1)Value Added Tax (VAT) Definition

Value added tax or VAT is an indirect tax, which is imposed on goods and services at each stage of
production, starting from raw materials to final product. VAT is levied on the value additions at different
stages of production. VAT is widely applied in the European countries. However, now a number of countries
across the globe have adopted this tax system.
VAT was first introduced in France as taxe sur la valeur ajoutee or TVA. In 1954, the French economist,
Maurice Laure, the joint director of the French tax authority, the Direction generale des impost, initiated the
concept of VAT, which came into effect on April 10, 1954. Initially introduced for large businesses of France,
with the passage of time, VAT was employed for all business sectors of the country. In France, value added
tax is considered to be one of the major sources state finance.
Value added tax, also known as goods and services tax or GST proves to be beneficial for the government.
Through implementation of this tax system, government can raise revenues invisibly, where the tax is not
shown on the bill paid by the buyer. VAT is different from sales tax in various aspects. While sales tax is to be
paid on the total value of the goods and services, VAT is levied on every exchange of the product, so that
consumers do not have to carry the total cost of tax. However, VAT is generally not applied on export goods
to avoid double taxation on the final product. However, if VAT is charged on export goods, the tax amount is
usually refunded to the tax payer.
Value added tax can also be recovered. The individual consumers cannot recover VAT on purchases made by
them. However, businesses can recover VAT on the services and materials, which are bought by them in
order to continue the supply of the products and services.
VAT was introduced to arrest the increasing smuggling and cheating, which were resultants of high sales tax
and tariffs. Initiated in France, VAT is used as an instrument of taxation in all the member states of the
European Union. Different VAT rates are employed in different member states of EU. The minimum VAT rate
for the EU members is 15%. However, the reduced rate of VAT can be as low as 0%. The rate is determined
by the VAT authorities of different countries.
There are also some countries, where VAT has been introduced to replace sales tax. India is one such
country, where the system of VAT has been adopted for replacing the sales taxation system.
The value added tax serves as the solution for different problems related to the sales tax system. Unlike
sales tax, in VAT, there is provision for input tax credit or ITC. Due to the simplicity of the VAT system, the
entire taxation system on consumer products and services has become easier.

Value Added Tax (VAT) Act

Value Added Tax Act differs widely as far as statutory specifications go, from one area to another. However,
despite the difference in specificities, the spirit of the Act remains essentially the same all over the world.
VAT is fundamentally a goods and service tax, which is indirect in nature, as it is paid by a party who does
not bear the entire cost of the tax.
Irrespective of its position application, VAT Acts cover the following key areas:

Imposition and rate of VAT This is the single most important section in any VAT related Act. The
goods that come within the purview of the VAT and those that fall outside it have been restated by the Sixth
VAT Directive. This schedules states the applicability of the tax on the supply and exchange of goods, as well
as the rates of exchange.
VAT rates also vary widely across the EU VAT area. While there are parts of Europe where 25% VAT is applied
to goods, there are also areas where as low as 0% VAT is levied on certain commodities in some countries.
However, irrespective of these extremities, the general VAT rate remains at around 15%.

Taxable Persons and Registration This schedule defines the persons to be taxed. Being an indirect
tax, it is important for the law to ascertain the payee on whom the tax is levied. It includes persons as well

as business organizations.

Scope of VAT on Taxable Supplies

Supply is generally defined by the Treasury order of the respective country. Associated schedules also go on
to ascertain and fix the Time and Place of supply. Reverse charge on supplies received from abroad,
depending on the place and time of the supplier and/ or the recipient of the service.
Scope of VAT on acquisitions of belongings of other member states This schedule is particularly applicable to
the member countries of the EU. The formation of a common currency has drastically refashioned the
taxation system in the whole of Europe. All member countries of the Euro are bound to be a part of the EU
VAT area. The levying authority and the collecting authority as well as the rates of taxation are determined
by the Euro Council.
In most EU states, and particularly the UK, this clause also includes the acquisition from member states. The
meaning of acquisition is defined by an additional schedule of the VAT Act. The Time and Place of acquisition
is also covered and defined by the Act.
Acquisitions from persons belonging to another member state, is another schedule which is also particularly
applicable to EU. However, it can be well applied to other economic blocs as well, like the Nordic countries
and Latin America, of course with specific modifications.

