While India is yet to sign a final agreement with the United States for the Foreign Accounts Tax Compliance Act (FATCA), close to 1,000 Indian financial institutions and their overseas units are believed to have already registered with the United States tax authorities under this new regime. FATCA compliance had its genesis when the US Treasury initially announced in 2012 that it was engaged with more than 50 countries and jurisdictions around the world to improve international tax compliance and implement FATCA. Since that time, many intergovernmental agreements (“IGAs”) have been signed and released by the US Treasury. Current news shows that a Model 1 IGA is treated as “in effect” by the US Treasury with India as of April 11, 2014. The US and Indian governments have reached an agreement in substance, and India has consented to disclose this status. In accordance with this status, the text of such IGA has not been released, and financial institutions in India are allowed to register on the FATCA registration website consistent with that treatment of having an IGA in effect, provided that the jurisdiction continues to demonstrate firm resolve to sign the IGA as soon as possible.
Meritas, an established global alliance of independent, full-service law firms (of which NM&M is a part of), is currently holding its annual meeting in Denver, Colorado. Today, Steve Dubner, the economist, author, speaker and podcaster, told Meritas attorneys the value of collecting data, evaluating the data without preconceptions (have fun with that), and how to use that data and analysis in a useful way. Steve’s insight and ability to explain complicated concepts is truly refreshing. Think Like a Freak!
International Business Transactions and Mitigation of Seller’s Risk: Standby Letters of Credit and Harmless Error
A standby letter of credit (“SLC”) is a common way for a seller of goods to mitigate his or her risk in a transaction where the seller is sending goods abroad and either the buyer is not amenable to resolving disputes in the seller’s home jurisdiction or the seller has doubts about the buyer’s credit worthiness. SLC’s allow the beneficiary, the seller here, to collect payment directly from the SLC’s issuer in place of chasing a defaulting buyer. SLCs are thus analogous to payment insurance. In order to compel the issuer to honor a payment request, the beneficiary is required by the issuer, and by New York law, to comply strictly with all the terms and requirements of the SLC before a claim is honored:
The post below is authored by Stuart J. Freedman, Esq.
Many businesses use promotions based on sweepstakes or contests to stir up customer interest and/or add names to their mailing/contact lists. For the unwary, doing so can get you into a great deal of legal difficulty.
Being “Patient” is Now Off the Table as Janet Yellen Issues the Fed’s March Statement – Interest Rates Likely to Rise By Summer’s End
While recognizing continued conflicting market data, the Fed feels confident enough to signal that interest rate increases are in the offing. In her statement yesterday, Fed Chair Janet Yellen acknowledged strong job creation, continued growth, and healthy consumer demand in the United States, but contrasted that against a global collapse in oil prices (under US$45/barrel) and a rapid run-up in the dollar (US$1.08 v Euro). Those conflicting forces seem to keep economic growth is still below the Fed’s targeted inflation rate of 2%. Yellen’s statement included the following comment: “The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium-term.” The “medium term” is likely to mean the next three to six months, leaving the possibility of a rate increase in June, but more likely September, particularly if the targeted inflation rate remains below 2%. “This change,” Yellen said, “does not mean that an increase will necessarily occur in June, although we can’t rule that out.”
Even though experts seemed to anticipate Chairwoman Yellen’s remarks, the market moved significantly yesterday, with the Dow dropping about 150 points from the opening bell up to the time of the Fed’s statement, then rising over 250 points from its previous close – a swing of almost 400 points during the day. The NASDAQ and other US markets moved in a similar fashion. In terms of the global economy, the Fed continues to pay attention to the dollar. While great for US travelers abroad, the continued strengthening of the US dollar continues to hinder US exports as their products become more expensive. The growing US economy, the stronger dollar and the dropping oil prices will test Chairwoman Yellen navigation skills. Stay tuned……
This week, in the REWIND of international business news, we discuss Google possibly violating antitrust laws and more trouble for Airbnb.
Yet another regulatory body may question whether Google violated antitrust laws.
European authorities began an inquiry into Google’s practice of bundling apps with its Android operating system last year. It seems that the inquiry has given some ammunition to at least one of Google’s rivals to seek a similar inquiry from another regulator. Yandex, Russia’s most popular search engine, has asked Russian authorities to investigate Google’s practices after alleging that vendors were unable to pre-install Yandex onto Android devices.
Airbnb may be ready to check out in Singapore.
Singapore is the latest sovereign to scrutinize the legality of Airbnb’s offerings. Airbnb facilitates the short-term rental of personal residences in lieu of a hotel. Existing regulations in Singapore prohibit the rental of a personal residence for less than six months. Many other countries and cities around the world impose similar restrictions, or require hotel taxes to be paid for rentals of the type facilitated through Airbnb. Singapore’s Urban Redevelopment Authority is soliciting public feedback regarding the existing regulations. Singaporean regulators acknowledge the benefits provided to homeowners (primarily an opportunity to earn extra cash) as well as the drawbacks of residential neighborhoods becoming hotel districts.
