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1、Global family business tax monitor 2023Branching out,building up,giving backKPMG I family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Foreword04Whats new?At a glance:Ke
2、y provisions and potential developments06Taxing family business transfers A world of differences10Case studies:Case study 1 Case study 214Family business succession in uncertain times:Key themes Branching out More business families and their assets are going global Building up Putting focus on gover
3、nance and managing family wealth Giving back Philanthropic activities are drawing more attention30Thinking ahead:Planning and communicating are critical46Summary notes by country,territory and jurisdiction 50Contacts613Global family business tax monitor 2023 2023 Copyright owned by one or more of th
4、e KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Foreword For many family businesses,long-term sustainability depends on the successful transfer of business assets and family wealth from one generation to the next.On top of the profound emo
5、tional issues these transfers entail,tax,legal and a host of other issues should be considered.Today,these issues are multiplying as the pandemics long-term effects make themselves known,long-simmering geopolitical conflicts erupt,a potential global recession looms,the consequences of climate change
6、 continue to emerge and technology opens up opportunities for new business models and ways of doing business.With all of these forces at play,where should business families focus their attention when planning for succession?This report shares some insights into their current thinking and helps to co
7、nfirm some of the experiences of business families on their most important considerations in planning the succession process.For business families and governments around the world,KPMG Private Enterprises Global family business tax monitor has regularly delivered insightful information on the implic
8、ations of transferring the family business to the next generation,both through gifting during the owners lifetime,including on retirement,and through inheritance.Since the first edition in 2014,which covered 23European countries,the report now spans 57 countries,territories and jurisdictions worldwi
9、de.In this latest edition,advisers from KPMG Private Enterprise in each covered country,territory and jurisdiction offer a snapshot of the domestic tax rules governing family business transfers see the summary notes at the end of this report for details.These advisers also provided a detailed analys
10、is of the outcomes of two case studies:one in which the shares in a family business are transferred on the owners death(inheritance)and a second in which the transfer happens during the owners lifetime(gifting).As the case studies in this report show,there are significant disparities between tax reg
11、imes on:whether a specific tax relief is available and what conditions must be met to gain that tax relief;and whether taxes are applied on inheritances and family gifts directly or through other taxes and charges,such as capital gains taxes and stamp duties.Jonathan Lavender Global Head KPMG Privat
12、e Enterprise KPMG InternationalAmid rising geopolitical tension and significant economic uncertainty,the leading business families that our advisers work with are diversifying globally and putting more focus on the sustainability of their businesses,their wealth and their communities.By doing so,the
13、y are helping to position their families for sustainable success down the generations.”4Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Domestic tax rules are
14、 only one factor helping to drive succession,investment and business planning.For broader context,this years report surveys the lay of the land for todays business families,with insights on some of their biggest risks and priorities distilled from interviews with KPMG Private Enterprise leaders and
15、advisers in selected countries,territories and jurisdictions.Based on these discussions,we found that more business families around the world are:Branching out More business families are globalizing,and family members are more globally mobile,assets being diversified geographically,and businesses tr
16、ansitioning to greener models.But as long-established global business families should know,when people,activities and interests spread to ever more jurisdictions,the tax,legal and other risks can multiply.As the pandemic lingers in certain jurisdictions,these risks can be especially heightened for w
17、ealthy families.Governments are now looking to them as a potential source of much-needed revenue to help restore finances depleted by emergency relief delivered during the pandemic.Building up KPMG Private Enterprise advisers are seeing increased rigor in the management of family wealth in many coun
18、tries,territories and jurisdictions,with more reliance on family offices and more focus on governance.The transition often occurs as new generations are brought in to take part in the familys business and wealth affairs.At this point,the familys focus often turns from running the founding generation
19、s business to managing the familys investments and capital for the long term.The business may also expand into new markets and industries in line with the next generations values.Giving back Business families have long played a philanthropic role,but the sharpening focus on transparency and environm
20、ental,social and governance(ESG)reporting(for the family business)is compelling many of them to be more public about their contributions.Part of this entails a change in how families are defining the purpose of wealth beyond capital in line with their values,social contributions and long-term legaci
21、es.They are also seeking ways to make more of an impact with their philanthropic works.We trust that business families will find this report useful while preparing for the future of your family enterprise.Olaf Leurs Tax PartnerKPMG Private EnterpriseKPMG in the NetherlandsTom McGinness Global Leader
22、Family Business KPMG Private EnterpriseKPMG International and Partner,KPMG in the UKMike Linter Global Head of KPMG Private Enterprise Tax,Tax and Legal,KPMG International,and Partner,KPMG in the UKGreg Limb Global Head of Family Office and Private Client KPMG Private Enterprise KPMG International a
23、nd Partner,KPMG in the UK5Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.At a glance:Key provisions and potential developmentsWhats newRio de Janeiro and So
24、Paulo,BrazilBrazils Supreme Federal Court recently ruled that as long as there is no complementary federal law regulating inheritance and gifts taxes,no such tax should apply at the state level if:the donor or deceased person is domiciled outside Brazil;the inherited assets are located abroad;or the
25、 probate procedure itself occurs outside Brazil.Brazils state governments are considering increasing the inheritance and gift tax rates due to the COVID-19 pandemic emergency investments.Many states have already raised these rates to the 8 percent maximum,but increases are still being debated by So
26、Paulos state government.BelgiumRecent tax case law confirms that certain real estate activities that go beyond mere passive management of real estate may qualify as an economic activity,which is one of the conditions that a family-owned business must meet for its shares to benefit from reduced inher
27、itance tax rates or gift tax exemption.ArgentinaOver the last 2 years,the Argentinian government has been consulting with key stakeholders within the government on whether to implement an inheritance and gift tax nationally or to ask each province to implement a provincial version of the tax.CanadaT
28、he Canadian government recently introduced tax relief that is intended to address certain intergenerational transfers of small business corporation(including family farm and fishing)shares where parents or grandparents could incur a significantly higher tax bill than they would,had they sold those s
29、ame shares to an arms-length party.Generally,the new tax relief provides that where an individual taxpayer transfers shares of a qualified small business corporation to a company controlled by their children or grandchildren who are at least 18 years of age,the transfer does not result in a deemed d
30、ividend to the taxpayer where certain conditions are met.Where the new tax relief applies,taxpayers undertaking these transfers may instead be able to realize capital gains(e.g.in the province of British Columbia,the 2023 combined federal/provincial top marginal personal tax rate is 26.75 percent fo
31、r capital gains and 36.54 percent/48.89 percent for dividends).These taxpayers can also potentially utilize their lifetime capital gains exemption(i.e.up to CAD971,190 for 2023),which is equivalent to the tax treatment that would apply if they sold the shares to an arms-length party.This new tax rel
32、ief was effective 29 June 2021.ColombiaThe Congress of Colombia has finalized a tax reform that applies for the 2023 fiscal year.Among these changes,the tax rate increased to 15 percent(from 10 percent)and the maximum exemptions from personal tax decreased for both inheritance and gifts.GermanyStart
33、ing in 2023,the valuation rules for real estate will change,leading to higher valuations for gift and inheritance taxation.6Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All ri
34、ghts reserved.Rio de Janeiro and So Paulo,BrazilBrazils Supreme Federal Court recently ruled that as long as there is no complementary federal law regulating inheritance and gifts taxes,no such tax should apply at the state level if:the donor or deceased person is domiciled outside Brazil;the inheri
35、ted assets are located abroad;or the probate procedure itself occurs outside Brazil.Brazils state governments are considering increasing the inheritance and gift tax rates due to the COVID-19 pandemic emergency investments.Many states have already raised these rates to the 8 percent maximum,but incr
36、eases are still being debated by So Paulos state government.BelgiumRecent tax case law confirms that certain real estate activities that go beyond mere passive management of real estate may qualify as an economic activity,which is one of the conditions that a family-owned business must meet for its
37、shares to benefit from reduced inheritance tax rates or gift tax exemption.ArgentinaOver the last 2 years,the Argentinian government has been consulting with key stakeholders within the government on whether to implement an inheritance and gift tax nationally or to ask each province to implement a p
38、rovincial version of the tax.CanadaThe Canadian government recently introduced tax relief that is intended to address certain intergenerational transfers of small business corporation(including family farm and fishing)shares where parents or grandparents could incur a significantly higher tax bill t
39、han they would,had they sold those same shares to an arms-length party.Generally,the new tax relief provides that where an individual taxpayer transfers shares of a qualified small business corporation to a company controlled by their children or grandchildren who are at least 18 years of age,the tr
40、ansfer does not result in a deemed dividend to the taxpayer where certain conditions are met.Where the new tax relief applies,taxpayers undertaking these transfers may instead be able to realize capital gains(e.g.in the province of British Columbia,the 2023 combined federal/provincial top marginal p
41、ersonal tax rate is 26.75 percent for capital gains and 36.54 percent/48.89 percent for dividends).These taxpayers can also potentially utilize their lifetime capital gains exemption(i.e.up to CAD971,190 for 2023),which is equivalent to the tax treatment that would apply if they sold the shares to a
42、n arms-length party.This new tax relief was effective 29 June 2021.ColombiaThe Congress of Colombia has finalized a tax reform that applies for the 2023 fiscal year.Among these changes,the tax rate increased to 15 percent(from 10 percent)and the maximum exemptions from personal tax decreased for bot
