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Estonia: Rules on Taxation of Bitcoin

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(Apr 17, 2014)

On March 13, 2014, the Tax and Customs Board of Estonia published on its website a document entitled Taxation of Trade in Bitcoins (Maksustamine Bitcoin'idega Kauplemisel (Mar. 2014)). In this first government statement concerning the official policy in regard to Bitcoin, the Board followed the position of the European Central Bank and the Financial Action Task Force (FATF) and recognized Bitcoin as a decentralized virtual currency (id.).

According to an analysis of this document prepared by the International Bureau of Fiscal Documentation, in terms of its legal status Bitcoin in Estonia can be seen as an alternative means of payment. Bitcoin is not viewed by Estonian financial regulators and tax authorities as any form of security or e-currency. (Marek Herm, Estonia: Taxation of Bitcoin Transactions, International Bureau of Fiscal Documentation online subscription database (Apr. 8, 2014).)

Therefore, all individuals and legal entities conducting Bitcoin transactions are required to be registered as providers of business services (id.). Income generated from Bitcoin transactions is recognized as a capital gain for taxation purposes and is taxed accordingly. Because Bitcoin is not recognized as a financial instrument, transactions involving it do not constitute financial services and therefore are not exempt from the 20% Estonian Value Added Tax or from social security contribution requirements (id.).

Earlier this year the Estonian Public Broadcasting news service reported that the website that sold Bitcoin in the country was closed because the Anti-Money Laundering Bureau of the Police Department requested the business registration of the website. (Stuart Garlick, Bitcoin Trading Faces Increased Police Scrutiny, ESTONIAN PUBLIC BROADCASTING (Feb. 17, 2014)). It was also reported that sellers of Bitcoin in Estonia became subjects of a criminal investigation because money paid for a Bitcoin transaction was stolen from another account. (Anna Gershenzon, First Criminal Case Against Bitcoin Sellers Initiated in Estonia [in Russian], FOREXHM.RU (Mar. 3, 2014).)

Author: Peter Roudik More by this author
Topic: Currency More on this topic
 Financial services More on this topic
 Internet More on this topic
 Taxation More on this topic
Jurisdiction: Estonia More about this jurisdiction

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Japan: Gang Member Convicted of Fraud for Playing Golf While Hiding His Gang Membership

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(Apr 17, 2014)

The Japanese Supreme Court has recently reached different conclusions in similar cases involving golf course policies to exclude gang members from playing. Depending on the circumstances, a gang member who deceives the course employees and plays golf can be guilty of fraud.

Miyazaki Cases

In cases that involved two golf courses in Miyazaki Prefecture, the courses had signs at the entrances of the clubhouse buildings stating that "persons who associate with gangs are not allowed to play." In addition, the golf courses' adhesion contract stated that gang members are refused admittance to the facility and are not permitted to play golf. The receptionists at the courses, however, did not ask questions about visitors' association with gangs when those visitors checked in. (2013 (a) No. 3, S. Ct., 2nd Petit bench [in Japanese] (Mar. 28, 2014), COURTS IN JAPAN.)

Some other golf courses nearby had similar procedures and gang members had the experience, that that they could play golf if they did not say anything about gang membership. At one golf course, gang member X went to play golf with another gang member. X saw the sign at the golf course, but did not say anything when he checked in and wrote his name on a sheet, played golf, and paid the fees. At the other golf course, a person who had a golf club membership asked X to play golf. At the front desk, X signed in using his own name, did not mention that he was a gang member, and paid the requisite fees before leaving the facility. The Court decided that a person's simply not mentioning his association with a gang did not constitute an act of fraud. X was therefore found not guilty of fraud. (Id.)

Nagano Case

A different outcome resulted in Nagano Prefecture. The golf courses in Nagano Prefecture had strict anti-gang policies. During the club membership application process, an applicant is asked whether he or she has any association with members of gangs. To be a member, an applicant must submit a letter that states he or she will not accompany gang members to the golf course. In addition, the golf course adhesion contract stated that gang members are refused entrance into the facility and not permitted to play golf. (2013 (a) No. 725, S. Ct., 2nd Petit bench [in Japanese] (Mar. 28, 2014), COURTS IN JAPAN.)

