Yip Ho Ying was named as the winner of the Judges Prize at the Sovereign Art Foundation’s 2026 Hong Kong Students Prize at the Awards Ceremony held at Art Central in the city’s iconic Central Harbourfront on 28 March, with Lam Man Hei of receiving the Public Vote Prize.

Now in its 14th year, this annual award is designed to celebrate the importance of art in the education system and showcase young artistic talent to a wider audience. It also enables the Sovereign Art Foundation (SAF) to engage with local organisations that share its aim of promoting arts in the community and encouraging cultural development.

Teachers in secondary schools across Hong Kong were invited to nominate their best art students to submit artworks to the competition. 20 were then shortlisted for the Finalists’ Exhibition that ran at Art Central during Hong Kong Art Week from 25 to 29 March.

The depth and creativity of the artworks on display in SAF’s booth captivated visitors; with each piece interwoven with personal narratives, social critique and reflections on identity. Together, the works offered a glimpse into the experiences shaping Hong Kong’s youth. Click here to view the shortlist!

Ho Ying’s acrylic painting titled Shelter? was awarded the Judges Prize. The work reflects how a sanctuary within the home becomes unsettling when stress strips this final place of refuge of its former sense of tranquillity. She received HKD8,000, with a further HKD20,000 being donated to Pooi To Middle School as a grant for the wider benefit of all students and their creative pursuits.

Man Hei’s Modern Instructions of Women, which employs acrylic on canvas and polymer clay, attracted the most public votes, either in person at the exhibition or online. The work appropriates the format of a Chinese calendar to reinterpret traditional women’s roles. She received HKD4,000, with Po Leung Kuk Tang Yuk Tien College receiving a grant of HKD10,000.

Both winners will now go through to the Global Students Prize, which brings together the winning artworks of all SAF’s Students Prize competitions around the world to select a Global Judges Prize winner and Global Public Vote Prize winner.

Selected artworks were available for bidding through a charity auction, which raised over HKD40,000 for the students and SAF’s Make It Better programme in Hong Kong.

Congratulations to the winners and all the finalists. We were delighted to have the opportunity to celebrate at Art Central, our Venue Partner. And thank you again for our judging panel of Janet Fong, curator and Assistant Professor at the Academy of Visual Arts at Hong Kong Baptist University, Sharon Cheung, journalist, curator and Director of SC Gallery, Ngai Wing-Lam, a Hong Kong-based artist, and SAF Founder and Chairman Howard Bilton.

Through its global network of student awards, SAF continues its mission to celebrate the importance of art in the education system. With prizes now established in 13 countries, its exhibitions not only showcase the creative energy of each region but also reaffirm SAF’s longstanding commitment to nurturing young voices.

Stay tuned for the announcement of the 2026 Sovereign Asian Art Prize finalists! Follow us on Instagram so you don’t miss it.

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1. What is a Trust?
A trust is a way of managing assets (money, investments, land or buildings) for people. It is an arrangement, recognised under common law, by which property or assets are transferred from one person (the ‘settlor’) to another person (the ‘trustee’) to hold the property for the benefit of a specified list or class of persons (the ‘beneficiaries’).

A trust can be created solely by verbal agreement but it is usual for a written document (the ‘trust deed’) to be prepared. This evidences the creation of the trust, sets out the terms and conditions upon which the trustees hold the trust assets and outlines the rights of the beneficiaries.

Unlike a company, a trust is not a legal person; it is a relationship. The practical advantages of a trust are gained from the distinction that is drawn between the formal or legal owner of property, the trustee, and those people that have the use or benefit of the property, the beneficiaries.

2. Who should set up a Trust?
APAC Wealth Creators – Asia’s Economic Growth in 2025 proved unexpectedly resilient, weathering tariffs and uncertainty, and will remain the biggest driver of global growth, contributing about 60% this year and next. The shock from trade tensions has been cushioned by a front-loading of exports ahead of new levies, stronger-than-expected investment in artificial intelligence, ongoing supply-chain reconfiguration within the region, and policy easing in some countries.

2025 saw Asia Pacific IPO proceeds surge to USD90 billion (+73% year-on-year), with Hong Kong/China and India accounting for over half of the region’s activity. Hong Kong led with 32% of IPO volumes, while India posted its highest annual tally ever at 25%, delivering five USD1 billion+ IPOs.

According to McKinsey analysis, between 2023 and 2030, ultra-high-net-worth (UHNW) families with personal financial assets more than USD50 million and high-net-worth (HNW) families with personal financial assets between USD1 million and USD50 million in the Asia–Pacific region are set to undergo an intergenerational wealth transfer estimated at USD5.8 trillion. UHNW families are expected to account for about 60% of the total wealth transfer.

With many such families in the Asia-Pacific region owning operating businesses, effective succession planning is even more essential for preserving wealth and ensuring a smooth transition of assets across generations.

3. Why would you set up a Trust?
Trusts are set up for a number of reasons, including:

• Wealth preservation – to control and protect family assets.
• Succession planning – to pass on assets while a settlor is still alive.
• Estate planning without public probate – to pass on assets when a settlor dies (a ‘will trust’) with enhanced confidentiality.
• Business continuity – allows a business to continue functioning normally, while beneficiaries continue receiving benefits from the business.
• Avoidance of forced heirship laws.
• Tax efficiency and futureproofing.
• Asset protection – litigation/divorce.
• Caring for vulnerable beneficiaries – minors or incapacitated.
• Family governance.
• Philanthropy.
• Legacy planning.

When assets are spread across different countries, a trust can eliminate the complexities of managing multiple probate processes across different jurisdictions, which can be time-consuming and costly, with each country’s legal system imposing its own requirements. The trustees can immediately act to distribute the assets according to the deceased’s wishes.

Trusts also provide a centralised asset management platform, allowing settlors to consolidate their global assets under one legal structure. This simplifies the management of these assets, reduces administrative burdens and ensures they can be managed and distributed from a single jurisdiction. It also ensures that wealth accumulated over a lifetime can be retained as one fund to accumulate further.

If the assets are centralised in a politically and economically stable jurisdiction, and denominated in hard currencies, it provides security from volatility in the home country as well as providing flexibility and potential for diversification.

Assets held in trust do not necessarily need to be liquidated upon the settlor’s death. This can be advantageous during market downturns, because the trust structure allows assets to be retained rather than sold at a loss, preserving their value and benefiting the beneficiaries in the long term.

For business owners, the trust structure is particularly effective in avoiding disruption during a generational handover of a business. By transferring ownership and control of the business into a trust, founders can ensure that the enterprise remains within the family while safeguarding it from personal financial issues, divorce or external threats.

A trust also introduces the option of professional oversight. Trustees with commercial expertise can be appointed to manage or co-manage the business alongside family members, ensuring operational competence even where successors may lack experience.

4. When should you set up a Trust?
It’s never too early. An effective succession plan enables a smooth transition of both ownership and management while maintaining segregation of business assets and personal wealth. Early leadership transition helps family enterprises stay relevant and grow as the next generation introduce new ideas while still benefiting from the older generation’s experience and guidance.

The direct transfer of business ownership via shares not only grants dividend rights but also voting control, which can create shareholder disagreements or impede business operations. Trusts, which hold the company shares, can provide a useful mechanism for separating legal ownership, control and management, and economic benefits. In this way, only family members actively involved in the business will have control over business decisions, but passive family members will still receive economic benefits through trust distributions.