43、h inheritance and gifts.GermanyStarting in 2023,the valuation rules for real estate will change,leading to higher valuations for gift and inheritance taxation.7Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities p
44、rovide no services to clients.All rights reserved.JapanThere is a recent proposal to comprehensively review the current inheritance tax system to better integrate inheritance and gift taxes.In addition,the proposal also includes an adjustment to the amount of deductions available on gifts.Regarding
45、gift taxes,gifts received within the 3-year period leading up to the time when an inheritance occurs should be subject to inheritance tax.However,according to the 2023 tax reform proposal,for 2024 and later years,the above 3-year lookback period will be extended to 7 years.The 2023 proposal also all
46、ows taxpayers to claim the annual standard deduction of JPY1.1 million,unavailable under current law,in addition to the maximum total deduction of JPY25 million on gifts effected in 2024 and beyond when opting for the settlement at the time of inheritance taxation system instead of the normal calend
47、ar year taxation system.CanadaIndiaAlthough India currently has no inheritance tax,there are ongoing discussions about reintroducing one.MaltaThe time-limited tax incentive in terms of which a reduced rate of duty on documents and transfers of 1.5 percent(reduced from 2 percent or 5 percent)is appli
48、cable on the donation of company shares to qualifying family members has been extended to 31 December 2023.Hong Kong(SAR),ChinaThe Hong Kong(SAR)government is introducing a tax concession for single family offices in Hong Kong(SAR)that is expected to have retrospective effect from 1 April 2022.1 The
49、 concession will exempt profits derived by family-owned investment holding vehicles from Hong Kong(SAR)profits tax where the vehicle is held by a single family and managed by a single-family office(subject to conditions).GreeceThe gift tax rules were amended so that the donation of any type of asset
50、s(including shares and partnership units)to persons of first-degree kinship will be taxed at 10 percent of the assets value,as determined based on specific rules included in the Greek Inheritance/Gift Tax Code,with an exemption of EUR800,000.NetherlandsThe Dutch governments 2023 Tax Plan includes re
51、assessing the business succession scheme to exclude leased real estate,so it will no longer be taxed at the reduced tax rate.There will also be a broader evaluation of the effectiveness of the exemption,but there seems to be no inclination to abolish it altogether.There is a discussion of reducing t
52、he 83 percent exemption for gift and inheritance tax,which would increase the tax due when a family business transfers to the next generation.The outcome of this discussion will likely be included in the 2024 Tax Plan.MalaysiaThe 2023 budget proposed that the stamp duty on transfer of property by wa
53、y of love and affection between family members(spouses,parents and children,grandparents and grandchildren),executed from 1 January 2023 onwards,will be subject to nominal stamp duty of MYR10,provided the recipient of the property is a Malaysian citizen.The above proposal is subject to the re-tablin
54、g of the budget,which is scheduled to occur on24 February 2023.1 The Inland Revenue(Amendment)Bill 2022 is currently under review by the Legislative Council of Hong Kong(SAR).8Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG Internat
55、ional entities provide no services to clients.All rights reserved.SpainCurrent proposals may eliminate differences in tax laws between Spains different autonomous regions(Madrid and Andalusia)in order to unify the tax treatment of inheritances throughout Spain.The government also proposed to legisla
56、te tax rate increases,which include raising the personal income tax rate on capital gains to 27 percent(from 23 percent).South AfricaIntroducing a wealth tax is being discussed,with the 2022 Budget stating that the South African Revenue Service will focus on consolidating wealth data for taxpayers t
57、hrough third-party information,which would help in assessing the feasibility of a wealth tax.The High Net Wealth Unit has also been established with the aims of enhancing compliance and increasing collections from those considered high net wealth individuals.South Africas annual budget speech in Feb
58、ruary 2023 may provide further insights.SlovakiaDuring 2021,the Ministry of Economy in Slovakia introduced an action plan for small and family businesses that sets out 10 principles for creating and improving legal and administrative environment,although no significant changes were made to the taxat
59、ion of family business.ZimbabweZimbabwes government has increased capital gains tax rates to help recover financial support provided during the pandemic.South KoreaThe Korean government has proposed to reduce inheritance and gift taxes for family businesses with reference to the businesss operating
60、period as follows:For inheritance tax,the taxable value limits available for deduction would range from KRW40 billion to KRW100 billion.For gift tax,the value limit is increased for gifted properties eligible for the low tax rates of 10 percent to KRW100 billion,and 20 percent for those valued at ov
61、er KRW6 billion.Another proposal in favor of taxpayers would reduce the follow-up period for special inheritance and gift tax benefits for family businesses to5 years(from 7 years).New ZealandIn 2022,the New Zealand government indicated that it would increase its focus on preventing individuals from
62、 avoiding the top personal income tax rate of 39 percent by diverting income through lower-taxed entities.Proposals introduced during the year included amending the dividend rules so that the sale of company shares by a controlling shareholder(more than 50 percent shareholding)will be treated as a t
63、axable dividend to the extent that the company has undistributed earnings at the time of sale.In response to concerns around the wide scope of this proposal and tight implementation timeframe,officials recommended that the changes not proceed for now.However,this reprieve is likely to be temporary.P
64、ortugalAs of 1 January 2023,a new rule entered into force establishing that short-term gains arising from the sale of companies shares are subject to the progressive tax rates(up to 53 percent)whenever the shares have been held for less than 365 days,and the taxable income of the individual is EUR78
65、,834 or more(the last tax bracket).The acquisition cost of securities acquired by donation that is exempt from stamp duty will corresponds to the stamp duty assessed in the 2 years before the donation.PolandThe Act on Family Foundations was signed by the President on 6 February 2023,and will enter i
66、nto force 3 months after its publication,which is in May 2023.The proposed legislation brings such an entity into the Polish legal system and will help Polish entrepreneurs transfer their business to the next generation more effectively.The plan includes setting favorable taxation rules that will al
67、low family foundations to claim a corporate income tax exemption for income earned by a family foundation from its activities,to the extent allowed by the Act on Family Foundations(e.g.lease,dividend,granting loans to companies in which it holds shares).9Global family business tax monitor 2023 2023
68、Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Taxing family business transfers A world of differences10Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG Internatio
69、nal entities.KPMG International entities provide no services to clients.All rights reserved.With more business families going global and seeing their members disperse geographically,inconsistencies among jurisdictions in the tax treatment of transfers during the owners lifetime(by gift)and on death(
70、by bequest)across various countries can make their business and wealth succession plans even more complicated.This report highlights the wide discrepancies in tax treatment of family businesses around the world and reflects the planning challenges that all business families face in managing the tax
71、burden associated with transferring a business.While the case studies examine the tax results in detail,a host of other factors business and personal should also be considered as part of business succession planning in order to produce the best outcome.Case studies:Highlights and takeawaysGiven the
72、wide variation in tax approaches taken by different countries,territories and jurisdictions to family business transmission,its hard to draw broad conclusions by region,size or other factors,much less make global assumptions.For example,larger,older economies tend to have tax regimes with higher tax
73、 rates and more complicated requirements for exemptions but not always.Some emerging economies have imposed significant and complex tax rules as well.Of the 57 countries surveyed for the report,18 have a specific inheritance tax2 that applies for the intra-family transmission of a family business va
74、lued at EUR10 million and 21 apply inheritance tax3 on such As business families look ahead to determine their best approach to succession,a host of personal,legal and business issues come into plan tax being one of the most important factors influencing how and when the business should be passed on
75、 to the next generation.2 After exemptions11Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.businesses valued at EUR100 million.Seventeen countries have a gif
76、t tax4 that applies for lifetime transfers of a business valued at EUR10million business,and 19 countries apply a gift tax5 on transfers of EUR100 million.Of the top 10 countries surveyed with the largest gross domestic products(GDPs),only two China and Italy have no gift or inheritance tax that app
77、lies to the transfer of a family business.Seven others the US,Japan,Germany,the UK,Brazil and Canada have taxes that apply to lifetime transfers and transfers on death.Globally,South Korea,France,the US and the UK impose the highest tax rates for transfer of a family business,valued at EUR10 million
78、 by inheritance,before exemptions.With exemptions,however,the tax due can drop to zero for each of these countries except France.In that country,exemptions can still cut the tax bill from almost EUR4.3 million to below EUR1 million.After accounting for exemptions,South Africa takes the biggest bite
79、from family business inheritances valued at EUR10 million by far.With an overall inheritance and personal income tax bill topping EUR3.5 million in these cases,South Africas tax burden far outweighs those resulting post-exemption in the next top two highest taxing jurisdictions for inheritances,name
80、ly Canada(about EUR2.2 million)and Japan(about EUR2.1 million).For inheritances of family businesses over EUR100million,however,the most expensive taxing jurisdiction is South Korea after exemptions are considered,with South Africa and the US coming second and third.For lifetime transfers of family
81、businesses valued at EUR10 million,Venezuela imposes the highest taxes globally before exemptions,followed by Spain,South Korea and France.Venezuela offers no exemptions whatsoever,so lifetime gifts in our case study can attract a whopping 55 percent tax rate.For the other three countries,the pictur
82、e changes significantly once exemptions are factored in,and most dramatically for such transfers in Spain,where total taxes on the transfer fall from over EUR4.6 million with no exemptions to just over EUR100,000 after exemptions are claimed.After exemptions,South Africa and Japan come second and th
83、ird behind Venezuela as the jurisdictions imposing the highest tax costs on business transfers by gift.Similar gift tax outcomes are seen for family businesses valued at EUR100 million before and after exemptions,with Venezuela imposing the highest taxes payable in both cases.After exemptions,howeve
84、r,South Korea is the second most expensive,followed by South Africa,while Japan becomes the ninth in this ranking.Among the various regions and even among neighboring countries,differing tax treatments can produce vastly different results.In the Americas,for example,Canada imposes only about half of