Input Tax and Output Tax

Two kinds of VAT are levied in Europe. First, there is the output tax, which is paid by the customer on the
exchange directly. Then, there is the 'input tax', paid by one business to another for supplies. The Sixth VAT
Act of the EU Council states that the Input VAT cannot be recovered if it is attributed to exempt supplies.

Payment by reference to accounting periods and credit for input tax against output
tax.
The input tax of the business houses is calculated to be recovered by the output tax. The government pays
off the excess if it fails to be recovered, of course with clear accordance to the statutes and the clauses lay
down by the VAT Act of that particular country.

Payments on account of VAT

The customer, moreover, can avail a discount in tax on the basis of previously taxed input and labor at the
exempt stage, resulting in a lowered effective rate than the headline rate.

VAT Acts also cover the following key areas:

General provisions relating to imported goods

Free Zone Regulations

Place and Time of acquisition and Supply

Value of supply of goods or services

Value of imported goods

Application of customs enactments

Goods imported for private purposes

Invoices provided by recipients of goods or services

Value Added Tax (VAT) Rates

VAT or Value added tax was first introduced by Maurice Laure, a French economist and the joint director of
the French tax authority in 1954. The system of VAT taxation was made effective from April 10 in 1954.
Though this tax system was first applied in France, it was soon adopted by a number of other countries.
VAT, an indirect tax, is levied on value addition of products at every stage of production. From raw materials
to the final product, at every stage, value is added to the goods and services. Initiated in France, today VAT
is widely used as a method of taxation in most of the European countries.
VAT rates are decided on the basis of the main rules formed by European Union. All the member states of the
European Union follow these rules for deciding over the VAT rate to be charged at every stage of production
of goods. The three main rules for determination of VAT rate are:

The standard rate of VAT imposed on goods and services, on which this tax is imposed, is a minimum
of 15%.
Members of the European Union can apply maximum of two reduced rates of VAT, which should not
be less than 5%.
There is a provision for the members of the EU, where, under certain conditions, countries may
impose reduced VAT rate to certain services.
There are generally three different rates of VAT, which can be charged on goods and services. The standard
VAT rate is 17.5%. For particular goods and services, there is a reduced rate of 5%. There are also some
products, which are exempt from VAT, for which 0% VAT rate is imposed. However, the actual VAT rates
levied on products vary from one country to other. The VAT authorities of the countries decide on the rates to
be imposed on different goods and services. In addition, there are also certain rules for specific products and
services.
VAT is known by various local names in different countries. VAT rates of the some of the member countries of
the European Union and the local names used for this taxation system in those countries are mentioned
below:

Apart from the

European Union
member states,
there are also a
number of countries
across the world,
where VAT has been
introduced to solve
various problems
related to the sales
tax system. In most
of these countries,
variations of VAT are
imposed on value
addition on goods
and services.
However, in India,
VAT has been
introduced with the
aim of replacing the
system of sales tax.
The following table
shows VAT rates of
some of the
countries across the
globe, which are not
members of the
European Union:

VAT Rate
Country
Standard
Denmark

Argentina

Reduced
25%

none

Mervrdiafgift

22%

17% or 8%

Arvonlisavero
Mervardesskatt

Germany

19%

7%

Mehrwertsteuer/Umsatzsteuer

France

19.6%

5.5% or 2.1%

Taxe sur la valeur ajoutee

21%

13.5%, 4.8% or 0%

Value Added Tax (English)

Cain Bhreisluacha (Irish Gaelic)