Alternatives to intergenerational succession of the business – a sale or public offering – may provide a more suitable path forward if the next generation is keen to pursue interests outside the business. It is critical to establish an estate plan early in the sale or IPO planning phase because the opportunities will generally diminish as a deal moves toward closing.

Families should also consider succession plans for their personal wealth, which may be very different from the succession plans for business assets, especially if there may be plans to appoint heirs to be business successors.

Families may also choose to consolidate their financial asset holdings through a private investment company (PIC) or family office that allows family members to be involved through bespoke shareholding and directorship structures. Holding the PIC through a trust can be useful to help address issues like incapacity planning, tax planning, wealth management and protection, and confidentiality.

5. Where should you set up a Trust?
When selecting the best offshore jurisdiction for establishing a trust it is important that it should offer:

• Politically, economically and socially stable
• A strong tradition of enforcing trusts.
• An English common law system.
• An established reputation for trust business.
• Modern trust legislation, including contemporary trust concepts.
• Tax neutrality – low or no taxation for trusts.
• Good international reputation that is aligned with your family’s long-term interests.
• International connectivity.
• Privacy and confidentiality.
• Deep professional sector.
• Access to global investment opportunities.

Hong Kong and Singapore score highly in all these areas and both have the added benefit of a convenient location in Southeast Asia. However, there can be many reasons – security, confidentiality, discretion, legal protections – to position your trust further away from your place of residence or doing business. Sovereign generally recommends Guernsey, the Isle of Man, Gibraltar, Cyprus, Malta and Mauritius as among the best available trust jurisdictions.

Guernsey’s proximity to London and continental Europe offers a powerful strategic advantage, while modern legislative and regulatory framework accommodates a wide range of structures that can be tailored to a client’s specific requirements, including:

• Trusts and private trust companies (PTCs): Discretionary trusts, non-charitable purpose trusts and charitable trusts support succession planning and asset protection, while customary protective mechanisms (e.g. reserved powers and protector roles) are well understood and respected
• Foundations and private trust foundations (PTFs): These structures provide legal personality and offer an alternative to trusts for families from civil law countries seeking more control than a traditional trust provides. Governance can be tailored to the family’s unique requirements
• Corporate/investment vehicles: Guernsey supports private investment funds, family limited partnerships and family investment companies (FICs) to hold investments in a corporate structure. This allows families to crystallise their investment strategies into entities they control, which is especially useful for ESG or impact portfolios
• Custom hybrids: Families often create bespoke structures made up of more than one trust or entity, with each holding different asset types or benefitting different parts of a family.

6. Other questions you need to ask
Families today are facing increasingly complex questions around how to protect their wealth, preserve their values and empower future generations. Trusts offer a powerful solution, but before setting up any trust it’s essential to ask the right questions.

• Who do you wish to ultimately benefit from the Trust and under what circumstances?
• How much control are you willing to give up now to ensure stability for tomorrow?
• Are you clear about whether the trust is purposed for your own interests, for current or future family members or for charitable causes?
• Is the trust purely a financial mechanism, or do you also want to also encourage education, hard work, entrepreneurship, philanthropy, family life or family leadership?
• Have you considered issues of fairness and managing expectations among heirs?
• Are you truly comfortable letting trustees make decisions according to the trust deed and any guidance you have provided by way of a letter of wishes?
• Does the trust allow for mechanisms like protectors, powers of appointment or the ability to amend?
• Do you understand the different types of Trust – ‘fixed interest trusts’, discretionary trusts, reserved powers trusts and purpose trusts)
• Who should serve as the trustees of the Trust?

Choosing the right trustee(s) is a crucial part of setting up a trust because trust law imposes strict obligations and rules on trustees. Corporate trustees that are appropriately licensed, like Sovereign, are held to a standard of providing responsible ethical conduct, careful exercise of discretionary powers, competent investment management, expertise in tax and legal matters, and continuity in the administration of the trust for its duration.

As the Asian region continues to grow as a hub for HNWIs, the need for sophisticated wealth management and preservation strategies has never been greater. Sovereign Group is well-positioned to assist HNWIs and families in navigating the complexities of wealth management and legacy planning in this dynamic region.

Sovereign has more than 30 years’ experience of setting up and managing various types of trust around the world. We offer trustee, wealth management, succession planning and tax advisory services to internationally mobile families and entrepreneurs, with an emphasis on cross-border asset management and family governance.

Sovereign is fully licensed to act as professional trustee in Singapore and Hong Kong, Guernsey, the Isle of Man, Gibraltar, Cyprus, Malta and Mauritius.

The post Trusts in APAC – What, Who, Why, When and Where? appeared first on The Sovereign Group.

Most days start with meetings, speaking to clients, understanding their objectives, and then working through different structures and jurisdictions based on what actually makes sense for their business. Given our global presence, that often means working closely with other Sovereign offices, whether that’s in Dubai, Malta, or elsewhere, so it’s very much a collaborative process rather than something done in isolation.

There’s also a big relationship side to the role, staying close to accountants, lawyers, and introducers, and getting out regularly to meet people.

No two days are the same. It’s a mix of problem-solving, conversations, and a bit of detective work at times, which is what keeps it interesting.

2. You’ve worked across banking, fintech, and corporate services, what has shaped your approach to business development the most?
Working with people, without a doubt.

Banking gave me that front-facing exposure, sitting with clients, understanding their needs. Fintech pushed me into leading and developing teams, which taught me how to communicate and adapt. Corporate services brought the technical depth, understanding how everything actually fits together.

But overall, it comes down to listening, learning, and adapting. Business development, for me, has never been about pushing a product. It’s about building trust and figuring things out together.

3. Working closely with entrepreneurs and international businesses, what trends or shifts are you currently seeing in the market?
Things are definitely moving towards more transparency and substance.

Regulations are changing constantly and there’s less appetite for anything that doesn’t genuinely make sense commercially. There’s also a more cautious mindset now, clients are thinking longer-term, it’s less about quick wins and more about getting things right from the start.

4. What do you find most rewarding – and most challenging – about your role?
Meeting people, hearing their stories, and being part of their journey in some way.

Keeping up with constant change, regulation, expectations, competition. And making sure you’re always adding real value, not just offering a service.

5. What’s something people might be surprised to learn about you outside of work?
I’m a triplet, which usually surprises people. There are two more of me out there hahahaha

The post Ejaz Niazi – Head of Business Development, Sovereign Trust (Gibraltar) Ltd appeared first on The Sovereign Group.

Financial Secretary Paul Chan delivered Hong Kong’s 2026-27 Budget on 25 February. Themed as ‘Driving High‑quality, Inclusive Growth with Innovation and Finance’, the Budget is focused on sustaining growth momentum, advancing long‑term capability building and positioning Hong Kong to capture new opportunities.

Hong Kong’s economy grew by 3.5% in 2025, marking the third consecutive year of expansion, supported by strong external trade and a recovery in domestic demand. It is forecast to grow by 2.5%-3.5% in the year ahead, while the headline inflation rate is expected to remain below 2%.

Chan said a buoyant economy and capital market had driven higher tax revenues, while a reinforced fiscal consolidation programme had helped public finances improve sooner than expected. To preserve the SAR’s simple and low-rate tax regime, the government will introduce and extend a series of modest tax relief measures for households in 2026, along with a package of preferential tax policies for targeted businesses and industries.