85、 the US tax before exemptions for the transfer of a EUR10million family business.After exemptions,however,the US tax burden drops to nil while the reduction in Canadian taxes is nominal.Advance planning around complex conditions is keyAs a fiscal policy,allowing entrepreneurial families to retain we
86、alth so they can invest it in profit-producing activities is known to significantly stimulate job creation and innovation,leading to broader economic benefits.Thats why many of the countries featured in this report provide tax support for business transfers both during lifetime and on death.However,
87、the support often comes with complex restrictions on holdings and activities designed to ensure the business continues and the rules are not abused to avoid tax inappropriately.No matter where business families are located,advance planning is often needed to secure the full benefits of any tax conce
88、ssions in place to facilitate the intergenerational transfers of a family businesses.3,4,5 After exemptions12Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.1
89、3Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Case study 1Family business succession EUR10 million Erik Jackson owned his family business,Jackson Networks,
90、for over 10 years.He invested EUR1 million to establish the company and has worked hard over the years to build it.The current balance sheet is shown below.The business is now valued at EUR10million on an arms-length,third-party basis(which includes EUR5 million of goodwill).All assets in the compan
91、y are used for the purposes of the business.Eriks spouse Jennifer died in 2012 and he had onedaughter,Lianne,who is 35 years old.What are the tax implications:1.If Erik unfortunately passes away in early 2023 and in his will he had requested the business be passed to Lianne,who intends to continue t
92、he business for the next 10 years or so?2.If Erik,who is getting older and wishes to retire,gifts Jackson Networks to his daughter Lianne,who intends to continue the business for at least the next 10 years or so?The gift is not related to any employment of Lianne in the business.The results for 57 c
93、ountries,territories and jurisdictions covered in this survey,before and after available exemptions,are summarized in the following pages in figures 1a,1b,1c,1d,1e and 1f.Key highlights and takeaways from the results are summarized on page 50.Jackson Networks balance sheet as at date of transferManu
94、facturing facility(real estate)EUR3,000,000Inventory EUR2,000,000Trade debtorsEUR2,000,000Cash(used in the business)EUR1,000,000Total assetsEUR8,000,000Share capitalEUR1,000,000Distributable reservesEUR4,000,000Bank debtEUR3,000,000Total liabilitiesEUR8,000,000Figure 1a:Country/territory/jurisdictio
95、n comparison of tax treatment pre-and post-application of exemptions and reliefs on a family business transfer through inheritance.This figure shows an overview of tax levied across the 57 countries,territories and jurisdictions surveyed on a family business transfer through inheritance of EUR10 mil
96、lion,before and after applying any available exemptions and reliefs.United States4,000,000*MexicoCanada 2,407,582 2,223,695 Brazil(So Paulo)77,21377,213*ArgentinaVenezuela 1,250,000 1,250,000Brazil(Rio de Janeiro)392,221392,221Jamaica*Trinidad*Bahamas*BermudaBolivia 88,246 88,246 Colombia 150,000 14
97、5,309 75,000 25 BarbadosTax due before exemptionsTax due with exemptionsEUR3 millionEUR1 millionEUR3 millionEUR3 millionEUR1 millionEUR3 millionEUR3 millionEUR1 millionEUR3 millionEUR3 millionEUR1 millionEUR3 millionEUR3 millionEUR1 millionEUR3 millionEUR3 millionEUR1 millionEUR3 millionEUR3 million
98、EUR1 millionEUR3 millionEUR30 millionEUR10 millionEUR30 millionEUR30 millionEUR10 millionEUR30 millionEUR3 millionEUR1 millionEU 3 millionEUR30 millionEUR10 millionEUR30 millionEUR30 millionEUR10 millionEUR30 millionEUR10 million29Global family business tax monitor 2023 2023 Copyright owned by one o
99、r more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Family business succession in uncertain times:Key themes30Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG Inter
100、national entities provide no services to clients.All rights reserved.In gathering insights from KPMG Private Enterprise advisers in firms worldwide,three key trends emerged that business families around the world should consider as they develop their long-term plans for their businesses and their we
101、alth:Branching outMore business families and their assets are going global.Building up Governance and managing family wealth are gaining priority.Giving back Philanthropic activities are drawing more attention.Lets look at each of these trends in more detail.31Global family business tax monitor 2023
102、 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Branching out More business families and their assets are going global32Global family business tax monitor 2023 2023 Copyright owned by one or more o
103、f the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.The case studies in this report only consider the tax treatment in one jurisdiction.When the rules of more than one jurisdiction are in play,any tax and legal planning becomes exponential
104、ly more complicated.This is the reality for the growing number of business families with assets and stakeholders all over the world.For long-established business families,globalization is part of their natural evolution as families and their businesses grow,and new generations seek new horizons.This
105、 is true not only for many families in developed economies but also increasingly in emerging markets as more family businesses mature and achieve scale.Now,however,a number of factors are driving even more business families to globalize and face the significant tax,legal and other complexities that
106、arise in the international context.Perhaps one of the biggest is increasing digitalization and,in particular,the pandemic-driven shift to remote working,which gives many business family members more flexibility to decide where they live and work.In our view,the current international tax framework is
107、 not yet equipped for this level of mobility.When the pandemic started,we saw business families wondering whether they should streamline their residences and properties in light of the movement restrictions that were in place.But what transpired was the opposite:over time the pandemic really opened
108、the eyes of many business families to the new normal,what virtual working would enable them to do and how much flexibility it provides about where they want to be.”Gavin ShawPartner Family Office&Private Client KPMG Private Enterprise KPMG in the UK33Global family business tax monitor 2023 2023 Copy
109、right owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Further,despite the economic downturn,many business families have a high proportion of capital sitting in the business waiting to be deployed.They are looking
110、at different kinds of investments to help drive better profits for the business so that it can better fund the expanding family as each generation moves forward.6Their investment choices are often being guided by younger family members.Business diversification,including by geography,often starts bec
111、ause members of the next generation may not be wedded to the core business.In some industries,this is especially true in view of todays more socially and environmentally conscious next generation.Some younger members are pressuring their families to move away from old economy industries,such as foss
112、il fuels,and put capital to better use by reinvesting in sustainable projects,such as renewable energy.Russias invasion of Ukraine,for example,has caused many families in Germany and other European countries to create fallback scenarios to safeguard a portion of their wealth in a country outside of
113、the eurozone.Today,the next generation is putting a lot of pressure on their families to exit old economy industries that can be challenged to align with an ESG-led future and that can deliver diminishing returns.As the world transitions to clean energy,family businesses are being compelled to move
114、quickly.But moving too fast can create succession and other planning issues.Where and how to invest in this fast-moving environment needs consideration.Business families should plan carefully how they navigate their move from the old economy to the new one,with input from all generations involved.”M
115、ike LinterGlobal Head of KPMG Private Enterprise Tax,Tax and Legal,KPMG International,and Partner,KPMG in the UKOver the last year,a lot of business family clients are asking questions about threats arising from Russias invasion of Ukraine,especially in countries like Germany and Poland that are phy
116、sically closer to the conflict.Some of these families are looking to move assets to more neutral locations,such as Switzerland,Southern Europe or North America.”Michael Christeleit Senior Manager,Corporate Tax Private Client&Family Offices KPMG Private Enterprise,KPMG in GermanyThis shift could see
117、a wave of consolidation in some less environmentally friendly industries as some business families sell off assets as part of an aggressive transition to more sustainable businesses.While this has significant implications for business ownership and succession,families may also have a window to benef
118、it from the tax reliefs on offer in their countries to promote greener economies.While many business families are seeking to diversify their holdings geographically so they can seize new opportunities,others are doing so to help safeguard their assets.6 Our article,“Redefining wealth in business fam
119、ilies”,explores in more detail how many business families are facing a new reality in terms of how they create wealth and allocate their capital in todays more volatile and unpredictable environment.In China,ongoing global geopolitical tensions and strict pandemic measures implemented from 2020 thro
120、ugh January 2023 have caused some business families to find ways to globally diversify their assets,even though the countrys tight foreign exchange controls mean they need to take a step-by-step approach towards diversification.And as we explore in more detail later in this section,Colombia,followin
121、g the enactment of the tax reform aimed at personal wealth in Colombia,has seen some local business families considering migrating their families and assets elsewhere.In South Africa,many long-established business families are seeking to diversify the location of their wealth in response to the gove
122、rnments recent focus on wealthy taxpayers.The countrys tax authority has set up a dedicated High Net Worth Wealth unit to ramp up collections and compliance,and its government has been assessing the feasibility of introducing a wealth tax.With people and interests in multiple countries,territories a
123、nd jurisdictions,globalizing business families face new tax uncertainties in the current economic environment.For many governments,COVID-19 emergency support measures have severely dented their finances,and some governments may be eyeing new taxes on wealth or capital to help recoup revenues.Most go
124、vernments face a difficult decision in this regard because imposing any such tax could actually impede 34Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.The g
125、overnment of Kenya is taking steps toward defining net wealth for tax purposes,for example,by integrating data from the land registry,tax filings and stock market transactions.Whether these activities ultimately enable the government to impose,assess and enforce a wealth tax remains to be seen.”Sand
126、eep MainDirectorKPMG in East AfricaColombias tax reform is focused on collecting more taxes not only with the wealth tax,but also by increasing tax rates,especially on capital gains,and by removing tax benefits for capital gains and income.Where the wealth tax is concerned,the COP3000 million minimu
