Aberdeen Asian Income Fund (AAIF) has announced that it is formulating proposals to migrate its tax residence to the UK and to apply for UK investment trust status.
Background to the proposals
AAIF aims to provide investors with a total return primarily through investing in Asia Pacific securities, including those with an above average yield. Because of this, much of its investment income is subject to overseas withholding taxes. AAIF’s Board has been advised that a UK tax resident company is able to access lower rates of withholding tax in some jurisdictions than a Jersey tax resident company as there are a greater number of double tax treaty agreements between the UK and overseas jurisdictions. The Board has therefore concluded that, subject to appropriate tax, regulatory and shareholder approvals, it will benefit AAIF and its shareholders as a whole if the Company becomes UK tax resident and elects to join the UK’s investment trust regime, thereby allowing AAIF to avail itself of these treaties and the related tax benefits.
Retaining Jersey domicile
The board says that it only intends to migrate AAIF’s tax residency to the UK at this time. AAIF will remain a Jersey incorporated entity, subject to Jersey law and regulation and the oversight of the Jersey Financial Services Commission.
Next steps
In order to effect the proposals, AAIF will be required to adopt new articles of association in order to remove the current restrictions on it carrying out its business in the UK. Further details of the proposals, including the proposed amendments to the articles of association, will be set out in a circular which will be sent to shareholders in due course.