To raise revenue, the government is to raise stamp duty rates from 4.25% to 6.5% on high-value residential property transactions valued above HKD100 million (USD12.8 million). It will also continue to implement the OECD Pillar Two Global Minimum Tax, which has been in force since financial years (FYs) starting on or after 1 January 2025.

Under the rules, multinational enterprise (MNE) groups with consolidated annual revenue of at least €750 million are required to pay top-up taxes if their effective tax rate falls below the minimum 15%. According to Chan, implementation of these rules is expected to bring in an additional HKD15 billion (USD1.9 billion) in tax revenue per year starting from FY 2027-28.

To align Hong Kong’s economic future with its development goals, the focus of investment in the Budget was in the innovation, artificial intelligence and international financial sectors, with initiatives including:

• Asset and Wealth Management – to increase the number of single-family offices in Hong Kong, which currently exceeds 3,300, and attract funds to set up in Hong Kong, the HK government will introduce an amendment bill in the first half of this year to enhance the tax regime and expand the scope of ‘fund’ to cover specific funds-of-one, as well as classifying digital assets, precious metals, specified commodities as qualifying investments eligible for tax concessions; it will also legislate to enable privatisation of Real Estate Investment Trusts (REITs) and to amend the law next year to provide stamp duty waiver for transferring non-residential properties into REITs seeking to list.
• Corporate Treasury Centres (CTCs) – the HK government to relax criteria for stamp duty relief for intra-group transfer of assets, applicable to instruments signed from Budget day. Further measures to strengthen Hong Kong as a base for CTCs to be announced in the middle of this year, including additional tax incentives, greater flexibility for CTCs and associated companies, and the introduction of a pre-approval mechanism.
• Company Re-domiciliation Regime – with the approval of 22 re-domiciliation applications since commencement of the regime in 2025 and a further 20 applications being processed, the government will step up publicity to attract more enterprises to establish in Hong Kong.
• Development of Digital Assets – CMU OmniClear, which operates Hong Kong’s central securities depository (CSD) for fixed-income, to establish digital asset platform in the year to support issuance and settlement of digital bonds. The government will introduce a bill this year to establish licensing regimes for, among others, digital asset dealing and custodian service providers.
• Intellectual Property Trading – the HK government to introduce legislation this year for ¬tax deduction arrangements for capital expenditure in purchasing intellectual property; to invest HKD28 million in the Hong Kong Technology & Innovation Support Centre for patent evaluation and implement a two-year Pilot Patent Valuation Support Scheme; to invest HKD52 million for Intellectual Property Academy on two-year pilot.
• Trade Centre – the HK government to introduce amendment to tax law this year for preferential policy packages, including preferential arrangements on land grants, financial subsidies and tax incentives. Preferential tax rates at half rate or 5%; to set up Advisory Committee on Tax Policy; to set up cross-sectoral professional services platform to support Mainland enterprises expanding overseas using Hong Kong as a base; and to invest HKD100 million to attract international, large-scale exhibitions with new elements.
• Mutual Market Access – the HK government to expedite the launch of Chinese Government Bond futures in Hong Kong, inclusion of REITs in mutual access, and inclusion of RMB trading counter under Southbound Stock Connect.
• Driving AI+ Development – the HK government to establish Committee on AI+ and Industry Development Strategy to transform industries; the Hong Kong AI Research & Development Institute to operate in second half of year to support R&D and transformation of outcomes.
• Small and Medium-sized Enterprises (SMEs) – the HK government to inject a further HKD200 million into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) to assist Hong Kong-based companies capitalise on opportunities in the Chinese Mainland and ASEAN countries, and raise the funding ceiling of ‘Easy BUD’ to HKD150,000 per application; to increase the total loan guarantee commitment to enterprises through the SME Financing Guarantee Scheme by HKD20 billion and extend the application period for the 80% Guarantee Product to the end of March 2028 and the application period for the principal moratorium arrangement to mid-November this year.
• Aviation, Shipping and Logistics – the HK government to launch a Future Innovative Logistics Acceleration Scheme this year to enhance interconnectivity of logistics data; to introduce legislation this year to enhance tax-concession measures for maritime services industry, provide half-rate tax concession to eligible commodities traders, revamp existing ship registration arrangements, extend current arrangements under Air Transhipment Cargo Exemption Scheme.
• Supporting Emerging Industries – the HK government to set up HKD10 billion I&T Industry-Oriented Fund to begin operation this year to channel market capital into strategic and emerging industries, including life and health technology, AI and robotics, and future industries; to review and enhance tax arrangements for R&D expenditures; to push for R&D and applications in embodied AI, quantum technology and new materials; to direct Office for Attracting Strategic Enterprises (OASES) to attract aerospace enterprises and Stock Exchange of Hong Kong (HKEX) to review listing requirements for aerospace enterprises; Hong Kong Investment Corporation (HKIC) and enterprises to establish Hong Kong RISC-V Alliance, forging collaboration among industries, academia and the investment sector in microelectronics.
• Gold Trading – the HK government to explore tax concessions for eligible institutions conducting gold trading and settlement in Hong Kong.
• New Industrialisation – the HK government to launch a New Industrialisation Elite Enterprises Nurturing Scheme this year to support high-growth enterprises; to allocate HKD220 million to establish the first national manufacturing innovation centre outside the Mainland at Yuen Long InnoPark, which will be led by the Hong Kong Microelectronics Research and Development Institute and focus on semiconductor R&D.
• Northern Metropolis for I&T – the HK government to set aside HKD10 billion each for the Hetao Hong Kong Park, the San Tin Technopole and the Hung Shui Kiu Industrial Park to accelerate the megaproject through the government’s partnership with developers and tech enterprises.

The government has launched a public consultation on the implementation of the OECD’s new Crypto-Asset Reporting Framework (CARF) and related amendments to the Common Reporting Standard (CRS 2.0) for the reporting and automatic exchange of information in respect of crypto-assets. It plans to complete the necessary legislative amendments in 2026 to implement the CARF rules to be effective on 1 January 2027 and the CRS 2.0 rules on 1 January 2028.

The government is committed to expanding Hong Kong’s network of Double Taxation Agreements, which currently comprises 55 agreements, including those signed last year with Jordan, Maldives, Norway and Rwanda.

In view of the evolving global tax environment, the Financial Secretary is to establish and chair an Advisory Committee on Tax Policy to gather views from commercial, industrial and professional sectors, so that Hong Kong’s tax policy can reinforce economic development.

2026 marks the first year of China’s 15th Five-Year Plan. Chan announced that Hong Kong will, for the first time, formulate its own local five-year plan, indicating that the region’s development trajectory will align more closely with national policy priorities in the coming years.

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The UK Autumn Budget, presented on 26 November 2025, introduced a number of measures that will have an impact on UK and international private clients with interests offshore. It followed the wholesale dismantling of the longstanding non-domiciled and the ‘protected trust’ tax regimes from the UK tax system last April.

As of 6 April 2025, the UK government replaced ‘domicile’ as a connecting factor for liability to applicable UK taxes, including inheritance tax (IHT), and adopting a residence-based regime instead. Individuals who have been UK resident for at least 10 out of the past 20 tax years are classified as a ‘Long-Term Resident’ (LTR) and exposed to IHT on their worldwide assets.