In this case, club member B made a golf reservation for himself, gang member Y, and four others. During the check-in at the front desk, B printed his name and signed the sign-in sheet, but he asked a club employee to write down the other five names. The gang member's name was partly altered. Y intentionally avoided going through the check-in process. The employee believed none of B's guests were gang members, because B was abiding by club membership rules. If the employee had known the party included a gang member, he would have refused to check them in and to allow them to play. After playing, B paid all the fees incurred for the entire party, using his credit card. In this case, the Court decided that B's act constituted fraud and Y was a co-principal by conspiracy. (Id.)

A law professor, commenting on the Internet, criticized the Supreme Court's decision in the Nagano case, arguing that fraud was not committed, because the golf course received the fees, and therefore the golf course did not incur any property damage. He also states that the golf course may lose its reputation (which is a form of property damage), but such loss is not the accused's gain and is therefore outside the scope of the protected interest, which is what the charge of fraud properly covers. (Hisashi Sonoda, Booryokudan goruhu wa sagizai ka? [Is It Fraud If Gangs Play Golf?], YAHOO JAPAN (Apr. 4, 2014).)

However, the majority of scholars and the Court have held that, in a case of fraud, release of the property itself or the benefit itself is the loss, regardless of whether the usual compensation was given. (HOOMU SOOGOO KENKYUU SHO [LEGAL AFFAIRS COMPREHENSIVE RESEARCH INSTITUTE], KEIHOO KAKURON (sono 1) [PENAL CODE, INDIVIDUAL CRIMES (vol. 1)] 236 (2008).) Thus it appears that in the Nagano case, the Court's judgment is consistent with precedent.

Author: Sayuri Umeda More by this author
Topic: Fraud and financial crimes More on this topic
 Judiciary More on this topic
Jurisdiction: Japan More about this jurisdiction

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European Union: New Regulation on Clinical Trials

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(Apr 17, 2014)

On April 14, 2014, a new regulation on the authorization of clinical trials was adopted at the European Union level by the Council of the EU. The European Parliament approved the regulation in December 2013. (Press Release, Council of the European Union, Council Adopts New Rules on Clinical Trials, CONSILIUM [Council of the European Union official website] (Apr. 14, 2014).) The new regulation replaces two existing Directives, 2001/20/EC and 2005/28/EC, on establishing rules for good clinical practice and on requirements for authorization of the manufacturing or importation of medicinal products for human use, respectively. (Clinical Trials, European Commission website (last visited Apr. 16, 2014).)

The old clinical trials regime has been subject to criticism by patients, researchers, and the pharmaceutical industry because of its extensive regulatory requirements, high cost, and lack of harmonization of rules for multinational clinical trials. All of these factors contributed to a decline in the number of trials conducted in the EU. It is estimated that during the period 2007-2011, the number of applications for clinical trials decreased by 25%. (Press Release, Memo/14/254, European Commission, Q&A: New Rules for Clinical Trials Conducted in the EU, EUROPA (Apr. 2, 2014).)

The new regulation establishes the uniform application of common standards governing clinical trials across the EU and aims to attract more researchers to conduct clinical trials in the EU by simplifying and expediting the authorization procedure. Under the prior legal regime, an authorization was necessary in each Member State where the clinical trial was to be conducted. (Council Adopts New Rules on Clinical Trials, supra.)

The major highlights of the regulation are:

· Clinical trials must be authorized within 60 days. If no decision is made within the deadline, authorization is considered as having been given through tacit approval.

· Decisions on applications for large-scale modifications of clinical trials must be taken within 49 days. If the deadline passes without a decision having been made, authorization is deemed to have been granted.

· One single application will be sufficient for conducting clinical trials in several EU Member States. (Id.)

A Clinical Trials Register, maintained by the European Medicines Agency, has been in operation online since 2011 and allows public access to information on clinical trials for medicines authorized in the 28 EU Member States and in Iceland, Liechtenstein, and Norway. (Clinical Trials, EU Clinical Trials Register website (last visited Apr. 16, 2014).)