Italy

20%

10%, 6%, or 4%

Imposta sul Valore Aggiunto

Netherlands

19%

6% or 0%

Belasting toegevoegde waarde

Portugal

20%

12% or 5%

Imposto sobre o Valor Acrescentado

Spain

16%

7% or 4%

Impuesto sobre el valor aadido

Sweden

25%

12% or 6%

Mervardesskatt

United Kingdom 17.5%

5% or 0%

Value Added Tax

Poland

7%, 3% or 0%

Podatek od towarow i uslug

Finland

Ireland

Country
Standard

Name

22%

VAT Rate

Name

Reduced
21%

10.5% or
0%

Impuesto al Valor Agregado

Canada

5%

4.5%

Goods and Services Tax , Harmonized Sales Tax

Croatia

22%

10%

Porez na dodanu vrijednost

Iceland

24.5%

7%

Virdisaukaskattur

12.5%

4%, 1%, or
Value Added Tax
0%

Mexico

15%

0%

Russia

18%

10% or 0% Nalog na dobavlennuyu stoimost

India

Impuesto al Valor Agregado

People's Republic of
17%
China

6% or 3%

Zeng zhi shui

Uruguay

22%

10%

Impuesto al Valor Agregado

7.6%

3.6% or
2.4%

Mehrwertsteuer, Taxe sur la valeur ajoutee, Imposta sul valore

aggiunto, Taglia sin la Plivalur

Norway

25%

14% or 8% Merverdiavgift or meirverdiavgift (informally moms )

South Africa

14%

0%

Switzerland

2) INCOME TAX

Belasting op Toegevoegde Waarde , Valued Added Tax

Indian Income Tax law is a subject full of legal jargons and complexities, which keep on
changing every new financial year. In spite of this fact the importance of this law in our
routine life cannot be ignored. Whether it is filing of Income Returns on due dates or
whether it is a financial decision to invest in an asset, every where the Income Tax
provisions play a major role in driving of the cost factor
ASSESSEE

In Simple terms any Person whose income is assessable under any Tax law (herein referred
to as The Income Tax Act 1961) is called an Assessee.

ASSESSMENT YEAR

Assessment year in simple terms means the financial year immediately succeeding the
previous year. In other words it is the year in which one is assessed for his/ her
income.
Below mentioned example will help you gain more clarity on these terms:

Mr. B, a salaried individual earned an income of Rs. 3, 50,000/- in the

previous year starting from 1st April 2007 to 31st March 2008 (i.e. 2007-08).
Now he has to pay tax on income earned, at applicable rates for assessment
year starting from 1st April 2008 to 31st March 2009 (i.e. 2008-09).

However there are certain exceptions to the above Rule, those being:

1. Income of a Non-resident from Shipping.

2. Income of persons leaving India either permanently or for a long period of
time.

3. Income of Bodies formed for a short duration says for a particular event or
purpose.

4. Income of a person trying to either Charge, Sell, Transfer or Dispose of or

otherwise part with any assets with a view to avoid any tax liability.

5. Income earned from a discontinued business.

6. PREVIOUS YEAR
Previous year means the financial year immediately preceding the assessment year,
i.e. the year in which income is actually earned.
Below mentioned example will help you gain more clarity on these terms:
Mr. Z, a sole proprietor earned a profit of Rs. 20,000/- for the previous year 2007-08,
His income for previous year 2007-08 will however be chargeable to tax at rates
applicable for Assessment year 2008-09.
However there are certain exceptions to the above Rule, those being:

1. Income of a Non-resident from Shipping.

2. Income of persons leaving India either permanently or for a long period of

time.

3. Income of Bodies formed for a short duration says for a particular event or
purpose.

4. Income of a person trying to either Charge, Sell, Transfer or dispose of or

otherwise part with any assets with a view to avoid any tax liability.

5. Income earned from a discontinued business.

6.

GROSS TOTAL INCOME & TOTAL INCOME

GROSS TOTAL INCOME: As per the Income Tax Act Income is Chargeable to
tax under five heads, those being:
1)

Salaries

2)

Income from House Property

3)

Profits and Gains from Business or Profession

4)

Capital Gains.

5)

Income from Other Sources

The aggregate income under these heads is termed as Gross Total Income. It is
always calculated before providing exemptions under Chapter VIA, i.e.,
deductions from Section 80CCC to 80U.

TOTAL INCOME: Total Income stated simply is the Gross Total Income as
reduced by amount permissible as deduction under Sections 80CCC to 80U.

PERSON/ TYPES OF ASSESSEE

The term person as per Income Tax law is defined to include: 1)

An Individual. e.g. Mr. A or Mr. B.