To ensure that LTRs do not escape tax obligations immediately upon leaving the UK, the legislation includes a ‘tail’ provision. This means that, if the LTR dies within the residence tail period, their worldwide estate will still be subject to UK IHT for up to 10 years after they cease to be a UK resident.

The length of the tail will depend on the duration of the individual’s residence in the UK. The minimum length of the tail is three years, which applies to individuals who have been UK resident for 10 to 13 of the past 20 UK tax years. The length of the tail increases by one tax year for each additional year of residence, up to a maximum of 10 years.

Individuals who do not meet the criteria for LTR status generally remain liable for IHT on UK-based assets only. This aligns with the previous system, under which non-UK domiciled individuals were taxed on UK situs assets but non-UK assets were out of scope for IHT purposes.

A new Foreign Income and Gains (FIG) regime was also introduced for people moving to the UK for the first time or after living abroad for at least 10 years. Foreign income and gains are tax-free for the first four years in the UK but are then subject to standard UK tax rules.

Under the old rules, trusts set up by non-doms were free from UK IHT forever. This shelter was removed. Once the settlor is classified as an LTR, the trust falls within the UK’s ‘10-year charging regime’, which imposes a tax charge of up to 6% every 10 years or when assets leave the trust – even if the settlor is excluded as a beneficiary of the trust.

The recent Autumn Budget announced a cap for these charges: for certain trusts created before 30 October 2024, all charges for each 10-year period – including the 10-year charge and any exit charges – will be limited to £5 million. Unfortunately, the £5 million cap applies only per trust, so multiple smaller trusts settled by one settlor will not get relief.

The Budget also introduced, with immediate effect, a measure to prevent the possibility of avoiding the exit charge on non-UK assets held in trust when a settlor ceases to be an LTR by converting non-UK relevant trust property into UK-situs assets immediately prior to the exit.

From 6 April 2026, it will also no longer be possible for an individual who is not an LTR to shelter UK agricultural property from IHT by holding it via a non-UK entity. It will now be subject to the same IHT treatment that was introduced for residential property under the IHT anti-enveloping legislation in 2017. UK commercial property can still be sheltered by non-LTRs using an offshore structure.

As we have previously highlighted, the main beneficiaries of all these changes to the UK’s IHT regime, are long-term UK expatriates. Before 6 April 2025, the worldwide estates of individuals with a UK domicile of origin remained subject to IHT unless they had succeeded in shedding their domicile of origin and acquiring a new domicile of choice in a distinct jurisdiction.

This involved moving to a country and forming a permanent or indefinite intention to remain there, which created difficulties for globally mobile individuals who did not settle in any one location. It was not possible to obtain a domicile ruling from HMRC, so the IHT position of many British ex-pats was uncertain.

With the UK’s new statutory residence test in place, British ex-pats have certainty as to their residence status. If they have at least 10 tax years of non-UK residence, they can set up an overseas excluded property trust (offshore trust) without any risk of an upfront IHT charge. This may be advantageous for asset protection or succession planning, as well as managing assets for future generations.

Furthermore, subject to the tax regime in their country of residence, gains and income accumulated within the trust may not be exposed to personal taxation. Many countries, even EU states such as Italy, Greece, Cyprus and Malta, have non-domicile tax regimes that only impose tax on income and gains that are either sourced locally or are remitted to the country of residence. Income and gains that remained within an offshore trust would not therefore be subject to taxation.

Consideration will only need to be given to the IHT treatment of the trust if the expat returns to live in the UK. Previously, an individual with a UK domicile of origin in the UK who then became UK resident was immediately treated as domiciled in the UK, and taxable on their worldwide income or gains. Now their foreign assets will not be in scope of IHT until such time as they become classified as an LTR, and they can also benefit from the new FIG regime for four years.

British expats living abroad can take advantage of this favourable new regime to return to the UK for a short period, for business reasons, to care for elderly parents or to cease being resident in another jurisdiction for foreign tax planning reasons. And, because they can clearly identify their first year of UK residence, they can take the steps necessary to cease UK residence again, if and when desired.

Please contact Simon Denton sdenton@sovereigngroup.com or David Griffiths dgriffiths@sovereigngroup.com at Sovereign UK for further information or to arrange a non-obligatory call or virtual meeting to examine your circumstances and requirements.

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Establishing an offshore corporate or wealth management structure is an extremely attractive proposition. Businesses and families develop international structures involving companies and trusts to facilitate cross-border trade and investment, to hold overseas assets, to manage succession planning, to access stable banking environments and hard currencies, or to benefit from favourable treaty networks.

But all too often individuals and businesses do not fully realise the potential value of their offshore structures. They are established to solve an immediate need and then left largely unattended. As a result, opportunities to enhance efficiency, improve governance, strengthen asset protection or adapt to changing events or conditions can be missed.

An international structure should be viewed as a dynamic framework that evolves alongside the client’s business, investments and family circumstances. At each stage of its lifecycle – from formation and operation, through to reorganisation or closure – there are opportunities to improve the benefits it can provide. It must also be capable of adapting to changes in legislation and regulation in the countries where the business operates or where the principal and other family members choose to reside.

1. The Formation Stage – building the right foundation

The formation stage is one of the most critical phases in the life of any offshore structure. The decisions taken at this point will often determine its long-term success and effectiveness.

Anyone considering the establishment of an international structure – whether a Company, Trust, Foundation, Retirement Plan or Special Licence Entity – will need to select the right structuring partner. A Trust and Corporate Service Provider (TCSP) should not simply be an administrative provider, it should also serve as a strategic advisor. Key considerations when selecting a TSCP should include:

• Jurisdictional expertise and regulatory standing.
• Experience and track record in administering international structures.
• Accessibility and quality of client services.
• Independence to operate without constraints, conflicts of interest or incentives.
• Breadth of professional networks and capabilities.

Equally important is the careful structuring of the governance documentation at the outset. One area where many structures fall short is the Shareholders’ Agreement. A well-drafted Shareholders’ Agreement should go beyond basic administrative provisions. It should consider potential future scenarios, such as:

• Shareholder disputes.
• Death or incapacity of a principal.
• Succession issues.
• Exit or buyout mechanisms.
• Deadlock resolution.
• Protection against hostile actions or competing interests.

It may be uncomfortable to consider worst-case scenarios during formation, but anticipating potential challenges at the outset will allow the structure to withstand future pressures. In our experience, disputes are far more common in structures where governance documents were treated as a formality rather than a carefully considered framework.

2. The Operational Stage – ensuring the structure continues to deliver value

Once a structure has been established and begins operating for its intended purpose, the focus should shift to ongoing engagement and strategic oversight.

Each structure is initially created with a clear purpose. For operating companies, this is typically reflected in the business plan and in the Articles of Association, which define a company’s internal rules, governing structure and purpose. For family or discretionary trusts, the objectives are generally captured in the Letter (or Memorandum) of Wishes, a confidential document outlining the settlor’s beneficiary, investment and distribution preferences to guide the trustees.

However, circumstances rarely remain static. Markets evolve, regulations change, currencies fluctuate, and family dynamics shift. A structure that was optimal at inception may require adjustments to remain effective or compliant. For this reason, continuous dialogue between clients and their management company or trustee is essential. Regular engagement ensures that potential risks can be mitigated early and that opportunities are identified as they arise.

