman of KPMG Asia Pacific and China, says: “We warmly welcome SF Lawyers as the newest member of the KPMG Global Legal Services network, which has grown by 30 percent in 2018 alone, and has significant growth ambitions just beginning to be realised across the Asia Pacific region.”
“With increased global connectivity and the digitalisation of many business functions, SF Lawyers will be uniquely positioned to deliver on the needs of both domestic clients (including going outbound) and multinational clients entering or transacting in the Chinese market. Working in conjunction with KPMG, SF Lawyers will provide clients with legal services in key areas such as M&A and deals, and infrastructure projects. It will also offer technology enabled legal services, while leveraging significant investments in robotics, artificial intelligence and other technologies developed globally and in China through the KPMG Digital Ignition Centre.”
“The firm will also help provide clients with global legal solutions, leveraging our legal services practices across 76 jurisdictions, together with KPMG’s presence in 154 countries around the world”, To adds.
SF Lawyers will be operating in association with KPMG Law in Australia, which is led by Stuart Fuller, the former Global Managing Partner of King & Wood Mallesons. Fuller has recently moved to KPMG where he occupies the role of Asia Pacific Regional Leader for Legal Services.
Fuller says: “We are excited about the association between KPMG Law in Australia and SF Lawyers in Hong Kong, which is reflective of the increasingly important trade and business flows between the two jurisdictions. We are not trying to be a traditional law firm. Our approach is different, with a focus on offering our clients integrated global legal advice and solutions, where we are able to work seamlessly with existing KPMG clients who are looking for local and multijurisdictional counsel. As someone who has lived and worked in Hong Kong for 6 years, I am proud to see SF Lawyers as the newest entry to the network in Asia.”
Global law firm White & Case LLP has advised First Abu Dhabi Bank P.J.S.C., Goldman Sachs International, HSBC Bank plc, Samba Capital & Investment Management Company and Standard Chartered Bank, as managers, on Samba Funding Limited’s issuance of US$1 billion Notes due 2024 under its newly established US$5 billion Euro Medium Term Note Programme.
“This issuance represents Samba Bank’s successful entrance into global debt capital markets and we were well-placed to advise the investment banks based both regionally and internationally on the establishment and issue under the new programme,” said White & Case partner Debashis Dey, who led the Firm’s deal team.
Samba Funding Limited is a wholly-owned subsidiary of, and the Notes are guaranteed by, Saudi Arabia-based international financial services provider Samba Financial Group.
The White & Case team which advised on the offering was led by partner Debashis Dey (Dubai & London) with support from counsel Xuan Jin (Dubai) and associates Michael Byrd (London) and Sarah Altukhaifi (Riyadh).
The United States will become the first country to leave the Paris Agreement in one year.
The Trump administration announced its decision to withdraw from the global pact two years ago but just filed the official paperwork earlier in the week.
The Paris Agreement was officially agreed to by every nation on the planet in 2015 and outlines a basic framework on how to address climate change on a global scale.
The move to withdraw is part of an ongoing effort by President Trump to appease corporate interests and financial concerns in the name of “red tape reduction”.
All of this comes at a time when scientists are urging rapid action to avoid the worst impacts of the climate crisis. On Tuesday, 11,000 scientists officially declared a global climate emergency.
“Scientists have a moral obligation to warn humanity of any great threat,” said Dr Newsome from the School of Life and Environment Sciences. “From the data we have, it is clear we are facing a climate emergency.”
While concerns about global warming were first published in 1912, it wasn’t until the United Nations Intergovernmental Panel on Climate Change released its first report in 1990 that the world’s scientists united in their warnings of danger.
The vast majority of climate scientists agree that we have roughly eleven years left to limit fossil fuel use before “untold human suffering” is unavoidable, including extreme heat waves, drought, floods, plaques, poverty, starvation, famine, and war.
While only 61% of Americans say they are concerned about climate change, 70% of Americans believe environmental protections are more important than economic growth.
Yet, the majority of Republicans in Washington are on record as skeptics of science, so the administration’s decision falls directly into the party’s orthodoxy despite the ominous warnings.
The Home Office has recently issued a factsheet indicating that freedom of movement as it currently stands will end on 31 October 2019 and that arrangements for people coming to the UK for longer periods for work or study will change. What does this mean in practice and how should employers prepare?
