Is there life after Brexit or concerns for the UK business?
September 27, 2016
Not too long ago news feed contained notes about Brexit – exit of Great Britain from the European Union. However, only a minimum percentage of this information concerns the offshore world. Do businesspersons have to avoid UK companies and ignore favorable offers relating to the registration of the UK structures? Alternatively, is it necessary to evaluate the comments of expertsobjectively, taking into account the enormous influence of politics? Let us try to understand a little bit on this issue in the context of values for the offshore business.
Significance of Brexit on the world stage
The UK had been part of the European Union since 1973 and its exit has certainly shaken the world’s economy and politics. After the referendum in favor of leaving the EU,comes a long process of transition from an EU-member state to the state outside the EU. This process takes at least two years and during this period, governmental negotiations will be conducted. This is what causes uncertainty, which always raises doubts and fear. However, company registration in the UK takes no more than 24 hours and it is easy to calculate how much incorporation can be done in these two years, because in this period the law and practice of the companies’ incorporation will remain relatively constant.
Now, neither the UK government nor the EU has announced the beginning of negotiations, it is just rumors, because the EU exit procedure has not yet been applied and that experience is unique for the UK. When will the procedure start? How long will the procedure take? When will the United Kingdom be completely out of the European Union? Answers for these questions are still unknown. That is why all we can do is just wait and work in usual regime: please, notice that no large bank of more than 250 currently operating in the UK withdrew its assets from the country and the pound sterling is almost back to the previous level.
What happens with the legislation?
During the EU membership, the UK has accumulated a huge database of European legislation.There are at least two ways for resolving this legal issue. First, there is an opportunity to revise the previously existing agreements. Mainly, this involves regulations in the sphere of international trading, because Great Britain will become separate from the EU economic zone. Second, there is the possibility of legislative regulation of the economy and taxation at the EU level and from the UK side.
Anyway, all the previous laws and regulations remain in force until their abolition by the new legal act. This can be direct act on the abolition of all the previously published laws, or new regulations in different spheres.The probability of the first variant is minimal, while the second sounds quite convincing.However,we will be able to study it only with the advent of such circumstances. This is national legislation concerning the establishment of companies and partnerships, used for offshore purposes. It is unlikely that Brexit will cause its changes.Especially because the business structures in the UK are not only used for trading purposes, but also for the organization of offices, joint ventures, holding patent rights, copyrights and other intellectual property.
British national legislation in the sphere of intellectual property is considered one of the most progressive in the world, as well as the British judicial system, where resolution of disputes, if they occur, will take place. And this does not depend on Brexit.
In addition, the UK is going to selectively eliminate EU standards and regulations, because the state is not coming out from the G8 and remains to be strong world’s economy and the largest financial center. Undoubtedly, a number of European standards can be saved for the convenience of further cooperation.
A popular “unpopular” policy
Undoubtedly, taxation is the issue of interest for all users of the offshore market products. In general, experts predict an increase in the tax burden on the grounds that, such an unpopular measure is widely used in times of crisis. However, this forecast has no evidence.
Similarly, it is unclear for sure whether the United Kingdom will continue to work according to European standard VAT or not. Probably the United Kingdom will not come up with anything new.
Is there a real concern for businesses?
Whether it is still relevant to create a company in the UK. There is no possibility to answer this question unambiguously.
We will reply you, that all depends on the goals that every businessperson has set while constructing an offshore structure, on contractors, and the well-balanced risks.
Despite all the uncertainty,which has come to offshore business with Brexit, the UK is still a respectable jurisdiction and to possess assets there is prestigious and profitable. Moreover, in times of crisis, government tends to attract capital inflows, and this can only be with the help of a competitive business environment. Thus, there is a strong possibility that the level of popularity for the UK jurisdiction will increase in a short time.