At Sovereign, we place significant emphasis on maintaining close relationships with our clients. This includes not just formal interactions such as Board Meetings and Quarterly Reviews, but also ongoing informal engagements. Modern technology has made it so much easier to stay engaged with our clients and obtain real-time feedback on pain points, need for guidance, indications of future intentions or potential new opportunities. These interactions allow us to understand evolving client objectives and provide timely advice.

During the operational phase, a proactive TCSP should continuously look for ways to enhance the effectiveness of the structure. In our experience at Sovereign Trust (Mauritius), we frequently add value in the following areas.

• Professional introductions

Clients can sometimes require specialist expertise across multiple disciplines. Where services fall outside our direct scope, we can introduce clients to trusted professional partners (or provide a panel of options for consideration), including:

• Tax advisors.
• Specialist legal counsel.
• Audit and accounting firms.
• Banks and financial institutions.
• Insurance and risk management specialists.
• Property advisors and developers.
• Recruitment consultants.

Access to a strong professional network can significantly enhance the functionality and efficiency of a client’s structure.

• Structural ‘health checks’

Periodic reviews of a structure often reveal opportunities for improvement. Changes in a client’s residency, regulatory developments or evolving business activities may make it advantageous to refine the structure. In certain circumstances, we have recommended:

• Restructuring ownership arrangements.
• Adding additional entities to the structure.
• Redomiciling a company or transferring a trust to a different jurisdiction.

Such adjustments help ensure that the structure continues to meet the client’s needs while remaining compliant with international regulatory standards.

• Cashflow Management and Trade Finance

Many of our clients operate trading businesses that involve cross-border transactions and extended payment terms, which can create a significant timing gap between shipping and payment. Through our banking relationships, we have assisted clients in accessing various trade finance solutions, including:

• Letters of Credit.
• Import Financing.
• Supplier Credit Facilities.

These instruments help businesses to manage their working capital more efficiently and support continued growth.

• Optimising Treasury Management

It is not uncommon for offshore companies to maintain significant cash balances in non-interest-bearing accounts. By understanding the operational cashflow requirements of the business, we can help clients structure treasury solutions that improve returns on surplus funds, including:

• Fixed deposit placements.
• Liquidity management strategies.
• Introductions to alternative banking solutions.

In many cases, we have been able to negotiate improved terms with financial institutions.

• Enhancing economic substance

International regulatory standards increasingly emphasise economic substance and genuine business activity in the jurisdiction of incorporation. In Mauritius, for example, many of our clients have chosen to strengthen their presence by:

• Relocating to the island.
• Obtaining residence or occupation permits.
• Becoming directors of their Mauritian companies.
• Establishing physical offices and operational teams

We are often involved in facilitating these relocations and assisting clients in developing a genuine operational presence that supports both regulatory compliance and business growth.

• Expanding services as needs evolve

Over time, clients’ requirements often expand beyond the original purpose of the structure. In many cases, clients are not initially aware that additional in-house services can be integrated into their existing arrangements, including:

• Payroll and HR advisory services.
• Intellectual property and trademark protection.
• Pension and retirement planning structures.
• Bank account introductions.
• Immigration and residency programmes.
• Aviation and marine ownership structuring.

By maintaining an ongoing advisory relationship, these additional opportunities can be identified and implemented efficiently.

3. The Wind-Up or Transition Stage – planning the next chapter

Like any business arrangement, offshore structures have a natural lifecycle. Some are established for a specific project or transaction, while others remain in place for many years as part of a broader business or wealth management strategy.

Even discretionary trusts – which are typically multi-generational structures – can outlive their original purpose. This may occur, for example, if family members relocate to jurisdictions that do not recognise the trust concept or where different tax considerations apply.

When a structure reaches the end of its useful life, careful planning remains essential. Rather than simply closing an entity, clients should consider how best to redeploy the capital or assets that it holds.

In many cases, we assist clients with transitioning their wealth into alternative structures, such as:

• Personal pension or retirement plans.
• Investment portfolios.
• Life assurance bonds.
• Residency or citizenship planning strategies.

For entrepreneurs approaching retirement, this stage often coincides with a broader lifestyle transition. Many clients choose to retire in a different jurisdiction to where they built their business, and international structuring can play a key role in facilitating this move efficiently and securely.

Conclusion

Establishing an international structure is only the beginning. To fully realise and maintain the benefits it can provide, clients must view the structure as an evolving tool that adapts to changing business, financial and family circumstances.
Ultimately, the most successful structures are those supported by long-term partnerships between clients and trusted service providers who understand their objectives and are fully engaged with on protecting and growing their interests.

The post A step-by-step Guide to getting the most out of your International Structure appeared first on The Sovereign Group.

South Africa’s 2026 Budget, delivered by Finance Minister Enoch Godongwana on 25 February, signals a period of relative fiscal stability after several years of pressure on public finances, writes Ralph Wichtmann, Managing Director of Sovereign Trust (SA).

Government debt is expected to peak and gradually decline as fiscal consolidation gains traction, while economic growth is forecast to improve moderately over the next few years.

This shift was best illustrated last November, when South Africa secured its first credit rating upgrade in nearly 20 years after S&P Global raised the country’s foreign-currency long-term sovereign rating from ‘BB-‘ to ‘BB’. It cited stronger growth prospects, an improving fiscal outlook and reduced contingent liabilities following better performance at state power utility Eskom.

The other really positive news is that South Africa was officially removed from the Financial Action Task Force (FATF) ‘grey list’ of jurisdictions under increased monitoring last October. The removal recognised South Africa’s progress in strengthening its anti-money laundering and counter-terrorism financing (AML/CFT) frameworks to address the 22 deficiencies identified by the FATF in February 2023.

South Africa is widely regarded as being one of the most significant financial hubs on the African continent. With that comes the expectation that it should meet international standards of governance, oversight and transparency in respect of financial matters.

South African Budget

For South African tax residents with international assets or those considering externalising capital, the Budget did not introduce sweeping new tax measures. However, several updates and policy signals remain highly relevant for offshore structuring, wealth planning and estate strategies. Below are the key implications for clients:

1. No major tax increases – but continued reliance on a narrow tax base

One of the most notable developments is that the previously proposed ZAR20 billion tax increase was withdrawn due to stronger-than-expected revenue collections. At the same time, the National Treasury highlighted the structural reality that a relatively small group of high-income taxpayers contributes a significant portion of South Africa’s tax revenue.

For internationally mobile individuals and families with global wealth, this reinforces a long-standing planning consideration:

• South African tax residents remain taxed on worldwide income and gains.
• Effective international tax planning and asset structuring remains essential.

2. Tax incentives to encourage Investment and Savings

The Budget introduced several measures to encourage domestic investment and savings, including increasing the annual limit for tax-free investment accounts from ZAR36,000 to ZAR46,000 and retirement fund deduction limits were also increased to ZAR430,000 annually.

The Capital Gains Tax (CGT) annual exclusion for individuals is to increase from ZAR40,000 to ZAR50,000 and the CGT exclusion in respect of the disposal of a primary residence is also to increase from ZAR2 million to ZAR3 million. The threshold for exemption from Donations Tax applicable to individuals, will increase from R100 000 to R150 000.

