| STEPS ARGUMENTS | COMMENTS |
| If savings tax extended to trusts, then those wanting to avoid tax could utilise companies, foundations and establishments. | A poor argument, as the amendment was always going to include entities and legal arrangements. |
| Trusts are not used for tax avoidance. Their purpose is succession planning, confidentiality, family support and possibly asset protection. | This is the financial equivalent of the Iraq Information Minister, comical Ali, stating on live TV at the end of the Iraqi war that Iraq had defeated the US army, whilst in the background one could see US tanks rolling onto the Euphrates river banks. The tax evasion scandals using Liechtenstein trusts and foundations went public the same month of STEP's denials. |
| STEP spent in inordinate amount of effort, to the point of warning the savings tax was not litigation-proof, if the savings tax directive mandated the deeming of beneficiaries of discretionary trusts. Their argument being that future or unnamed beneficiaries cannot be deemed a beneficial owner as they do not have equitable right to payments received by a trust. | STEP are in a rut with outdated preconceptions that tax authorities will accept you giving away your assets, even irrevocably, to an entity without tax liability. In the US, a grantor trust deems the settlor the beneficial owner. This concept was adopted by the savings tax directive and the focus of deeming beneficial ownership of discretionary trusts fell onto the initial principal contributor of assets. |
| Beneficiaries cannot be deemed as beneficial owners until distribution is actually made. | In the event the initial contributor is not identifiable, e.g. for a deceased settlor, then the trust becomes a Paying Agent Upon Distribution. The trustee must keep track of payments received and apply the savings tax provisions to anyone who becomes entitled to the payment within 10 years of receipt. |
| For UK trusts, tax is already applied to trustees and beneficiaries. | An especially weak argument regarding the savings tax, as UK tax wouldn't apply to non-residents. The whole purpose of the savings tax is to target cross border investors. The savings tax amendment is aimed at all trusts throughout the world, e.g. Singapore, New Zealand, Liechtenstein, etc. So STEP's focus defense on UK trusts being taxed did not help their cause. |
| The 3rd EU money laundering and anti terrorist financing directive to identify beneficiaries of trusts is unworkable and is being threatened with litigation | The savings tax overcomes these problems by deeming the Settlor as the beneficial owner if there are problems in identifying an immediate beneficiary. Alternatively, the trust becomes a paying Agent Upon Receipt, applying the savings tax when payments are distributed to beneficiaries. There cannot be problems with this simple approach. |