Author: Theresa Papademetriou More by this author
Topic: Health More on this topic
 International organizations More on this topic
 Medical research More on this topic
Jurisdiction: European Union More about this jurisdiction

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Indonesia: Plan to Revise Foreign Investment Rules

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(Apr 17, 2014)

Indonesia's Coordinating Minister for Economic Affairs, Hatta Rajasa, announced on April 11, 2014, that in the near future Indonesia plans to revise its current "negative investment list," which has been used to protect domestic industries considered to be "sensitive." No indication was given as to which industries would be removed from the list. (Rieka Rahadiana, Indonesia to Issue Revised Foreign Investment Rules Next Week, JAKARTA GLOBE (Apr. 11, 2014).)

The plan to reform the rules follows a slowing down of foreign investment in Indonesia. In addition, the country's negative foreign currency accounts had led to a 20% reduction in the value of Indonesia's currency against the U.S. dollar. (Id.)

The negative investment list, formed under Indonesian government decrees of 2007 and 2010, indicates sectors of the economy that are "either wholly or partially closed to private foreign and/or domestic investment … ." (Negative Investment List, Indonesia Investment Coordinating Board (IICB) website (last visited Apr. 14, 2014); The Presidential Regulation of the Republic of Indonesia on the Criteria and Establishment of Closed Business Line and Open Business with Conditions in Respect of Capital Investment, No. 76/2007 (July 3, 2007), IICB website; The Presidential Regulation of the Republic of Indonesia on List of Business Fields Closed to Investment and Business Fields Open, with Conditions, to Investment, No. 36/2010
(May 25, 2010), IICB website.)

The announcement of the planned revision comes after the December 2013 statement that an increase in foreign investment would be permitted in power plants, advertising, and pharmaceuticals. At that time, proposals to let foreign investors participate in air and sea ports were turned down. (Rahadiana, supra.)

Author: Constance Johnson More by this author
Topic: Foreign investments More on this topic
Jurisdiction: Indonesia More about this jurisdiction

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Egypt: Council of Ministers Issues Decree Classifying Muslim Brotherhood as Terrorist Organization

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(Apr 17, 2014)

On April 8, 2014, the Council of Ministers of Egypt issued Decree No. 579-2014, implementing a court decision issued on December 24, 2013, classifying the Muslim Brotherhood as a terrorist organization. (Council of Ministers Decree No.579-2014 [in Arabic], 14 AL JARIDAH AL RASSMAYAH (Duplicate (d)) (Apr. 9, 2014).) The Muslim Brotherhood organization is a religious and political group founded in 1928 on the belief that Islam is not simply a religion, but a way of life. It promotes insulation from secularism and strictly abiding by the rules of the Quran. (Muslim Brotherhood, ENCYCLOPAEDIA BRITANNICA ONLINE (last visited Apr. 16, 2014); Bryony Jones & Susannah Cullinane, What Is the Muslim Brotherhood?, CNN (July 3, 2013).)

The Decree provides that any individual who promotes orally and in writing the membership or activities of the Muslim Brotherhood organization will be punished according to the penalties established under the Anti-Terrorism Law No. 97 of1992. It also calls for the punishment of any one who finances or joins that organization. (Decree No. 579-2014; Anti-Terrorism Law, Law 97 of 1992, 29 AL JARIDAH AL RASSMAYAH 3 (July 18, 1992.)

In addition, the Decree requires the Egyptian government to notify all the Arab countries that joined the Anti-Terrorism Convention of 1998 of the December 2013 court decision and of any Council of Ministers' decrees implementing that decision. (Id.; Decision of the President of the Republic No. 279 of1998 on Joining the Arab Convention to Combat Terrorism, 18 AL JARIDAH AL RASSMAYAH 1312 (May 6, 1999).) Finally, the Decree orders law enforcement personnel, including members of police forces and the army, to protect government property from any future attacks that might be carried out by individuals affiliated with the Muslim Brotherhood organization. (Decree No. 579-2014.)

Author: George Sadek More by this author
Topic: Associations More on this topic
 Terrorism More on this topic
Jurisdiction: Egypt More about this jurisdiction

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