While these measures primarily support domestic savings, they highlight a broader government objective; strengthening South Africa’s investment culture. For high-net-worth families, this reinforces the importance of balancing:

• Onshore tax-efficient vehicles (retirement funds and tax-free investments), and
• Offshore investment structures for diversification and currency risk management.

3. Implications for South Africans with International Income

The Budget reiterates the central importance of tax residency in determining tax obligations.

• South African tax residents are taxed on worldwide income.
• Non-residents are taxed only on South African-sourced income and assets.

For individuals living abroad or planning to emigrate, this distinction remains one of the most important planning considerations. Key areas that requiring careful planning include:

• Timing of tax residency cessation.
• Exit Tax implications of becoming non-resident.
• Structuring foreign income streams through appropriate entities.
• Ensuring compliance with exchange control and tax reporting obligations.

4. Estate Planning and Trust Structures

South African trusts continue to play a central role in wealth planning but remain subject to a relatively high tax rate of 45%. This reinforces the need for careful structuring when trusts are used in cross-border estate planning. Key considerations include:

• Whether a South African trust or offshore trust is more appropriate.
• The role of foreign beneficiary structures.
• The interaction between CGT, Donations Tax and Estate Duty
• Whether assets should be held through offshore companies that are owned by trusts.

International families should also consider the impact of:

• Controlled Foreign Company (CFC) rules.
• Anti-avoidance provisions.
• Tax reporting obligations.

5. Exchange Control and Capital Externalisation

One of the major Budget changes introduced in relation to exchange control rules is the increase in the Single Discretionary Allowance from ZAR1 million per calendar year to ZAR2 million with no tax clearance needed. It should be noted, however, that the Foreign Investment Allowance, which requires SARS Approval for International Transfer (AIT) tax clearance, remains unchanged at ZAR10 million per year. These allowances remain the primary mechanisms for legally externalising capital.

For wealthy families, capital externalisation strategies typically involve:

• Phased transfers of investment capital offshore.
• Offshore trusts or Family Investment Companies (FICs).
• Diversification of custody, banking and asset management.

6. Increased focus on Financial Transparency and Compliance

South Africa’s removal from the FATF grey list was a key milestone and the government has indicated that continued strengthening of AML/CFT frameworks remains a priority. South Africa’s next FATF mutual evaluation is scheduled to begin in the first half of 2026, with the assessment concluding in October 2027. This Fifth Round evaluation will be assessing the sustainability of South Africa’s reforms. For globally mobile families, this is likely to involve:

• Increased reporting obligations.
• Greater scrutiny of cross-border transactions.
• Continued emphasis on increased tax transparency.

The Common Reporting Standard (CRS) was first published by the OECD in 2014 as the global standard for automatic exchange of financial account information. It was designed to promote tax transparency and help tackle offshore tax evasion. Over 100 jurisdictions worldwide have implemented the CRS and most of those have now been exchanging information since 2018.

This year, global tax transparency has been fundamentally expanded by bringing crypto assets, digital money and enhanced due diligence into automatic exchange regimes under the new CRS 2.0 and the Crypto-Asset Reporting Framework. From 2026, financial institutions and crypto service providers must report broader asset classes, transaction-level data and additional client identifiers, closing long-standing reporting gaps and significantly increasing cross-border tax visibility.

This expansion makes compliant structuring more important than ever. For internationally active South African families, the focus therefore remains clear – robust global structuring combined with long-term flexibility.

The post South Africa Budget 2026 – Key takeaways for International Wealth Structuring appeared first on The Sovereign Group.

Bahrain is proposing to introduce a corporate tax regime from 2027, marking a significant shift for businesses operating in the Kingdom.

We are pleased to invite you to join our upcoming webinar, where our Client Accounting team will provide a clear overview of the proposed corporate tax framework, its anticipated application, and the practical implications for existing and prospective businesses in Bahrain.

LIVE Webinar
Bahrain Proposes Corporate Tax Intro in 2027 – Key Impacts and Actions

Date: 6 April
Time: 12:00 PM (Bahrain Time)
Format: Online Teams
Free to attend

During this session, we will cover:

• How the proposed corporate tax framework is expected to operate
• The impact on businesses currently operating in Bahrain
• Key considerations for companies entering the Bahrain market
• Practical steps organisations can take now to prepare
• Approaches to impact assessment, compliance planning, and structural alignment

Speakers:

Sameer Ansari – Senior Client Accountant

Muhammad Amir – Assistant Manager, Client Accounting

This session is designed to help organisations understand the upcoming changes and take proactive steps ahead of implementation.

We encourage you to register today to secure your place.

We look forward to your participation.

RSVP here

The post LIVE Webinar – Bahrain Proposes Corporate Tax Intro in 2027 – Key Impacts and Actions appeared first on The Sovereign Group.

Representatives from MONEYVAL, the EU Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, visited the Isle of Man in January to deliver training to the public and private sector.

The two-day event, referred to as ’Country Training’, marks the official start of the Mutual Evaluation and will provide stakeholders from both the public and private sector with an insight into the process and offer valuable assistance in preparing for MONEYVAL’s two-week on-site visit in October 2026.

MONEYVAL is to conduct an onsite evaluation of the Isle of Man in October 2026 to assess the Island’s technical compliance and effectiveness in countering money laundering and terrorist financing against the relevant international standards – the 40 Recommendations issued by the Financial Action Task Force (FATF) – which have evolved since the last evaluation undertaken by MONEYVAL in 2016.

The Mutual Evaluation process will give the Island recommendations on how to improve its anti-money laundering and countering the financing of terrorism (AML/CFT) regime. It is conducted by a team of evaluators comprising experts from MONEYVAL member jurisdictions as well as members of the MONEYVAL Secretariat.

The overall Mutual Evaluation process will take place over 18 months and will include multiple drafts of the Mutual Evaluation Report being shared with the Isle of Man government prior to a final draft being shared across the MONEYVAL membership for comment.

The evaluation covers Financial Institutions such as banks, investment and fund managers and life insurers, as well as Designated Non-Financial Businesses and Professions (DNFBPs) such as Trust and Company Services Providers (TCSPs), Virtual Asset Service Providers (VASPs), accountants, e-gaming, lawyers, lenders and estate agents. The Non-Profit Organisation (NPO) sector will also be subject to assessment.

Meeting the international standards for AML/CFT is an important aspect of being a responsible and reputable international finance centre. The Isle of Man takes its international responsibilities very seriously and always seeks to protect its communities and businesses from the harms caused by financial crime.

The event’s first morning was attended by representatives from the private sector and began with opening remarks from the Minister for Justice and Home Affairs Jane Poole-Wilson and (via video link) the MONEYVAL Chair Nicola Muccioli. This was followed by a presentation and Q&A session led by MONEYVAL’s representatives, covering what the private sector can expect from the Mutual Evaluation and guidance on engaging with assessors.

The afternoon and second day gave the Isle of Man’s AML/CFT authorities an opportunity to demonstrate and receive initial feedback on their effectiveness at preventing, investigating, and prosecuting financial crime through presentations and mock interviews.

“Part of our Island Plan is to ensure the Island’s financial structures continue to meet international standards and to demonstrate to MONEYVAL our all-Island approach to tackling financial crime,” said Poole-Wilson. “The event offered guidance on how we can demonstrate this most effectively, as well as giving our Island’s businesses a valuable insight into the process of this year’s evaluation.”