2)

A Hindu Undivided Family. e.g. Mr. A (HUF) or Mr. B (HUF).

3)

A Company. e.g. XYZ Pvt. Ltd. Or ABC Ltd.

4)

A Partnership firm. e.g. M/s ABC or M/s XYZ and Co.

5)

An Association of persons or a body of Individuals, whether incorporated or

not. e.g. ABC Sangh or XYZ Dal.

6)

A Local Authority. e.g. Pune Municipal Corporation or PCMC Municipal

Corporation.

7)

Every Artificial Juridical persons not falling within any of the above
categories. (Residual Category).
RESIDENTIAL STATUS AS PER INCOME TAX ACT

) What is Residential Status?

A) Residential Status of a person determines whether the persons income is
chargeable to tax in India or not.
Q) Why is it necessary to determine residential status of a person?
A) It is necessary because total income of a person cannot be assessed until and
unless his/ her residential status is determined as per the rules prescribed in the
Income tax Act 1961.
Q) What are the categories of Residential Status?
A) In case of Individuals and Hindu Undivided Family (HUF)
I.

RESIDENT
(i) Resident and Ordinarily Resident.
(ii) Not Ordinarily Resident.

II.

NON RESIDENT

Refer following table for more clarity on Residential Status: Category

Individuals/ HUF

Any Other forms

of Person

Resident in India
Category A

Ordinarily
Resident

Category B

Not Ordinarily
Resident

Non resident in India

Resident in India

Non resident in
India

RESIDENTIAL STATUS OF AN INDIVIDUAL

For determining the Residential Status of an Individual one has to pass the litmus test
of two broad situations, First is the testing of two Basic Conditions, and Second is the
testing of other two Additional Conditions.
BASIC CONDITIONS:

Basic Condition (a)

He is in India in the previous year for a period

of 182 days or more.

Basic Condition (b)

He is in India for a period of 60 days or more

during the previous year and 365 days or more
during 4 years immediately preceding the
previous year.

The above period of 60 days gets extended to 182 days in the following three
situations:
1) If you being an Indian Citizen leave India during the previous year for the
purpose of employment outside India; or,
2) If you being an Indian Citizen leave India during the previous year as a member
of the crew member of an Indian Ship.
3) If you being an Indian Citizen or a Person of Indian Origin come to visit India
during the previous year.

So if any Individual/ HUF satisfies at least one of two basic conditions subject
above exemptions he gets qualified for the second round of tests i.e., testing
of two additional conditions.

However if does not pass any of the two conditions specified above his Residential
Status will qualify to be of a Non Resident

ADDITIONAL CONDITIONS:
He has been resident in India in at least 2 out of
Additional Condition
10 previous years immediately preceding the
(a)
relevant previous year.
Additional Condition
(b)

He has been in India for a period of 730 days or

more during 7 years immediately preceding the
relevant previous year.

3) Fidelity Guarantee Insurance FAQs

How should I submit a claim form for Fidelity Guarantee insurance?
When dealing with the condition of a policy on claims procedure, the employer (insured) must give
immediate notice to the Company as soon as he discovers any loss due to the fraudulent act of the

employee insured under the policy. The employer must furnish the complete particulars of the claim together
with every explanation and evidence necessary to substantiate the claim. These are the minimum
requirements of the company.
As soon as the employer receives information about the loss of money on account of the insured employee,
he must contact the insurance company and collect the claim form and complete the necessary formalities
within the time stipulation.
What details are required to file a claim for the Fidelity Guarantee scheme?

Details about the employee responsible for the loss i.e. name, address, resignation,
nature of duties, etc
Details about the loss i.e. date of discovery, modus operandi followed by the
employee causing the loss, period during which misappropriation or embezzlement
occurred
Action taken against the defaulting employee i.e. police case and copy of the FIR to
be submitted along with disciplinary proceedings and departmental enquiries, etc.
copies of which should be submitted

Details about the amount of loss i.e. the extent of loss as discovered from the books
of accounts, direct recoveries if any made from the defaulting employee amounts due
to the employee viz. pending salaries, allowances or cash security deposited with the
employer by the employee