127、m threshold offers room for planning by distributing some wealth with other family members.”Carlos Neira Director,Global Mobility Services and Family Business Lead KPMG Private Enterprise KPMG in ColombiaIn a way,Spains national government is aiming for harmony for those taxpayers who are subject to
128、 the various wealth taxes imposed by 15 of Spains 17regions.The solidarity tax is deductible from regional wealth taxes so that high-net-worth Spanish individuals pay a similar amount.”Xavier Aixela Director of Family Office&Private Client KPMG Private Enterprise,KPMG in Spaineconomic recovery and g
129、rowth.Nevertheless,there are fears that successful business families may be confronted with higher taxes at both the corporate and personal levels in multiple countries,territories and jurisdictions.Typically,wealth taxes are a politically easy concept to put forward but can be difficult to implemen
130、t in practice.In the UK,for example,there is a sentiment that those with the biggest shoulders should bear the biggest burden.After a closer look,however,the UKs Wealth Tax Commission concluded in 2020 that an annual wealth tax was“a non-starter.”The commission found that a one-off wealth tax could
131、raise significant revenues over 5 years.The commissions final report says,“In the aftermath of a crisis,difficult choices need to be made and there is probably more public acceptance of the need for change than in normal times.7“It remains to be seen as to how the UK,like many other countries,reacts
132、 to the need for change and take what would be seen as a brave and bold choice to introduce a wealth tax.The government of Kenya appears to believe corporations already pay enough tax and has also considered imposing a wealth tax on individuals as another source of revenue.Unlike in France,for examp
133、le,there is currently no clear system for measuring net wealth in the East African context in order to tax it.Spain is one of the few jurisdictions to impose a form of wealth tax.As a temporary measure,Spains central government is supplementing its wealth tax with an annual solidarity tax at graduat
134、ed rates ranging from 1.7 percent to 3.5percent on individuals with worldwide assets over EUR3million.The tax also applies to non-resident individuals on their assets in the country.Colombias new government is introducing substantial tax reforms to raise money to fund anti-poverty efforts,free publi
135、c universities and other social welfare programs.These include making the existing temporary tax on individual wealth permanent.As enacted,the tax will apply annually at progressive rates to the aggregate value of Colombian residents worldwide assets over COP3000 million(about US$624,000).7 A wealth
136、 tax for the UK:The Wealth Tax Commission,Arun Adani,Emma Chamberlain and Andy Summers,9 December 2020.The new wealth tax has a number of business families in the country reviewing their wealth and investment strategies to include more foreign investments.The new tax is also prompting some families
137、to consider ways to transfer wealth,for example,by accelerating what were planned as inheritances through gifts to multiple younger family member to take advantage of personal exemptions and lower graduated rates.The governments approach,however,may ultimately diminish domestic investment and impede
138、 growth,especially as there is no exit tax if Colombian families decide to move their members and their assets somewhere else.35Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.Al
139、l rights reserved.Frances unique scheme would allow employees to participate in the temporary increase in their employers profitability and turnover,on top of their usual profit sharing.This measure could prove to be quite valuable,especially with the persistent problems that family businesses have
140、retaining top talent.”Vincent BergerInternational Tax Partner Co-head of Family Office&Private Client KPMG Private Enterprise,KPMG in FranceFor example,a Greek family member who has been a non-resident for a number of years might use the incentive to return home to Greece and enjoy a stable amount o
141、f taxation within the Greek territory on any foreign source income,regardless of their level of such foreign source income worldwide.“The ATO is scrutinizing the wealthiest business families because their numbers are bigger,their structures are more complex and their activities are more internationa
142、l allowing the ATO to generate much higher collections for the same effort than they would by targeting other taxpayer groups.”Clive Bird Partner,National Tax Leader KPMG Enterprise Business&Tax Advisory KPMG Private Enterprise KPMG AustraliaRather than taxing wealth directly,France is considering a
143、 unique approach to redistributing wealth by targeting the many companies,including family businesses,that made windfall profits during the pandemic.The scheme would involve paying employees a form of dividend(rather than a permanent salary increase)to ensure they share in the companys good fortune.
144、Other governments,such as Canadas,are counting on economic growth to generate enough tax revenue to get their finances on track.Rather than raising taxes,these governments are offering tax incentives and subsidies for innovation to stimulate investment and expand their economies.Greece is also not c
145、onsidering taxing the wealthy,as the government has introduced frameworks to attract wealthy expatriates and others,for example,with incentives for taking up tax residency in the country.In addition to new immigrants,the incentives may appeal to wealthy individuals who may have left the country duri
146、ng previous periods of economic uncertainty.Other countries may be preparing for similar campaigns in the future.For example,China is introducing a new tax system focused on data and analytics,bringing together tax and non-tax information to identify non-compliance risk,especially for high-net-worth
147、 individuals with substantial capital gains and/or investment income.New Zealand Inland Revenue has sent questionnaires to the countrys wealthiest families requesting extensive information about their assets.There are also signs that governments are attempting to wring more revenue from their existi
148、ng tax bases by doubling down on collections and enforcement.The Australian Tax Office(ATO),for example,has rolled out aggressive programs targeting the countrys top 5,000 wealthiest private corporate groups(i.e.those with net wealth over AUD$50 million).Rather than conducting audits,however,the ATO
149、 is taking a“compliance and review”approach,looking at the complex activities of those wealthy families and informing taxpayers of where they may have been non-compliant or a potential tax liability they will need to report.Greece also offers two more preferential special tax regimes where,subject t
150、o conditions,a foreign pensioner can enjoy a 7 percent flat tax rate on any foreign source income,and an individual coming to work in Greece may benefit from 50 percent off their taxable base.”Christos Krestas Direct&Indirect Taxes,Mergers&Acquisitions and International Taxation Advisory Services,Pa
151、rtner KPMG Private Enterprise KPMG in Greece36Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.New Zealands tax authority is undertaking a statistical research
152、 project that seeks to calculate an effective tax rate on economic wealth for high-wealth New Zealanders and their families encompassing not only income,but also realized and unrealized capital gains.This project involves selected individuals providing extensive information to Inland Revenue at thei
153、r own cost.While Inland Revenue has assured participants that no enforcement action would be taken directly as a result of information gathered from this exercise,it will give the government extensive data to understand the overall taxes being paid by these families and inform future tax policy.”Nat
154、alie Berkett Director KPMG Private Enterprise,KPMG in New ZealandThe European Union(EU)countries and Australia have introduced mandatory disclosure rules for trusts,and new rules take effect in Canada for trusts for tax years ending after 30 December 2023.Their tax authorities will gain access to a
155、significant amount of data through these reports,including what may be closely kept and sensitive family information regarding ownership and beneficiaries.This will add to the already considerable data available to them through the automatic exchange of tax information and other transparency measure
156、s.All of these tax authorities are investing heavily in digitalization and analytic skills so they can maximize their ability to interrogate these huge reams of data and zero in on tax risk.It appears that tax complexity and uncertainty will face business families located in even one of these countr
157、ies for years to come,and these risks will spiral for families with footprints in multiple jurisdictions.The tax landscape is constantly changing creating both opportunity and risk so its always wise to monitor potential new or increased taxes and consider taking action in advance.37Global family bu
158、siness tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Building up Putting focus on governance and managing family wealth38Global family business tax monitor 2023 2023 Copyright own
159、ed by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.As business families move from one generation to the next and expand into new locations,their need to control risk expands with it.Once you have one offshore family mem
160、ber,like a child studying in the US,or asset,like a house in Portugal,international coordination is required to monitor and manage a vast range of issues,including tax,immigration,wills and estate planning,to name a few.Among the most important issues is controlling which jurisdictions family and in
161、heritance/succession laws might apply due to a birth,marital breakdown or other event.Consider the case of an international couple who married in the Netherlands but directly after lived in Ireland for many years.While the couple might understandably assume they were married under Netherlands law,in
162、ternational rules determined that Irelands quite different rules applied due to their residency there.This could significantly upset plans and legal arrangements on marital breakdown,on death or in the case of another event.Because of risks like these,its important to avoid having international law
163、apply unexpectedly and disrupt succession and estate plans.As time goes on and far-flung family members marry,have children,divorce,retire and pass away,global visibility and management becomes ever more essential.39Global family business tax monitor 2023 2023 Copyright owned by one or more of the K
164、PMG International entities.KPMG International entities provide no services to clients.All rights reserved.If your will doesnt make it clear which country,territory or jurisdictions law you want to govern the division of your estate to your children,then international rules might kick in with potenti
165、ally surprising results in terms of who inherits what.“Olaf Leurs Tax Partner KPMG Private Enterprise KPMG in the NetherlandsWhether its a family office,family governance council,family board or other structure,of primary importance is that the family as a whole is setting the direction for its inve
166、stments and operating companies in line with their values and preparing the next generation to take responsibility.“Brad Sprong Partner&Tax Industry Leader,KPMG Private Enterprise Tax,KPMG in the USFrom a tax standpoint,business succession can get especially complicated if control and decision-makin
167、g power passes to family members who live in a different jurisdiction than the founder on death.Central management and control rules imposed by many countries could apply to redetermine corporate residence for tax purposes,which can create significant tax costs.In some regions,KPMG Private Enterpris
168、e advisers are seeing more reliance on family offices to manage the complexity of the familys wealth.This can be especially valuable for globalizing families as their members and assets spread across multiple countries,territories and jurisdictions,which can create ever more cross-border risks with