In this week’s REWIND of international business news,
- The U.S. Copyright Office released a report last week detailing its findings on, and recommendations to improve, what it calls “the aging music licensing framework.” Acknowledging that many in the music industry consider the licensing system to be broken, the “Copyright and the Music Marketplace” report undertook an exhaustive review of the music licensing process, including a focus on music steaming services. The study indicated a finding of consensus on four issues across the industry: (1) creators should be fairly compensated; (2) the licensing process should be more efficient; (3) market participants should have access to authoritative data to identify and license sound recordings and musical works; and (4) payment and usage information should be transparently available to rightsholders. The Copyright Office made four recommendations to address issues in the licensing system: (1) regulate musical works and sound recordings in a consistent manner; (2) extend the public performance right in sound records to terrestrial radio broadcasts; (3) fully federalize pre-1972 sound recordings; and (4) adopt a uniform market-based ratesetting standard for all government rates. The Office also offers recommendations on changes to the government’s role in the licensing process, detailed at length in the report. While many in the music industry seemed initially receptive to the report and its findings, there is concern that the recommendations may increase costs to music streaming services, and that the recommendations still do not go far enough to fairly compensate artists.
- Chipmaker Qualcomm, Inc., is unhappy with new policies set by the Institute of Electrical and Electronics Engineers (“IEEE”), and as a result has indicated it is rethinking its participation in the Institute. The IEEE sets industry standards for Wi-Fi, including the royalty rate paid by companies such as Apple, Inc., and Microsoft Corp., pay to companies such as Qualcomm to use Wi-Fi on their devices. Patent owners and their licensees are divided on whether royalty rates should be based on the wholesale price of the smart phone, tablet, or other device that contains the chip, or if the rate should be based on the percentage of the relevant chip at issue—a difference that can have significant consequences for the patent owner given that smart phone and devices typically costs hundreds of dollars, while chips may cost only tens of dollars. In addition, the newly approved rules would limit patent holders such as Qualcomm from seeking injunctions or court intervention against licensees not properly paying the royalties. For its part, the Department of Justice has also concluded the rule changes will favorably benefit competition and customers. Without a doubt, as the demand for Wi-Fi and other means to send and receive data on mobile phones and devices continues to increase, the policies adopted by the IEEE will continue to have significant impact on its members.
- Australia’s Senate passed the Intellectual Property Laws Amendment Act of 2015, which introduces several reforms designed to better protect the rights of intellectual property holders. Among the changes, the Act permits for a single patent application and examination process for innovators trying to obtain patent protection for the same invention in both Australia and New Zealand. In addition, the Act implements a protocol of the Word Trade Organization, permitting generic drug manufacturers to manufacture patented drugs—i.e. those that are typically very costly—and export those medicines in instances where a developing country is experiencing a particular health epidemic.
The European Central Bank announced today an economic stimulus program designed to finally get the EU economy off its haunches. Will it work? The major stock markets were buoyed by Mario Draghi’s announcement on Thursday, with the DAX up 136, the FTSE100 up 69, the DOW up 260, NASDAQ up 83 and the S&P 500 up 31. However, the malaise in the EU is more broad-based than may be resolved by the adoption of a QE monetary policy intended to make credit more readily available. Significant unemployment exists in southern EU along with overspending. Of real interest is how long Germany and Greece at opposite ends of the EU economic spectrum, as well as those countries in between will be able to hold the course. How long will the populace in Italy, France, Spain, Greece and even Ireland support spending cuts and tax increases to eliminate their debt?
Draghi’s proposed stimulus program looks to buy bonds at the rate of 60 Billion Euros a month, up to an amount of 1.1 Trillion Euros. The announcement has already affected the value of the Dollar vs. the Euro, which had been in continuing slide for some time. The Dollar hit an eleven-year high against the Euro today. While the cheaper Euro will make European goods cheaper for Americans, it will likely have a continuing negative effect on US exports to the EU. Notwithstanding the impact on US exports, it seems that the markets welcomed Draghi’s action today with the hope that the EU members were finally able to come together to address their stagnating economy. Let’s hope that they can keep it together.
Melinda Fellner Bramwit’s video series wraps up this week as she discusses the details behind the streamlined filing program for non-residents with offshore assets.
In part 5 of Melinda Fellner Bramwit’s video series, she discusses the details behind the streamlined filing program for residents with offshore assets. Make sure you check back next week as we close out the series!