Country Training is a standard feature of the MONEYVAL assessment in advance of the Island’s on-site evaluation and provides private and public sector bodies an understanding of the criteria for the evaluation, how it will be conducted and how they can each contribute. It also assesses how the various agencies, regulators and government bodies involved in these areas exercise their responsibilities in relation to the FATF Methodology.

The Isle of Man Financial Services Authority, the financial regulator, is hosting a forum for Heads of Compliance in March to enhance awareness and understanding of the updated National Risk Assessment (NRA) and how it underpins efforts to deter financial crime.

The Authority is also working in conjunction with other government agencies to organise a flagship Countering Financial Crime Conference in August, which aims to build on the success of the past two years by once again bringing together leading local and visiting practitioners, experts and policymakers to share best practice.

“This is a critical year for the Isle of Man with the MONEYVAL mutual evaluation scheduled to take place in the Autumn, said Ashley Whyte, Head of the Authority’s AML/CFT Supervision Division. “Our events in March and August are part of a comprehensive engagement programme to strengthen collaboration with industry and promote an all-Island approach to combatting financial crime.”

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Hong Kong’s status as the preeminent supply chain ‘super-connector’ for Chinese Mainland enterprises to expand overseas and for global companies to access the market and regional supply chains has been reaffirmed by a major new US-Hong Kong research initiative published in December.

Commissioned by the Hong Kong Trade Development Council (HKTDC) and conducted by the Bay Area Council Economic Institute of the United States, the study analysed the ways in which the shift in US trade policy has triggered the accelerated reconfiguration of global supply chains.

Titled ‘Strategically Leveraging Supply Chains to Access the Asian Market’, the study noted that heightened geopolitical tensions, evolving trade policies, environmental pressures and technological advancements had served as a collective catalyst for a supply chain revolution that was impacting every aspect of the global economy.

In the wake of this mass recalibration, companies are having to reassess their operations and look to manage previously unencountered risks, ensuring that resilience is now prioritised alongside cost management and consistent competitiveness. This, it said, will inevitably impact the primacy of Asia’s role within this transformed landscape.

While subject to the same US reciprocal tariffs as the Chinese Mainland, Hong Kong as a stand-alone customs territory maintains a zero-tariff rate distinct from the Mainland and does not impose reciprocal tariffs on the import of US goods.

This and the exemption from tariffs for qualified goods exported from Hong Kong to the Chinese Mainland under the Closer Economic Partnership Arrangement (CEPA) has positioned Hong Kong as a key potential platform for US sales to the China market. In 2018, the CEPA was extended extension to include trade facilitation measures in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

To qualify for the preferential treatment, goods exported to the Chinese Mainland require a Certificate of Hong Kong Origin–CEPA (CO–CEPA) issued by the Hong Kong SAR’s Trade and Industry Department or by one of several Government Approved Certification Organisations (GACOs) such as the Hong Kong General Chamber of Commerce.

International companies with a qualified Hong Kong presence are eligible to leverage CEPA’s benefits when accessing the Chinese Mainland market. This can be done by establishing a legal entity in Hong Kong or by partnering with or acquiring a qualified Hong Kong company.

The manufactured products produced in Hong Kong and sold in the Mainland market will not be subject to Mainland tariffs. Qualifying companies are required to meet Rules of Origin thresholds that may consider where production occurs, apply a change in tariff heading (CTH) approach, and consider local content in a value-added requirement.

For zero-tariff treatment in some product categories, a company’s products must undergo “substantial transformation” in Hong Kong, with a value-added of at least 30%. Companies can subcontract for processing outside Hong Kong and add final finishing to a product in Hong Kong before its export to the Mainland.

This would, for example, allow a US company to establish a base of operations in Hong Kong, develop production partnerships in the GBA, and export those products to the Chinese Mainland under favourable CEPA terms.

When structuring contracts or joint ventures with Chinese Mainland partners, including those in the GBA, the foreign company’s Hong Kong entity has the ability to select Hong Kong as the governing law and seat for arbitration, assuring access to the city’s common law framework and significantly mitigating risk with regard to trade, investment, intellectual property, and other commercial disputes.

Service providers can also access CEPA benefits. Currently, the Chinese Mainland has fully or partially opened up 95.6% of its service sectors to Hong Kong companies. Benefits include the allowance of wholly-owned operations, relaxed restrictions on equity shareholding, reduced registered capital requirements, and relaxed restrictions on geographic location and business scope.

The critical step is to incorporate a legal entity in Hong Kong. Under CEPA’s non-discrimination principle, a foreign-owned company registered in Hong Kong will be treated as a “local Hong Kong service provider” and eligible for CEPA benefits.

The entity could be a regional headquarters, a project-specific company, or a joint venture with a local partner. With the recent removal of a qualification requirement of three years of substantive operations in Hong Kong, newly established companies can access these benefits almost immediately.

Another evolution of the original CEPA provides (with some exceptions) national treatment for investors from Hong Kong in all non-service sectors including manufacturing and investment in assets. Investment protection measures apply to both the service and non-service sectors, including restrictions on the expropriation of assets, the transfer and return of investments, and the simplification of procedures relating to investment. The Trade & Industry Department provides Hong Kong Investor (HKI) certificates to qualifying Hong Kong entities.

The report cited the electric vehicle (EV) sector as one example where Hong Kong is already playing a pivotal role in the regional supply chain transformation process. As mainland-based automotive manufacturers, as well as their global counterparts, prioritise the expansion of EV and battery production in Southeast Asia, Hong Kong has served as a crucial investment and financial hub, acting as an effective conduit for significant capital to be channelled into countries such as Indonesia, Thailand and Malaysia.

More generally, recent investment data also clearly indicated that Chinese Mainland companies are increasingly utilising Hong Kong as the support platform for many of their regional projects. This outcome bolstered by Hong Kong’s wide-ranging financial and professional services sectors, as well as the city’s agility in adapting to technological transformation and the evolving regulatory landscape.

“The adoption of strategies such as reshoring, nearshoring and developing redundant supply routes by many global businesses is accelerating the regionalisation of supply chains,” said Sean Randolph, Senior Director of the Bay Area Council Economic Institute. “Companies are diversifying their manufacturing bases, while relocating certain activities from China to other countries in Southeast Asia, India and Mexico – adopting the so-called ‘China+1’ strategy in order to ensure resilience and reduce risk exposure.

“At the same time, despite the ongoing bilateral friction, it is notable that many US companies remain deeply engaged with China. This is largely on account of the country’s unique concentration of suppliers – especially in the case of regions such as the GBA – which cannot be easily replaced or replicated elsewhere.

“Indeed, a number of recent surveys and announcements – including major Chinese Mainland investment commitments by businesses of the stature of Nvidia and Apple – have clearly demonstrated that, for many US businesses, China remains a key locale, with their engagement at least partly due to the indispensability of the broader regional supply chains,” said Randolph.

This new HKTDC research highlights Hong Kong’s vital roles as both a ‘super-connector’ and a ‘super-value-adder’, while confirming the city’s status as the key enabler for any mainland enterprise looking to expand overseas, and simultaneously serving as a gateway for any global company looking to access the revitalised regional supply chains and the China market.