169、tax,legal and asset protection being the forefront risks.Family offices can help ensure these multijurisdictional matters get appropriate attention.In its most mature form,a family office comprises the infrastructure and people devoted to managing all aspects of the familys wealth from regulatory co
170、mpliance through to tax planning and legal matters,including estate and trusts,to routine accounting,administration and concierge services.Many family offices start out with a smaller scope,often as investment managers in charge of the familys wealth who then recognize the familys need for a broader
171、 suite of professional services.These investment management teams can evolve into trusted advisers to meet these needs,coordinating the familys access to tax,legal,information technology and all other specialized support,both within and outside the family office team.Over time,they can take on addit
172、ional administrative tasks for the family,like bookkeeping,paying bills and taxes,and maintaining properties,aircraft and other vessels.Based on experience in countries like Australia and Canada,family offices tend to arise from a significant exit event.The sale of a business to a third party,for ex
173、ample,can unlock the significant amount of wealth embodied in the business,which generally results in the family needing to find new opportunities in which to invest it.Such events may also cause family members to give more thought to protecting their assets and planning their estates.Good governanc
174、e structures,advance planning and communication can help preserve harmony in the family as the transition unfolds.Further,now that the balance sheet has transitioned from an operating business to a cash box ready for investing,the business owners may not be able to rely on the same team and infrastr
175、ucture they did before as the business itself has changed hands.The family may need a new team with different specialties to focus on managing,deploying and building capital.Once the family office structure is in place,business families can gain much-needed support in achieving their objectives,espe
176、cially in the international context.In China,for example,restrictions on capital flows means many families need to develop two succession plans:one for their assets still located in China and a second for their investments offshore.Family offices can help manage the complexity of these parallel succ
177、ession plans,as well as the cash flows between those structures.Singapore has been the traditional hub for Chinese business family offices,with a skilled pool of professionals helping these families invest and set up business outside of China at the same time as they map the familys future.More rece
178、ntly,Chinese families are setting up offices in other countries,territories and jurisdictions,including the US and Canada.40Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All ri
179、ghts reserved.The US and Southeast Asia have become important destinations for business expansion and operations for Chinese private enterprises,in part because of industry-specific incentive programs designed to attract businesses to locate or relocate there.Meanwhile,Singapore and Hong Kong(SAR)ha
180、ve become attractive destinations for Chinese high-net-worth families to set up family offices because of the relevant family office tax exemption regimes.In addition,Canada and Australia are also increasingly popular,given the relatively high number of wealthy Chinese business family members educat
181、ing the next generation,and ultimately emigrating,there.“Koko Tang Tax Partner KPMG Private Enterprise KPMG ChinaFor business families that have not yet achieved the size and holdings to warrant a full-blown family office,multi-family offices can provide the level of services they need at an afforda
182、ble cost.For business families,specialized advice is crucial to help support objectives,keep family members up to speed,and view their wealth management holistically to avoid blind spots in identifying opportunity and risk.This tends to get even more important from one generation to the next as the
183、familys holdings get larger and more diverse,and the base of family shareholders multiplies.The family office structure can also serve as a robust governance framework to help mitigate risks that business families commonly face from the potential dilution of wealth to the lack of transparency to fam
184、ily conflict.These risks can be better managed or avoided entirely with clearly communicated and well understood governance structures in place.Further,if the next generation is not interested in running the family business and more interested in managing the family wealth or starting their own busi
185、ness,a family office can provide an excellent opportunity to engage them in the familys business affairs,for example,by appointing them to serve on a junior board.This can help them better understand the nature of the business,how it aligns with the familys values and what they can do to sustain and
186、 grow the familys wealth.A family office can also help ease some of the more emotional aspects of succession planning by creating open communication channels across the generations.This may help the older generations define and communicate their goals.It may also help the younger generations underst
187、and these plans and make their own goals and priorities known.Since members of the next generation often have their own trusted advisers and may not have built up trust with those of the current generation,a family office can help the two groups achieve balance.By centralizing and formalizing their
188、professional support systems within a family office,business families should be better placed to manage the workings of a family business with the familys wider interests and assets,along with the needs and desires of individual family members.41Global family business tax monitor 2023 2023 Copyright
189、 owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Giving back Philanthropic activities are drawing more attention42Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG Internation
190、al entities.KPMG International entities provide no services to clients.All rights reserved.Most KPMG Private Enterprise advisers interviewed for this report agree that business families have increased their focus on philanthropic issues over the last 10 years,using their wealth to give back to their
191、 communities and more actively publicizing their contributions.As a general trend,business families tend to get more philanthropic as the controlling founders get older.In some cases,as the founders approach retirement from the operating business,they tend to start thinking about the business more b
192、roadly and what legacy they want to leave for their descendants to build on.Once they create the philanthropic structure to support these goals,such as a family foundation,they can then connect the next generation and gain their participation on decisions on what good works the family should support
193、 or invest money in.Part of this evolution involves thinking about how wealth is defined and aligning this definition with the values of the family and its business.The family name and business are often linked in the publics mind,so the familys approach to philanthropy is important in shaping their
194、 reputation and legacy.As such,the familys philanthropy can be critical to a successful transition to the next generation.Just as attitudes in the corporate world have come to accept a companys broader social obligations beyond its shareholders,definitions of family wealth are evolving beyond purely
195、 financial wealth to encompass other contributions that can benefit the community.The recent focus on ESG issues for multinational corporations is not necessarily new for family businesses.Most have had their sights set on the long term,together with a high awareness of the social impacts of their b
196、usiness activities and the importance of strong governance structures.However,the imposition of new corporate social responsibility and ESG disclosure requirements in many jurisdictions is causing many business families to be more vocal about what they do.This can be especially true in transitioning
197、 industries.For example,a family business in the plastics or pulp and paper industry might highlight their investments in innovation to help reduce environmental harm or improve the recyclability of their products.43Global family business tax monitor 2023 2023 Copyright owned by one or more of the K
198、PMG International entities.KPMG International entities provide no services to clients.All rights reserved.By communicating their philanthropic activities,business families can not only build their legacy,but also build their current brand to attract talent in tight job markets.For the most part,toda
199、ys younger employees want to work for a business with a strong sense of purpose.By publicizing their ESG credentials,family businesses can create a competitive advantage.Many family business owners are realizing they have a strong case for differentiating themselves in the job market by talking abou
200、t the causes they support and how they give back.As a result,the familys philanthropy can help significantly boost their prospects of winning the global war for talent.“Tom McGinness Global Leader,Family Business KPMG Private Enterprise KPMG International and Partner,KPMG in the UKIn Japan,the major
201、ity of business families have always been focused on philanthropic activities.Its not new its something theyve just always done because its part of their value system.Tools like public associations(koueki-houjin tou)can help families donate wealth tax-effectively,but proper planning is needed to cle
202、ar all the hurdles and achieve the exemption.“Masayuki Sawada Partner KPMG Private Enterprise KPMG in JapanBusiness families often coordinate their philanthropicwork through a form of family foundation.These entities can be set up like any other family business,including the use of a family office,b
203、ut with operations dedicated to evaluating investment opportunities and determining how to deploy capital for various philanthropic endeavors.Depending on the jurisdiction,however,a private family foundation may not be the most cost-effective structure to achieve the familys objective.It may make mo
204、re sense to make the contribution through other institutions,like donor-advised funds,that have infrastructure already in place.In summary,business families have consistently put focus on philanthropy in step with their long-term values,and sustainability is in their DNA.Whatever causes they support
205、 and whatever structures are used to support them,a business familys engagement in philanthropic activities can provide an important avenue for helping to ensure the familys values and ideals endure from one generation to the next.8 Disruptive Philanthropists:How a new wave of modern philanthropists
206、 are shaping tomorrow,KPMG International,2021.With ESG thinking,philanthropy is no longer seen in terms of a strictly non-profit pursuits.As we explore in more detail in the report Disruptive Philanthropists,8 business families are recognizing that activities can generate profits sustainably while p
207、roducing social good.So in addition to traditional benevolent activities,many business families are seeking business models that earn financial profits while helping their communities prosper more broadly.Many jurisdictions have tax incentives to encourage philanthropic activities.These incentives c
208、an create significant opportunities for tax-efficient giving,but qualifying for them can be a burden.For example,Kenya offers a tax exemption for donations to registered tax-exempt charities.However,the amount of time it takes to apply for and receive the exemption is time consuming as long as 5 yea
209、rs in one recent client situation which can discourage people from taking advantage of the incentive.Similarly,Japan allows an exemption for donations to public associations(koueki-houjin tou),but again,the exemption is quite difficult to secure.44Global family business tax monitor 2023 2023 Copyrig