Details of any immovable property owned by the employee, if known

Details about any other insurance policies held by the employee, if known

What aspects and possibilities are scrutinised when he files a claim under the Fidelity Guarantee
scheme?
After the insurance company receives the claim form with all the details, the investigation of the matter will
commence to ascertain that

The loss has been reported by the insured immediately after discovery

The employer has provided all the relevant documents and details within a period
provided by the insurer after giving notice of the loss

The loss has been discovered within a period of 12 months from the date of expiry of
the policy or date of dismissal, retirement or death of the employee or within a
retroactive period of two years

There is no change of risk involved that might render the policy void

The insured has taken proper steps to pursue recovery against the defaulting
employee and also sought criminal prosecutionThe insured or any members of the
insureds family are not involved in the fraudulent act

The amount of loss claimed by the insured is actual and not magnified

Investigations for such claims are normally entrusted to independent surveyors, preferably Chartered
Accountants who will go through the books of accounts thoroughly and evaluate the circumstances of loss.
Then the CA makes his recommendations about the admissibility of the claim and the true amount of loss
payable under the policy.

At times employers do not want to prosecute their employees covered the Fidelity Guarantee
insurance schemewhy?
It is a condition precedent to liability that the insured must comply with all the terms and conditions of the
policy prior to making his claim for the benefits available for the policy. Thus, the insured must comply with
the claims procedure condition in the sense that he should take appropriate action against the defaulting
employee. If the fraudulent employee is absconding, the insured must make honest and sincere efforts to
trace his whereabouts and arrange for his prosecution. Even under the right of subrogation, the insurers
have no right to prosecute the dishonest employee. After all, there is no privity of contract between the
employer and his employees.
In certain cases, the employers may not wish to prosecute their employees either for social reasons or out of
sympathy. Others feel that prosecution diminishes the chances of recovering the amount from the employee.
In such cases, the insurers also may not insist on prosecution.
As a matter of practice since the insurers do not wish to prosecute the defaulting employees, preferring to
use persuasive methods to recover the amount involved. Wherever proof of loss appears vague, the
insurance company insists upon prosecution since complicity between the employer and the employee can
never be ruled out.
What will be the status of a Fidelity Guarantee insurance policy after a claim is paid off?
As soon as the formalities with regard to survey and procurement of documents are completed, the claim
papers will be banished and a claim note is put up to the competent authorities recommending payment of
claim. But before actually payable, the cash security held by the employer on account of wage, bonus,
incentive and allowances and direct recoveries made from the employee from the misappropriated amount
shall be deducted to arrive at the net loss payable to the employer.
If the net loss is more than the amount guaranteed as the sum insured under the policy only the sum
insured shall be paid and the balance amount will have to be borne by the employer itself. On the other
hand, if the net amount of loss shall be paid as such it should be noted that the question of under-insurance
is irrelevant in fidelity guarantee insurance since there is no possibility to decide on the amount of full
insurance. All losses are subject to a limit under the policy in respect of any one employee or in respect of
any one occurrence as in the case of excess floating policy. The insured must bear the fact that the net loss
arrived is also subject to the condition of extent of loss paid since they may have to decide on reinstatement
of the amount by applying the appropriate additional premium.
After the claim is paid, the individual policy is deemed as cancelled. In case of collective policy, the cover is
deemed as cancelled only in respect of that employee on account of whom the employer has suffered the
loss. Secondly, the employer is entitled to recover the amount of loss from the defaulting employee and
therefore in addition to passing on the right of subrogation to the insurer, he has to assist and furnish
documents to the insurers for vigourously pursuing recovery action against the fraudulent employee.
Whom should the Fidelity Guarantee insurance policy be recommended to ?
The Fidelity Guarantee insurance policy can be recommended to banks, companies or organisations that
have a sizeable number of employees to cover them against financial loss suffered because of their
employee's defalcation, forgery or fraudulent conversion.
What types of cover are available under the Commercial Fidelity Guarantee
Under the Commercial Fidelity Guarantee, three types of covers are available. The option to choose any one
or all of them lies with the policyholder as under:
Individual policy: Where only one named employee is covered for the mentioned amount.
Collective policy: Where the number of named employees is covered but only up to an agreed value as
decided by the policyholder according to their status and responsibilities.

