Sunday, 8 January 2017

Originally posted on Facebook - Wiring of Funds to other countries - Jan 8, 2017

The following are two statements or observations which I made on Facebook in response to a statement/statements which were made on a topic, which I will not repeat as the statement belongs to other persons and I am exercising care with respect to the person's reputation or the person's  intention in posting the statement.

"Well, with all due respect, being an outsider, perhaps you can check the country to which the funds were being sent... Banks accept money, not Ministries. Thus  a Ministry is the head of the depts, under which the Defense Force will be placed... Here is another perspective on this matter which I just saw, which I will be reading It is noteworthy that in this day and age when the exchange rate for GBP is low when compared to the US$ being converted to TT$, that GBP is being wired, but can you advise as to the purpose to which the GBP was to be used in Somalia?"  Jan 8, 2017 - 9:03 am 
Update Jan 12, 2017: There was an inclusion of Somalia in the original statement, however there was another statement where the funds were to be wired to Aleppo.

"I do not think that the public is handing out any guilty verdict... From a practical point of view, are the funds being sent to be held for and to be used when the exchange rates change partly because coincidentally that will be the time the funds are needed and will be used for relief purposes? Remember each country has different concepts and laws on taxation, profits, gains and in some places Sharia is used where interest is not earned, however profits are earned and to a westerner, receiving a foreign currency when the rate is low and using it when the rate is much higher may be a benefit which may or may not be subject to tax. So there are many steps along the way which may need to be examined.... :) Just saying.... Just as it may not be practical to send the actual articles which are needed, in some places, that is what happens... Many times when we see someone in need on the street, we have a choice, do I buy a pastry and a drink for them or do I give them money, very often the food and the drink is what is given and we all know why :)Jan 8, 2017 - 9:18am

Upon reflection I realised that I tend to look at things from a business perspective and many times I am viewed as being hard hearted... However be that as it may, the above statements which I made, may reflect the following:
  1. Foreign Exchange Strategies in light of accounting and taxation. It is quite legal to purchase currencies and use them in your business when the rates are favorable to you or your venture. 
  2. The use of Taxation to "level the playing fields." If the above statements with respect to foreign currency were used in a business venture, then in Trinidad and Tobago, Business Levy would be payable on the receipts of the company, when the company is making losses, either as a result of:
    • Its foreign currency strategies, 
    • Changes in the foreign exchange rates over time, 
    • The benefits of purchasing and holding of inventory or
    • Cash collections 
The company may not be subject to Income or Corporation Tax as a result of those changes or business practices.

Banking Rules:  I would suggest that where a foreign authority disputes  the completion of a transaction on the grounds of "Terrorist Financing" that the funds be placed in a separate account and earn interest until the matter is resolved.  If there are elderly persons who are involved in the "giving of aid" perhaps the matter can be placed as a priority, to avoid them experiencing grief in trying times.

Foot note: I am an accountant by qualification and I learnt about hedges, futures and options as part of the ACCA curriculum when that was mandatory.

The soft side of my nature disagrees with the use of some of those concepts, some of the time, as I think that it is necessary to be fair to others most of the time. 

In real terms there are many taxation concepts involved in entering into those transactions, which may make such activity "copy writable".

copyright: Jennifer N Bailey

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