210、ht owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.For some business families,the costs and administrative aspects associated with a family private foundation may not be justified.Where the family intends on donat
211、ing private company shares,there are some donor-advised funds that accept such donations.They also appreciate what it means to own private company shares and the needs of the underlying business.Business families using this route should engage with the fund early to help ensure the donor,the private
212、 companys business and the donations implications are understood.“Dino Infanti National Tax Leader KPMG Private Enterprise KPMG in Canada45Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to
213、 clients.All rights reserved.Thinking ahead:Planning and communicating are critical46Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.The traditional advice fo
214、llowed by carpenters can apply equally well where succession planning is concerned.This means considering all the potential risks and angles before the plan is executed to avoid potential missteps,pitfalls or regrets.If an unexpected event(e.g.death)or tax change occurs,early planning helps avoid ma
215、king inadequately informed decisions in haste.In other words,no matter where in the world your family and assets are located,early,ongoing and thorough planning and preparation are critical factors than can contribute to the continued success of a family business.In woodworking and succession planni
216、ng alike,it is important to properly measure and plan before making the cut.There are indications that many business families are doing just that.For many years,ageing demographics in developed countries led us to expect a massive spike of intergenerational business transfers from Baby Boomers to th
217、eir descendants.Our KPMG Private Enterprise advisers experience to date suggests that the anticipated spike has not yet occurred.The shift is gradually starting to happen,but at a more measured pace than expected.Not every family has the same timeline and objectives.So rather than a looming surge,it
218、 now seems these transfers will occur more gradually over the next 20 or so years.In the meantime,considerable planning is being done in the background to help ensure the success of these transfers for all family members concerned.Measure twice,cut once.47Global family business tax monitor 2023 2023
219、 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Im the son of a carpenter,who always taught me to measure twice but cut once.I believe this strategy runs true in estate planning.You should make sure tha
220、t everything is right when you decide to make that cut.The tradecraft of making sure everything is right and correct is one of the main reasons why I believe that a lot of the much-heralded wealth transfer hasnt yet happened.People are taking their time to measure and prepare so when the time comes,
221、the plan can produce the right outcomes and no regrets.“Greg Limb Global Head of Family Office and Private Client KPMG International and Partner,KPMG in the UK48Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities
222、provide no services to clients.All rights reserved.Some common planning points that all business families should consider are as follows:Start early.Whether it makes sense to transfer the business during lifetime or on death,the earlier the planning starts,the smoother the transition will ultimately
223、 be.This includes involving the next generation early as well as ensuring that the succession goals of everyone involved are understood and agreed.Seek professional advice.Family business succession is highly complex,and missteps can be costly.A professional adviser can help you understand the exemp
224、tions and other tax reliefs that will be available on the transfer.Many of these benefits are not automatic,and a professional adviser can help you make the arrangements needed to meet complex conditions and comply with the rules to ensure tax benefits on the transfer are optimized.Communication.Whe
225、n planning for the transfer of a family business,regular,open communication between the generations involved helps ensure that the visions and expectations of each family member are aligned.Develop a governance structure.Clarify and confirm your familys objectives from a legal viewpoint and establis
226、h succession plans and ownership structures that facilitate meeting those goals.Establish a structure for governance that will guide and safeguard the family businesss operations during and after the transfer.Conduct regular health checks.Review business arrangements and holdings to ensure all condi
227、tions receiving concessions will be met.As conditions often change in family relationships,business environments and tax legislation review your succession plan regularly and update it accordingly.49Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International
228、 entities.KPMG International entities provide no services to clients.All rights reserved.Summary notes by country,territory and jurisdictionArgentinaNo inheritance or gift tax applicable in most provinces Inheritance and gift tax rates vary by province and exemption thresholds apply.There is no inhe
229、ritance or gift tax in Argentina,except in Buenos Aires Province(which does not include the city of Buenos Aires).BahamasMinimal tax due Bahamas has no inheritance or gift taxes.Stamp duty may apply on the transfer of Bahamian situs assets.BarbadosMinimal tax due Barbados has no inheritance or gift
230、taxes.Stamp duty may apply on the transfer of assets situated in Barbados.Stamp duty is payable on the value of property transferred through lifetime gifts and on death.Property transfer tax is payable on lifetime transfers except transfers via testamentary disposition,which are exempt.Australia(Mel
231、bourne)Personal income tax due Australia has no inheritance,gift or estate taxes.The transfer of an asset by inheritance on death may result in income tax on a capital gain arising where the asset passes on death to a tax-exempt entity or person/entity that is not a resident of Australia for income
232、tax purposes.Any capital gain on lifetime gifts is subject to income tax at marginal rates(up to 47 percent).A 50 percent discount is generally available for non-depreciating capital assets as long as the donor held the asset for at least 12 months before the gift.State-based stamp duties or transfe
233、r duties generally do not apply to asset transfers through inheritance.Lifetime transfers of some asset classes are subject to a state-based stamp or transfer duty.The case study analysis in this report was prepared with reference to stamp duty imposed in the state of Victoria.AustriaMinimal tax due
234、 Austria has no inheritance or gift taxes.A real estate transfer tax applies to lifetime gifts and transfers on death of directly held land and,in certain cases,shares in a company holding land(real estate).BelgiumReduced tax rates and partial exemptions are available on inheritance,with full exempt
235、ion available on lifetime transfers Inheritance and gift taxes(and exemptions)vary between Belgiums Flemish,Walloon or Brussels Regions.In principle,the deceaseds last tax residence determines which regions rules apply.Each region has its own favorable tax regime for the transfer of family businesse
236、s.There are minor differences between the regime in the Flemish and Brussels regions.Currently,the differences with the tax regime in the Walloon Region are more substantial.The general principles are as follows:Company shares are always considered as movable assets,even when the underlying assets a
237、re(mainly)real estate.50Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.BermudaMinimal tax due Bermuda has no inheritance or gift taxes.Stamp duty may apply o
238、n the transfer of assets situated in Bermuda.BoliviaMinimal exemptions available Bolivia imposes an inheritance tax.Although there is no gift tax,there is a concept of an anticipated inheritance,which gives rise to an inheritance tax liability.An annual wealth tax is due on 31 December of each year.
239、The tax applies at marginal rates based on the value of the individuals assets,with an associated abatement.So Paulo and Rio de Janeiro,BrazilNo exemptions available Lifetime transfers and transfers on death are taxed under state law,rather than federal law.The applicable tax rate and calculation ba
240、sis varies depends on the companys location.If the asset has increased in value since the date of gift/transfer on death,capital gains tax may be imposed on the assets disposal.In cases involving family companies,tax authorities and taxpayers are having discussions about which value should be consid
241、ered for tax basis purposes:the companys net equity or market value.The State Courts of Appeal have set a precedent that the tax basis should correspond to net equity.ChinaNo tax applicable China has no inheritance or gift taxes.The transfer of shares between close family relatives should also not b
242、e liable for income tax(“preferential treatment”).When the shares in the family business are subsequently transferred to a non-family investor,the gain is subject to 20 percent individual income tax,and the deductible cost should be the original paid-in capital if the above preferential treatment wa
243、s adopted.ColombiaPartial exemptions available Income tax applies on transfers on death at the rate of 15 percent of the base cost of the share capital,with adjustments to the shares acquisition value as allowed by statute(e.g.accounting for inflation adjustment).Income tax applies on gifts at the r
244、ate of 15 percent of the base cost of the share capital,also with any allowable adjustments.As the case study in this report refers to gifting or death at 1 January 2023,Colombias latest tax reform has been factored into the analysis.CanadaPartial exemptions available Canada does not impose inherita
245、nce tax or gift taxes.Canada taxes the deemed gain that accrues from the time of acquisition until the property is gifted or transferred on death.A lifetime enhanced capital gains exemption of up to CAD971,190(for 2023 indexed each year for inflation)is available for dispositions and deemed disposit
246、ions of qualified small business corporation shares by an individual.To qualify,generally two tests must be met by the target corporation:At the date of the transaction,more than 90 percent of the fair market value of the companys assets must be used principally in an active business carried on prim
247、arily in Canada.For the 24 months before the transaction,more than 50percent of the fair market value of the companys assets must have been used principally in an active business carried on primarily in Canada.In addition,the individual selling the target corporation shares must meet a holding perio
248、d test for the 24 months preceding the transaction date.To benefit from the favorable inheritance and gift tax regime for the transfer of family businesses,the key consideration is whether the business has a qualifying economic activity.To benefit from the favorable inheritance and gift tax regime f
249、or the transfer of family businesses,there are requirements on the day of death or the date of the gift and for 3 years from that date.The analysis presented covers the Flemish Region only.51Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entitie
250、s.KPMG International entities provide no services to clients.All rights reserved.FinlandPartial exemptions available Inheritance and gift taxes apply,with exemptions.The inheritance or gift tax rates are progressive and depend on the value of the estate/gift and the closeness of the relationship bet
251、ween the deceased/donor and the beneficiary/donee.The exemptions are only available where the companys profits are taxed in Finland as business income and the recipient is a director of the business.Where the exemptions do not apply,the transfer is subject to gift or inheritance tax on its full mark