Floater policy: This is given when the number of employees is more than five and where the number of
unnamed employees is covered against a single amount stated in the policy. The company's liability in
respect of any individual and its total liability in respect of all the employees covered in the policy is limited
to the Sum Insured mentioned in the policy.
What is Liability ?
Third party legal liability or Public Liability arises from the concept that every person in the conduct of his
affairs owes to every other person duty of reasonable care. If there is a failure in his duty and the failure
results in bodily injury or damage to property of any person, the person failing in his duty is answerable for
damages to the aggrieved person.
Such types of liabilities are covered under Insurance of Liability.
What is Public Liability ?
Property owners - for instance, owners of cafes or cinema houses are liable to compensate their guests or
audiences as the case may be if bodily injury, death or damage is caused to their belongings or due to the
carelessness of their servants. This liability of property owners is covered under public liability insurance.
What is Employers Liability ?
The Employers are liable to pay compensation for any bodily injury or death caused to the employee during
the course of work. The Employers Liability Policy covers these risks.
What is Personal Liability ?
Professionals, during the course of treating a patient may cause death or disablement owing to their
carelessness. Then they have to pay compensation because they have breached the trust reposed in them
by the patients. This Liability is covered under Personal Liability policy otherwise it is known as Professional
Indemnity Insurance policy.
What is Product Liability ?
Manufacturers of food products, drinks, engineering goods, medicines, etc are expected to be careful in their
production.
If they fail in their duty, they are liable to pay compensation for the consequences because their defective
products might cause loss of life and damage to property. This responsibility of manufacturers is covered
under Product Liability Insurance.
What is Bailee's Liability?
When goods are entrusted to a transporter, he has a duty to safely deliver the goods at the destination.
In case he fails to do so, he shall have to pay compensation to the owner of the goods. This liability is
covered under the Bailees' Liability Policy more commonly known as Carriers Legal Liability Policy.
What is provided under the Public Liability Insurance Act, 1991?The Public Liability Insurance Act,
1991 provides that every owner of a hazardous establishment as defined under the Act needs to take out a
compulsory insurance policy whereby he is insured against his liability to give relief under the Act.
When can a Liability arise ?
Liability can arise from :

A Tort

A Contract

A Statute

4) Ocean and Marine insurance:

Ocean Marine Policy Forms:

Check This Out:

A Company goes "Global"

The following ocean marine forms are

those that are generally available.
Manuscripted policies, to cover unusual
situations or special risks are also
possible.
Marine Cargo Policy
Cargo War Risk Policy
Hull Insurance
Yacht Policy

Background:
Ocean Marine Insurance is the oldest form of
insurance, probably dating to the Middle
Ages. The organization of Marine Insurance
took great steps forward with the formation
and development of an insurance market on
Lombard Street in London, England and
subsequently-- since 1769--Lloyds of London.
Today, Lloyds still plays a prominent role in
Marine Insurance. The first American insurer
was Insurance Company of North America
(now CNA, one of the companies that writes
insurance for David G. Sayles Insurance
Services), formed in 1794. CNA has operated
continuously since that time, and remains an
important market for marine as well as
other forms of property and casualty
insurance.
Because of its long tradition, marine policies

Widget, Inc. is moving to international

sales. Going international sounds good
after all, the world is becoming one big
economy. Let's just hope Widget Inc.
remembers to expand its domestic
insurance coverage to encompass the
new foreign exposure.
For instance, the products coverage in a
standard Commercial General Liability
policy (CGL) must be extended to
protect against the product injuring a
person or damaging property outside
the CGL's territorial coverage--normally,
the United States, its territories and
possessions and Canada, along with
transportation between these locations.
The CGL does provide limited worldwide
coverage for the occasional product
that ships out of the country. For
example, if someone buys your suntan
lotion in the United States and gets a
rash from it on a trip to Jamaica, the
CGL will offer coverage--but not if a suit
is first brought outside the CGL's
territorial coverage. This is good
protection for most firms but not for
Widget since it's planning to export.
That's when Export Insurance comes in
handy. If Widget, Inc. is sending