A draft Immigration Bill drafted published by Theresa May’s government had already envisaged an end to free movement following a no-deal exit. However, to avoid a “cliff-edge” until a new immigration system could be put in place, the Home Office planned to introduce transitional arrangements for EU, EEA and Swiss citizens and their family members arriving in the UK between exit date and 31 December 2020. Those coming to the UK for short visits for any reason would be able to enter as they can now and stay for up to three months for each entry. Those wishing to stay in the UK for longer would need to apply to the Home Office for EU temporary leave to remain within three months of arrival (giving 36 months’ permission to live, work and study) after which they would need to apply under the UK’s future immigration system (expected to be introduced from January 2021).
The Home Office announcement and further reports now indicate the shelving of these transitional arrangements to be replaced by a new immigration system immediately applicable to new arrivals following a no-deal exit. There is very unlikely to be the time and resource to put in place such a system or the legislation which will underpin it. The Home Office is already stretched and the UK’s current Points Based System took nearly four years to design and implement. We may, therefore, still end up with some form of transitional registration system but the Government’s current direction of travel suggests this is likely to be more onerous than the EU temporary leave envisaged under Theresa May. Employers who had good reason to believe that they would be able to continue to recruit from the EU with relative ease until the end of 2020 (even in a no-deal scenario), should prepare for the possibility of new hires arriving the EU from 31 October 2019 needing some form of immigration permission prior to starting work. Exactly what this will entail, including the qualifying criteria, cost and application process, remains to be seen and we will providing updates as matters develop.
In any event, the Government has made clear that an immediate end to free movement following a no-deal exit will not affect the ability of EU, EEA and Swiss citizens and their families already resident in the UK by 31 October 2019 to continue living and working here, as long as they apply for status under the EU Settlement Scheme before 31 December 2020. Nonetheless, as a precaution, employers should support their affected employees to obtain (or apply for) pre-settled or settled status under the Scheme before 31 October 2019 (or at least prior to their next trip outside the UK) to reduce difficulties on re-entry by having to prove their prior UK residence by some other means. Current average processing times under the Scheme are reasonably quick – between one and four days. Those travelling outside the UK after 31 October and before they have been granted status would be well-advised to take with them some proof that they are already resident in the UK (ideally in line with the documentary evidence recommended by the Home Office when applying under the Scheme such as recent UK payslips, an employer letter or utility bill).
UK law firms have ramped up preparation for Brexit by registering a record number of solicitors in Ireland but confusion remains about how many of them will be able to practise in Ireland and the wider EU after Britain leaves.
The Law Society of Ireland said its solicitors roll had received 1,560 applications in the year to date — more than 31 times the average annual rate in the years before the 2016 EU referendum.
Some 3,706 lawyers from England, Wales, Scotland and Northern Ireland have been registered since the beginning of 2016 as City firms scrabble to insulate themselves from Brexit’s effects.
Those include UK lawyers potentially losing rights of audience in European courts and seeing their ability to advise on European legal matters curtailed.
In August the Law Society of England and Wales warned that the legal sector in the UK could face a £3.5bn hit as a result of a no-deal Brexit.
“Typically, major international commercial law firms are the source of these transfers, in some cases hundreds from one firm,” said Ken Murphy, director-general of the Law Society of Ireland. “It is an extraordinary development.”
Elite UK firms Allen & Overy and Linklaters have among the largest numbers of lawyers signed up to the Irish roll, according to the Irish Law Society, with 287 and 250 respectively. Latham & Watkins has registered 155.
However, only 981 UK lawyers hold a “practising certificate” which allows them to work in Ireland, according to the Law Society. Firms said they were waiting for the outcome of Brexit to determine whether to pay the annual cost of £2,650 per person required to take the final test.
One top-tier UK law firm said only a “handful” of the hundreds of lawyers registered in Ireland had practising certificates, because of the cost and “the lack of clarity as to whether this will actually function as a workaround in a no-deal Brexit scenario.”
In March the Law Commission in Ireland announced new hurdles for lawyers hoping to rely on Irish practising certificates after Brexit, including requiring firms to have a base in Ireland and indemnity insurance issued within the country.
Catherine Hudson, head of risk at Fieldfisher, said: “This was a surprise. A lot of people applied to be on the register in Ireland because they thought it would be a good plan B. But then the Irish Law Society published a note putting constraints on their practising certificates, suggesting they were concerned not to be used as a flag of convenience for people with no real professional connection to the republic.”
A number of firms including DLA Piper, Covington & Burling and Simmons & Simmons have opened offices in Dublin, and avoided those issues. Others, such as Fieldfisher, have merged with Irish firms to gain a permanent foothold.
DLA Piper launched a Dublin office in May and has so far recruited 11 partners, many poached from top-tier Irish firms.
Lawyers said the shift would create a more active transfer market and potential pay inflation in the traditionally conservative Irish legal market.