252、et value(calculated via methods of the Finnish tax authorities).FrancePartial exemptions available France imposes inheritance and gift taxes.A 75 percent exemption is allowed for transfers on death and lifetime transfers of business shares and business assets regardless of the donor and recipient(su
253、bject to requirements)where there is a commitment to keep the shares for a 6-year period(Pacte Dutreil rules).Lifetime transfers made by donors under age 70 may benefit from an additional 50 percent exemption.GermanyFull to partial exemptions available Germany imposes inheritance and gift taxes.Tran
254、sfers of small to medium-sized family businesses:Exemptions of up to 100 percent are available for favorable business assets,with several exceptions.A 100 percent/85 percent exemption is allowed for transfers on death and lifetime transfers of business shares(regardless of the donor and recipient),s
255、ubject to conditions.Small businesses can apply simplified exemption rules.Transfers of large family businesses:The above exemption is reduced on a straight-line basis for transfer values between EUR26million and EUR90 million and eliminated for transfers valued over EUR90 million.As an alternative,
256、the tax due may be reduced to 50 percent of the available wealth of the successor/donee,defined as all wealth except for exempted business assets.This is the only exemption for the transfer of assets worth above EUR90 million.If no exemption applies,transfers on death and lifetime transfers between
257、parents and children may be subject to gift tax and inheritance tax at graduated rates of up to 30 percent(compared to 50 percent where the transfer is not to a family member),depending on the value transferred.CroatiaFull exemptions available Croatia imposes inheritance and gift tax on transfers by
258、 individuals or legal entities of cash or shares in a joint stock company or movables where that property is inherited,received as a gift,or otherwise received or transferred without consideration.A full exemption is available for transfers to immediate relatives in the vertical line(e.g.spouses and
259、 children).Croatia does not impose inheritance or gift tax on shares in a limited company.CyprusFull exemptions available Cyprus has no inheritance or gift tax.Capital gains tax is only imposed,at the rate of 20percent,on any gains,after adjusting for inflation arising from:The sale of immovable pro
260、perty situated in Cyprus;The disposal of shares of companies,not listed on a recognized stock exchange,which own immovable property in Cyprus;and The disposal of shares of companies which indirectly own immovable property in Cyprus and derive at least 50 percent of their market value from such immov
261、able property.52Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.GibraltarMinimal tax due Gibraltar has no inheritance or gift taxes.Lifetime gifts of real est
262、ate are subject to stamp duty,which includes shares where the real estate held within the company is located in Gibraltar.GreeceReduced tax rates and tax-free bracket available Greece imposes inheritance and gift taxes.The tax rates are progressive(except for cash donations,where a fixed donation ta
263、x rate applies),depending on the proximity of the relationship between the deceased/donor and the beneficiary/donee and the value of the estate/gift.Specific rules govern the calculation of business values for transfers on death or lifetime gifts.The donations/inheritance tax relief is only availabl
264、e for donations of assets(other than cash)to persons with first-degree kinship,and it is a one-off lifetime relief.IrelandPartial exemptions available Ireland imposes inheritance and gift taxes,which are payable by the beneficiary.The first EUR335,000(during lifetime or on death)from a childs parent
265、s is free of gift and inheritance tax.Business relief may reduce the rate of inheritance/gift tax on qualifying businesses/companies from 33percent to 3.3 percent,subject to conditions.Lifetime transfers are also subject to stamp duty(transfer tax)and capital gains tax.The transferor may be exempt f
266、rom capital gains tax if the transfer meets the conditions for retirement relief.Among other conditions,the transferor must be aged 55 to 66.If the parent is older than 66,the cumulative exempt amount is restricted to EUR3million.Where retirement relief does not apply,revised entrepreneur relief may
267、 allow a reduced capital gains tax rate of 10 percent on disposals of qualifying assets.The lower 10 percent rate of capital gains tax only applies to cumulative chargeable gains of up to EUR1 million.Where gift tax and capital gains tax apply to the same transaction,the gift tax generally may be re
268、duced by the capital gains tax paid where the assets are retained for 2 years.Stamp duty of 1 percent(of the market value)applies to the gifting of shares and the rate of stamp duty on other business assets varies from 2percent to 7.5percent.GuernseyMinimal tax due Guernsey has no inheritance and gi
269、ft taxes.Guernsey probate charges are applicable to inheritance,calculated on a sliding scale up to a maximum of GBP100,000 for estates with a value greater than GBP28,000,000.Hong Kong(SAR)Minimal tax due Hong Kong has no inheritance or gift tax.For the case study analysis in this report,there is a
270、lso unlikely to be a personal income tax liability in Hong Kong(SAR)as a result of the transfer of the family business shares,nor any stamp duty where the shares are transferred by a parent to their child through their will.There is no exemption from the stamp duty,which is levied on the market valu
271、es of the shares,where the shares in the family business are transferred by way of gift(i.e.a voluntary disposition made in the donors lifetime).IndiaPartial exemption on lifetime transfers India has no inheritance tax.Transfer by donors by way of gift or will is exempt from capital gains tax.For th
272、e recipient,there is no tax where the gift is received from relatives or through a will or inheritance.Stamp duty applies to any instruments of transfer(e.g.on immovable property,securities,etc.).Generally,there is no stamp duty on property transferred by will.There is no stamp duty exemption on tra
273、nsfers/gift of property among relatives unless specifically exempted by a particular state.Indias wealth tax has been abolished since 2016.53Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services
274、to clients.All rights reserved.ItalyMinimal tax due Subject to conditions,transfers of family business shares on death and lifetime gifts to a spouse or direct descendant are exempt from inheritance,gift and real estate transfer taxes.There are several small taxes(stamp duties)where the tax liabilit
275、y is not material.MaltaPartial exemptions available Malta has no inheritance or gift taxes.Malta imposes income tax on the donor on a deemed capital gain on a lifetime gift.Gifts are exempt when made to the spouse,a direct descendant or ascendant,or their spouse.Where the donor has no descendants,li
276、fetime gifts to siblings and their descendants qualify for exemption.Duty on documents and transfers(for transfers made during lifetime and on death)is payable by the recipient at 2 percent or 5 percent.The 5 percent rate applies if immoveable property is being transferred(or if the shares being tra
277、nsferred are in a company in which 75 percent or more of the assets excluding all current assets other than immovable property are either immovable property or rights over immovable property).For purposes of the duty on documents and transfers,when an individual transfers shares(in a family business
278、 which carries on a business)to qualifying family members in terms of the Family Business Act,the first EUR150,000 of the shares value is exempt.There are also other time-limited tax incentives available in respect of inter-vivos donations of shares.JamaicaPartial estate duty exemption Jamaica has a
279、n estate duty,with an abatement for the first JMD10 million.Where the estates market value exceeds the abatement,a 1.5 percent estate duty applies together with a transfer tax on 2percent of the market value of the shares.The market value of the shares in a private company is determined based on the
280、 net asset value of the company.There is also stamp duty at the maximum rate of JAD5,000 payable for each instrument of transfer.JapanPersonal income tax exemption available Japan imposes inheritance and gift taxes.In the case of an inheritance or gift,neither of the transferor nor the transferee sh
281、ould be subject to personal income tax.Isle of ManNo tax applicable The Isle of Man has no inheritance or gift taxes.JerseyMinimal tax due Jersey has no inheritance or gift taxes.Guernsey asset stamp duty charges are applicable on an inheritance,calculated on a sliding scale up to a maximum of GBP10
282、0,000 for estates with a value greater than GBP13,360,000.KenyaNo tax applicable Kenya has no inheritance or gift taxes.The only tax on gifts applies where a parent transfers shares to a child during the parents lifetime.However,as they are related,they may apply for exemptions from capital gains ta
283、x and stamp duty.54Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.MexicoFull and partial exemptions While inheritance tax and gift tax are due for transfers
284、on death and lifetime transfers,respectively,the transfer is fully exempt where the transfer is declared to the tax authorities and the recipient fully complies in declaring their other income.Certain states impose an additional capital transfer tax on share transfers or a real estate acquisition ta
285、x when real estate is acquired on lifetime transfers and death.The figures shown in this analysis assume residence in a state where this tax does not apply.Capital gains tax is imposed where the recipient of a transfer on death later sells the shares,with the gain calculated based on the deceaseds o
286、riginal acquisition value and date.NetherlandsPartial exemptions available Inheritance tax and tax exemptions apply to transfers of enterprises on death and lifetime transfers respectively.The exemptions only apply to the value of an active business.Qualifying business transfers are 100 percent exem
287、pt from inheritance tax or gift tax on values up to EUR1,205,871 and 83 percent exempt on any excess,subject to complex conditions.For example,together with the active business condition,the business must be continued for at least 5 years,when certain conditions are met.Personal income tax also appl
288、ies on both lifetime gifts and transfers on death but is deferred to the next generation where the transfer qualifies for the business transfer exemption.Among other conditions,the beneficiary of a lifetime gift must have worked for the business for at least 3 years before the transfer.New ZealandNo
289、 tax applicable New Zealand has no inheritance or gift taxes.New Zealand also does not impose capital gains tax,real estate transfer tax,stamp duty or wealth tax.MalaysiaExemptions/reduced rates available on certain scenario Generally,Malaysia has no inheritance tax.There is no capital gains tax in
290、Malaysia apart from the real property gains tax(RPGT),which taxes gains derived from the disposal of real property or on the sale of shares in a real property company(RPC),known as the“RPGT chargeable asset”.Considerations should be given to the RPGT and stamp duty implications on the transfer of as
291、sets between family members.RPGT:Generally,the gift of an RPGT chargeable asset is deemed to be disposal at the market value of the asset.However,where the donor and recipient are spouses,parent and child,or grandparent or grandchild,the transaction is deemed at a no-gain,no-loss basis on the condit
292、ion that the donor is a Malaysian citizen.Devolution of the assets of a deceased person is subject to special rules.Stamp duty(applies to written documents):Any conveyance or transfer operating as a voluntary disposition inter-vivos(transfer during lifetime)is chargeable with stamp duty as if it wer