tend to be the most traditionally worded

policies in the insurance industry, and to
have the longest tradition of case law legal
decisions covering the various terms and
clauses of the policies. While care should be
taken with any insurance to clarify any
definitions provided in the policies, this is
especially true in marine coverages, where
the defined terms may have long histories.
To see visually the areas of coverage
available under the Ocean Marine policy
forms, see View. This picture covers three of
the four common policy forms--cargo, hull
and yacht--and who knows where that ship is
going?
Shipping Terms: In 1990 the International
Shipping Industry agreed on a number of
terms, which will be honored by various
governments internationally, that allow
transfer of ownership and control of goods
in shipment at various stages of the
shipping process. These are called the
Incoterms, and are presented graphically
on the linked page. If you are buying or
selling internationally you should be
familiar with these options, which can
improve or jeopardize your transaction!

The Marine Cargo Policy

Ocean Marine Insurance is designed to cover
various hazards related to the movement of
goods. The first and obvious protection that
can be provided is for the cargoes
themselves. This protection can be provided
to the seller/shipper or to the buyer. Where
ownership of and responsibility for the cargo
are assumed is crucial in determining what

employees out of the United States,

endorsements to its Workers'
Compensation and CGL policies are in
order, too. The Broad Form
endorsement to the CGL provides for
employees' acts while traveling on
business outside the CGL policy's
territory--among other valuable
extensions of protection coverage. The
Foreign Compensation endorsement to
the Workers' Comp policy includes
coverage for endemic diseases and
repatriations. (A repatriation may call
for expensive jet service to bring an
injured employee back to the States.) If
international operations are in your
firm's future, contact our agency for
some expert advice.

Cargo War Risk Policy

The Cargo War Risk Policy is designed to
provide coverage where the standard cargo
policy ends, in times or places of war or
similar (excluded) upheaval. The War Risk
Policy covers almost all of the war risk perils
excluded under the former policy. It is
generally written at the same time as the
Standard Cargo Policy. There are several
significant differences in coverage, however.
The War Risk Policy may exclude coverage
while the covered goods are within specific
geographic areas (typically areas deemed to
be extremely dangerous--this happened
briefly under Lloyds of London policies and
others in the Red Sea during the Gulf War
crisis). The War Risk Policy may be cancelled
on very short notice--typically 48 hours
(versus the 30 days notice of the Standard
Cargo Policy). The policy also sharply
curtails coverage when not on board ship--

coverage is needed. This used to be a

simpler exercise than at present--as a
limited number of shipping terms existed,
e.g. FOB, CIF etc.

prior to loading, when being transshipped or

after offloading in the country of final
destination.
Hull Insurance

In 1990 the International Shipping Agency

agreed on an expanded set of terms, which
allow transfer of ownership and
responsibility at various points along the
transit route, including at customs borders.
We have set the various terms out in
graphical format in Incoterms.
Risks are unavoidable in the shipment of
goods. Goods are loaded and transshipped.
Travel on the ocean provides its own set of
perils. These risks require that the shipper
take reasonable steps to ensure the safety
of his goods while in transit, for instance
with proper packaging and/or
containerizing, and shipping on a vessel
appropriate for the goods in question.
Goods are generally handled many times
during shipment, and Marine Insurance is
designed to provide coverage throughout
this process. Goods are first loaded at the
origination point onto a land vehicle (truck
or train, for instance). They are held in a
port prior to loading onto a ship. They may
be unloaded at an intermediate port, and
held for transshipment on a second vessel.
Upon arrival in the destination country, they
must be cleared through customs, then
loaded onto land carriers for transfer to the
buyer's premises. (There may also be
transfers between land transports on either
the buyer's or the seller's end--during which
time the goods are under the control of
warehouse depot operators, and additional
trucking or rail companies).