“As companies reshape supply chains and seek resilient gateways into the region, Hong Kong remains one of the most efficient and trusted locations to establish a presence,” said Alan Fong, Sovereign Managing Director – Asia. “Hong Kong is a key strategic hub where regional, Mainland and global businesses continue to build and expand their operations.”

Sovereign Hong Kong can support clients through:

• Hong Kong company incorporation and redomicilation.
• Full corporate administration and management.
• Professional company secretarial and governance services.
• Accounting, HR, payroll and economic substance services.
• Integrated business and wealth structuring.

With Hong Kong’s strategic role strengthening, now is an ideal time for businesses and families to explore new opportunities in both the city and the wider Greater Bay Area. To learn how we can support your Hong Kong set-up or expansion, please contact us at below.

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The Ministry of Human Resources & Emiratisation (MoHRE) has ramped up its programme of on-site inspections, both in frequency and scope, across the UAE’s private sector.

In 2023, the MoHRE conducted over 430,000 office inspections and flagged over 75,000 violations. The number of inspections rose to 668,000 in 2024. In the first half of 2025, the MoHRE conducted around 285,000 inspection visits and over 5,400 employers were found to be in breach of local regulations.

The MoHRE said these violations were primarily centred on non-compliance with wage payments, ‘fake Emiratisation’, failure to engage in the licensed activity, and registering workers without a genuine employment relationship.

The level of scrutiny has also increased. Employers are now being asked to provide evidence of who is working on site and in what capacity, including employee lists, employment contracts, annual leave records and proof of wage payments.

It is becoming clear that compliance is no longer just about ensuring you have the right paperwork, it is also necessary to demonstrate that employment relationships are genuine, that working conditions meet all the legal requirements and that employment is properly aligned with the licensed activity.

The UAE has been promoting efforts to integrate Emirati citizens into the private sector, a key pillar of its broader economic strategy aimed at building a more balanced labour market and achieving sustainable development.

The Nafis programme was introduced in September 2021 to ensure that Emiratis employees should increase to at least 10% of the private sector workforce over a five-year period. Employers in the UAE with at least 50 members of staff were required to meet a 4% target by the end of 2023, 6% by the end of 2024, 8% by the end of 2025 and 10% by the end of 2026.

In 2023, the government further expanded the Emiratisation campaign by directing that businesses employing between 20 and 49 people should have at least one Emirati staff member by the end of 2024, and two by the end of 2025.

The number of Emirati citizens working in the private sector reached 100,000 in May 2024 and rose to over 156,000 in October 2025. The MoHRE’s inspections are the main mechanism to ensure that the roles offered to Emirati’s are real, properly documented and legally compliant.

One of the main drivers of the MoHRE’s enhanced inspection programme is that it is increasingly data driven – inspections are often triggered by patterns and risk indicators, rather than random checks. The MoHRE’s Smart Inspection System (SIS) uses a risk matrix to analyse company data, classify establishments by risk level and sets priorities for inspectors.

In June 2025, the MoHRE said that SIS had detected around 1,800 employers who were not effectively practicing their licensed activities despite having registered workers without a genuine employment relationship. This resulted in fines totalling more than AED34 million (c. USD9.25 million), along with restrictions such as suspending new work permits.

What to look out for and how to be prepared?

Private sector employers in the UAE need to be aware that both the frequency and scope of the MoHRE’s programme of on-site inspections has risen. Businesses now need to verify who their active employees are, whether they are working physically on the premises or remotely, and whether their job titles and duties reflect the actual role being performed.

Employment contracts now matter more than ever because they are the baseline record for what the business states about the employment relationship. Salary slips or any other evidence confirming that salary was paid are also essential to evidence that wages are being paid correctly and on time through the correct channels, while leave records are a clear indicator of whether statutory entitlements of paid annual leave, sick leave and other leave entitlements are being provided to employees.

To prepare for the MoHRE inspections, employers must therefore ensure that they have clear documentation on their employees from the Ministry of Labour, that they maintain employment contracts and amendments, that they retain payslips to demonstrate wages are paid for the right amounts and at the right times, especially for those where the Wage Protection System (WPS) applies, and that they show leave approvals and balances in a way that is easy to follow and understand.

To help navigate these complex requirements, we list below some of the documents that employers are frequently asked for:

1. Company trade licence.
2. Establishment card.
3. VAT certificate.
4. Evidence of employee time attendance (sign in/out).
5. Evidence that employees are working – email and teams exchange may be required.
6. Labour card / MOHRE contract copy.
7. Visibility of leave and absences records.
8. Evidence of final settlement calculation and proof of payment for past employees.
9. Evidence of General Pension & Social Security Authority (GPSSA) registration and contribution payments for Emirati nationals.

It should be noted that MoHRE inspectors may request to speak with Emirati nationals to ensure that the employment relationship is genuine, that working conditions meet all the legal requirements and that employment is properly aligned with the licensed activity. In the case of any work-related injuries, they may also request to speak with the injured employee.

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The UK Companies House and Insolvency Service announced that it had shut down three connected companies providing unregulated company secretary and registration services to more than 11,000 UK businesses for overseas clients, predominantly from China, that had no real presence in the UK.

Yunma Tianlong International Consulting Co. Limited, Busy Secretary Service Limited and J&C Business (UK) Co. Limited were all wound-up at the High Court in London on 29 January. None of the companies were registered with HM Revenue and Customs (HMRC) as trust and company service providers (TCSPs).

They were operating an unregulated business model because they had failed to register as TCSPs, did not conduct anti-money laundering due diligence on clients wishing to register UK companies, and were creating a false impression that their clients had a genuine UK business presence. Investigators found that, as of April 2024, one address in South Croydon had more than 8,500 companies registered to it, but the uncollected post had piled up inside reaching the letterbox.

The three companies also filed dormant accounts at Companies House despite conflicting information that suggesting active trading which could not be verified. They also did not appear to follow UK data protection rules and did not fully co-operate with Insolvency Service investigations.

Registered TCSPs, like Sovereign, are firms that offer services such as forming companies, acting as directors, secretaries or trustees, and providing registered office addresses. They must be registered with HMRC and follow strict anti-money laundering rules.

“Most third-party agents provide legitimate services and play an active role in the creation and management of UK companies,” said Martin Swain, Companies House Director of Intelligence and Law Enforcement Engagement.

“We know however that some agents fail to comply with the rules and are careless, even reckless, in carrying out their duties. We will continue to step up our efforts with our law enforcement partners to crack down on this type of activity and protect the integrity of the register.”

Sovereign Corporate & Trustee Services Limited (SCATS), based in Chester, is supervised as a TCSP by HMRC for Anti-Money Laundering (AML). It specialises in helping UK businesses and individuals comply with Companies House and HMRC regulations, including identity verification, Trust Registration Service data and Register of Overseas Entities (ROE) requirements.

Businesses supervised by HMRC are subject either to fit and proper or approval requirements to ensure that the businesses’ beneficial owners, officers and managers are appropriate people to undertake those roles. Relevant persons must also pass the appropriate test before the business can register, and remain registered, with HMRC.

If you are looking to set up a genuine business presence in the UK, it is essential to use a properly registered and supervised TCSP. More than just a badge of approval, our registered TCSP status formalises our ability to support clients, particularly those overseas, with the evolving demands of UK corporate compliance.

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