293、e a conveyance or transfer on sale.There is a stamp duty exemption on the instrument of transfer of immovable property executed between spouses.Remission of 50 percent of stamp duty chargeable on any instrument of transfer of immovable property between parents and child on the condition the recipien
294、t is a Malaysian citizen.NigeriaCapital gains tax exemption Nigeria has no inheritance or gift taxes.Any gains arising from the disposal of a chargeable asset by way of a gift or the deemed disposal of a deceased persons assets are not generally chargeable gains,so they are effectively exempt from c
295、apital gains tax.The child will need to apply for a probate/letter of administration for the estate.The Probate Registry in Nigeria has a practice of charging up to 10 percent estate duty on the deceaseds aggregate property.In practice,the duty is not systematically administered.It may thus be subje
296、ct to negotiation if there is an excessive valuation of the deceased persons estate.OmanNo tax applicable Oman has no inheritance tax or gift taxes.55Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no
297、services to clients.All rights reserved.PolandFull exemptions available Poland imposes inheritance and gift taxes.Transfers during lifetime and on death to spouses,descendants and ascendants are exempt from inheritance tax or gift tax if declared to the respective tax office within 6 months.If the r
298、ecipient of a lifetime gift takes on the companys full debt(compared to the standard practice of the donor/recipient sharing joint and several liability for the companys debts),a civil law transactions tax of 2 percent or 1 percent is generally due on the value of the debt.PortugalNo inheritance or
299、gift tax,stamp duty exemption A base stamp duty of 10 percent is charged on transfers on death and free-of-charge lifetime transfers.For onerous transfers or donations of immovable property(including such property held by a company),an additional stamp duty of 0.8percent applies on the propertys val
300、ue.Provided the recipients are spouses,descendants and ascendants,transfers on death and free-of-charge lifetime transfers are exempt from the base stamp duty.Where the asset transferred is immovable property(including such property held by a company),the additional stamp duty is imposed on onerous
301、transfers and donations.RomaniaNo tax applicable The transfer of shares through inheritance or donation should not give rise to a taxable event,provided:the succession is finalized within 2 years after the parents death;and the donation is finalized with a public notary.No other tax applies in this
302、scenario,but notary fees will apply.RwandaCapital gains tax applicable The only tax on gifts applies where a parent transfers shares to a child during the parents lifetime.A 5percent capital gains tax may apply on the difference between the current value at the time of the share transfer and the acq
303、uisition value.If the company and assets transfer as a result of the parents death,this is considered to be a succession(not an asset transfer)under Rwandas law on matrimonial regimes,donations and succession,and no tax liability will arise.SingaporeMinimal tax due Singapore has no inheritance or gi
304、ft tax.There should be no personal income tax implications for the child as the gain arising from the inheritance should arguably be treated as capital in nature and not taxable(as capital gains are not taxable in Singapore).Stamp duty may arise on the transfer of shares in a Singapore company by gi
305、ft,based on 0.2 percent of the transfer consideration or value of the shares,whichever is higher.Where the company holds immovable property,that propertys market value is used instead of book value when determining the value of the shares.PakistanMinimal tax due Pakistan has no inheritance or gift t
306、axes.Stamp duty(at 0.1 percent of the face value)applies on the issued value of the shares.PhilippinesPartial exemptions available Philippines imposes inheritance and gift taxes.Since 2018,the rate of both inheritance(estate)tax and donors tax has been 6 percent.Documentary stamp tax also applies to
307、 the(inheritance and donative)transfers of real properties and shares of stock,unless specifically exempt from documentary stamp tax.56Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to cli
308、ents.All rights reserved.SwitzerlandFull exemptions apply Inheritance tax and gift tax are governed by the cantons in Switzerland.The majority of the cantons fully exempt lifetime transfers and transfers on death between parents and children.The rules differ significantly between cantons.Our case st
309、udy analysis in this report assumes the scenario occurred in Zurich.The Cantons of Appenzell Innerrhoden,Lucerne,Neuchtel,Solothurn and Vaud levy inheritance tax on transfers to children.Specific advice should always be sought in the relevant canton.South KoreaPartial exemptions available for lifeti
310、me transfers and transfers on death South Korea imposes inheritance and gift taxes under federal law.Inheritance tax and gift tax rates are progressive,ranging from 10 percent and 50 percent.If the transfer value is over KRW3 billion,the 50 percent rate is applied.Inherited or gifted assets are taxe
311、d with reference to the full market value,which is calculated by South Koreas Inheritance and gift tax.The deduction limit for the inheritance of a family business depends on the period that the heir runs the family business(i.e.1019 years:KRW20 billion;2029years:KRW30 billion;30 or more years:KRW50
312、billion).To qualify for exemption,the family business inheritance must meet conditions based on,for example,annual sales,asset size or type of business.The heir can deduct up to KRW0.2 billion,plus a personal allowance and blanket deduction of KRW0.5 billion.No tax applies if the standard for assess
313、ment(tax base)is below KRW0.5 million.SlovakiaNo tax applicable Slovakia has no inheritance or gift taxes.No other tax applies in this scenario.Where the gift or transfer is not a true gift and connected to an entrepreneurial or dependent activity of the individuals,the transfer may be reclassified
314、as income and taxed accordingly.SwedenNo tax applicable Sweden has no inheritance or gift taxes.SpainPartial exemptions available For transfers on death,inheritance tax is due.An initial,general reduction is allowed for descendants and ascendants receiving the family business share or assets(subject
315、 to conditions).There is an additional reduction for transfers of family business assets on death,subject to a 5-year holding period for the recipient and a prohibition against acts during that period that could significantly diminish the shares value.For lifetime transfers,gift tax(recipients liabi
316、lity)and personal income tax(donors liability)are due.Personal income tax does not apply if cash is gifted(rather than assets).A 95 percent reduction for gift tax and a complete exemption to personal income tax are available where the family business lifetime gift exemption conditions are met.South
317、AfricaPartial exemptions available Transfers on death are subject to estate duty and personal income tax(automatic partial exemption applies).Lifetime transfers are subject to donation tax and personal income tax(automatic partial exemption applies).An additional 0.25 percent securities transfer tax
318、 is payable by the company on the transfer.For both inheritance tax and donations tax,exemptions may be available in specific circumstances,for example,for an inheritance to a spouse.57Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG International entities.KPMG
319、 International entities provide no services to clients.All rights reserved.TanzaniaMinimal tax due Tanzania has no inheritance or gift taxes.The only tax on gifts applies where a parent transfers shares to a child during the parents lifetime.A 1percent stamp duty applies in these cases.ThailandParti
320、al exemptions available Thailand imposes inheritance and gift taxes.The inheritance tax is 5 percent for ascendants or descendants(and 10 percent for others)on assets valued above THB100 million.Inheritance income is taxed under the Inheritance Tax Act and exempt from personal income tax.Gift tax is
321、 part of personal income tax.The taxpayer should opt to pay at 5 percent as a final tax;otherwise,it would be taxed at the taxpayers marginal tax rate(up to 35 percent).Trinidad and TobagoMinimal tax applicable Trinidad and Tobago has no inheritance or gift taxes.No personal income tax applies on in
322、heritance received by an individual heir.Where the company is not registered on the stock exchange,stamp duty is charged at 0.5 percent of the greater of consideration given or the market value of the shares transferred.In practice,stamp duty is calculated using an independent valuation of the priva
323、te company shares.UgandaMinimal tax due Uganda has no inheritance or gift taxes.The only tax on gifts applies where a parent transfers shares to a child during the parents lifetime.A 1.5percent stamp duty applies in these cases.UKFull exemption or partial exemption on death or lifetime transfers can
324、 be available and/or full deferral on lifetime transfers Inheritance tax applies to transfers on death at the rate of 40 percent and is payable by the deceaseds estate.Certain exemptions and reliefs can be available for transfers on death).There is a nil-rate band,which is currently GBP325,000 per i
325、ndividual.The concept of domicile(which is distinct from residence)is important for inheritance tax purposes.An individual who is UK domiciled or UK deemed domiciled is generally liable to UK inheritance tax on their worldwide estate.Transfers of shares on death(and in life)qualifying for business p
326、roperty relief can benefit from relief from inheritance tax at either 100 percent or 50 percent.The level of cash in the company(potentially seen as impacting the trading status of the company)may restrict the exemption with other conditions also needing to be met.Inheritance tax can be payable on c
327、ertain gifts made during an individuals lifetime,subject to certain exemptions and reliefs.For lifetime transfers to individuals,inheritance tax does not apply if the donor survives for 7 years following the transfer.However,the donor of the gift is deemed to make a disposal at market value and is s
328、ubject to capital gains tax on that value(capital gains tax in the UK aside from on residential property and carried interest is 10 percent or 20 percent).Each individual is given a capital gains tax-free allowance of GBP12,300.Capital gains tax on certain lifetime transfers can either be fully defe
329、rred using holdover relief(with the recipient taking on the donors base cost,subject to conditions)or reduced to 10 percent under business asset disposal relief(subject to maximum lifetime gains of GBP1 million).Special rules can apply where individuals receive shares or share options as a result of
330、 their employment.Gifts between family members due to family relationships(and not employment)should be excluded from these rules.Specific advice should be sought as these reliefs carry complex conditions.58Global family business tax monitor 2023 2023 Copyright owned by one or more of the KPMG Inter
331、national entities.KPMG International entities provide no services to clients.All rights reserved.USLow-tax states Partial exemptions available Thirty-three of the 50 US states do not have estate or inheritance taxes,and residents are generally subject to federal tax only.Some low-tax states also imp
332、ose low levels of estate and/or inheritance tax.The case study analysis in this report assumes residence in a low-tax state that imposes both state and federal taxes.Each individual may be entitled to federal and state exemptions for transfers on death.Specific advice should be sought in respect of
333、the relevant state.VenezuelaNo exemptions available Lifetime transfers and transfers on death are subject to donations and inheritance tax.Lifetime transfers and transfers on death of real estate are also subject to real estate transfer tax.Assets excluded from the amount of the tax base of the inheritance include the main dwelling that has served as a permanent seat in the deceaseds home and is t