However Barry Devereux, managing partner of Irish firm McCann FitzGerald, said: “The large Irish law firms have always competed fiercely with each other, both for talent and for clients, so I don’t expect the entrance of US or UK law firms to have an enormous impact.”
The OECD on November 8, 2019, released its plans for a minimum tax on corporate profits, which is one element of a two-pronged approach to solving the tax challenges arising from the digitalization of the economy.
In May 2019 the Inclusive Framework agreed a Program of Work for Addressing the Tax Challenges of the Digitalization of the Economy. The Program of Work is divided into two pillars:
- Pillar One addresses the allocation of taxing rights between jurisdictions and considers various proposals for new profit allocation and nexus rules;
- Pillar Two (also referred to as the “Global Anti-Base Erosion” or “GloBE” proposal) calls for the development of a co-ordinated set of rules to address ongoing risks from structures that allow MNEs to shift profit to jurisdictions where they are subject to no or very low taxation.
The OECD’s GloBE proposal is designed to give jurisdictions a remedy in cases where income is subject to no or only very low taxation. The proposal looks to minimize tax base erosion and profit shifting by ensuring that income is not inappropriately shifted to territories that levy no or low tax rates, by ensuring that income is subject to at least a minimum level of tax, wherever that may be. This would involve the introduction of a new effective tax rate test, which would also enable stakeholders to better determine in a harmonized way how much tax multinationals pay internationally, the OECD has proposed.
In a new consultation on its proposal, which will run until December 2, 2019, the OECD has explained in detail how its proposed system will work.
According to the OECD, the four component parts of the GloBE proposal are:
- an income inclusion rule that would tax the income of a foreign branch or a controlled entity if that income was subject to tax at an effective rate that is below a minimum rate;
- an undertaxed payments rule that would operate by way of a denial of a deduction or imposition of source-based taxation (including withholding tax) for a payment to a related party if that payment was not subject to tax at or above a minimum rate;
- a switch-over rule to be introduced into tax treaties that would permit a residence jurisdiction to switch from an exemption to a credit method where the profits attributable to a permanent establishment (PE) or derived from immovable property (which is not part of a PE) are subject to an effective rate below the minimum rate; and
- a subject to tax rule that would complement the undertaxed payment rule by subjecting a payment to withholding or other taxes at source and adjusting eligibility for treaty benefits on certain items of income where the payment is not subject to tax at a minimum rate.
The OECD is proposing that the rules will be implemented by way of changes to domestic law and tax treaties. They would include a co-ordination or ordering rule to avoid the risk of double taxation that might otherwise arise where more than one jurisdiction sought to apply these rules to the same structure or arrangement.
The OECD said: “Like Pillar One, the GloBE proposal under Pillar Two represents a substantial change to the international tax architecture. This Pillar seeks to comprehensively address remaining BEPS challenges by ensuring that the profits of internationally operating businesses are subject to a minimum rate of tax.”
“A minimum tax rate on all income reduces the incentive for taxpayers to engage in profit shifting and establishes a floor for tax competition among jurisdictions. In doing so, the GloBE proposal is intended to address the remaining BEPS challenges linked to the digitalization of the economy, but it goes even further and addresses these challenges more broadly. The GloBE proposal is expected to affect the behavior of taxpayers and jurisdictions. It posits that global action is needed to stop a harmful race to the bottom on corporate taxes, which risks shifting the burden of taxes onto less mobile bases and may pose a particular risk for developing countries with small economies.”
The OECD added: “Depending on its design, the GloBE proposal may shield developing countries from pressure to offer inefficient tax incentives. The GloBE proposal is based on the premise that, in the absence of a coordinated and multilateral solution, there is a risk of uncoordinated, unilateral action, both to attract more tax base and to protect existing tax base, with adverse consequences for all jurisdictions. The GloBE proposal should be designed to achieve these objectives consistent with principles of design simplicity that will minimize compliance and administration costs and the risk of double taxation. To that end, the Program of Work calls for the consideration of simplifications, thresholds, carve-outs, and exclusions from the rules.”
The OECD intends that the GloBE proposal will operate as a top-up to an agreed fixed rate. The actual rate of tax to be applied under the GloBE proposal will be discussed once other key design elements of the proposal are fully developed, it said.
The consultation is seeking feedback on:
- The use of financial accounts as a starting point for the tax base determination, as well as different mechanisms to address timing differences;
- The level of blending under the GloBE proposal – that is the extent to which an MNE can combine high-tax and low-tax income from different sources taking into account the relevant taxes on such income in determining the effective (blended) tax rate on such income; and
- Experience with, and views on, carve-outs and thresholds considered as part of the GloBE proposal.
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