The basic Marine Policy is used to cover

either the shipowner or the shipper (or
buyer) of goods. When coverage is for goods
it is termed a Cargo Policy; when the ship is
covered, it is termed Hull Insurance. The
shipowner is provided legal liability
protection to others, for instance in the
event of a collision.
The Hull Policy can be written for each
voyage of a ship, or for a specified time
period, typically one year. When written on
a time period basis, an implied warranty of
seaworthiness is applied to the vessel. This
warranty does not adhere to the time basis
coverage; it is deemed to present a
potential hardship to the shipowner, since
the ship may be at sea or at a port where
suitable repairs might not be available,
when coverage begins.
Yacht Policy
The Yacht Policy covers pleasure craft, such
as yachts, motorboats and sailboats. It is
written to cover both the property (boat,
and contents) and its liability for collisions
or injuries.
There are two Yacht Hull Policies. The
Limited Hull Policy will only cover the
specified perils of fire, lightning and theft.
The Full Marine Policy additionally covers
explosions, perils of the sea, theft, collision
and conversion.

The marine policy may be scripted to meet a

variety of situations and desired coverages.
Generally, the policy covers perils of the
sea, fire, assailing thieves, jettison, barratry
of the master, explosion, defects in the ship
that cause damage, and other perils.
Exclusions in the policy are important, and
should be reviewed with a qualified risk
manager, such as your insurance agent.
These typically include damage due to
dampness, breakage, delay or loss of
market, acts of war, confiscation, etc.,
strikes, riots or civil commotions.

The Yacht Policy can also be written as allrisk coverage, in some cases. Like
homeowners' all-risk policies, all hazards are
covered unless specifically excluded. The
perils generally excluded are wear and tear,
gradual deterioration, or inherent vice,
marine borers, vermin, loss caused by ice or
freezing while afloat, loss to sails while
racing, and petty theft or mysterious
disappearance losses.

Further Reading: The books on the linked

page provide fuller information than we
can provide in this space. We have
provided brief reviews of some of them.
(We haven't checked their availability at
Amazon.com, although we do have a link
if you want to investigate further).

Other Sources: If you have a question on

a specific term not mentioned here, try
our Dictionary of Insurance Terms. Or call
your agent--or us!--who can give the most
definitive answer for your specific
situation.
Check out also: Shipping-Related Links

Kinds of insurance Property insurance

Two main types of contractshomeowners and

commercialhave been developed to insure
against loss from accidental destruction of
property. These contracts (or forms) typically
are divided into three or four parts: insuring
agreements, identification of covered property,
conditions and stipulations, and exclusions.
Origins of Formal Marine Insurance
The modern origins of marine insurance law were in the law merchant, with the establishment in England in
1601 of a specialised chamber of assurance separate from the other Courts. Lord Mansfield, Lord Chief

Justice in the mid-eighteenth century, began the merging of law merchant and common law principles. The
establishment of Lloyd's of London, competitor insurance companies, a developing infrastructure of
specialists (such as shipbrokers, admiralty lawyers, and bankers), and the growth of the British Empire gave
English law a prominence in this area which it largely maintains and forms the basis of almost all modern
practice. The growth of the London insurance market led to the standardisation of policies and judicial
precedent further developed marine insurance law. In 1906 the Marine Insurance Act was passed which
codified the previous common law; it is both an extremely thorough and concise piece of work. Although the
title of the Act refers to marine insurance, the general principles have been applied to all non-life insurance.
In the 19th. century, Lloyd's and the Institute of London Underwriters (a grouping of London company
insurers) developed between them standardised clauses for the use of marine insurance, and these have
been maintained since. These are known as the Institute Clauses because the Institute covered the cost of
their publication.

5)

ASSESSOR AS PER THE INCOME TAX ACT

1. The Assessor will look at evidence of a view or intent of establishing residence

as opposed to presence on the Island for a temporary purpose. We ask new
residents to answer a number of questions by completing a Registration for Manx
Income Tax Form R25 (New) in order to establish their residence status. In most
circumstances, completion of this form and evidence of the person having
accommodation in the Isle of Man is sufficient for the Assessor to accept that person
as resident and it is not necessary to make any further enquiries. The tests outlined
in paragraphs 6 and 7 are not applicable once we have accepted a persons
residence.

2. There are specific rules in the Isle of Man that determine tax residence by
physical presence. These tend to come into play when people claim not to be
resident for tax purposes, despite regularly being here. For the avoidance of doubt,
individuals residing in the Isle of Man for a period in the whole equal to more than
six months in any tax year (i.e. the year commencing 6 April) are tax resident and
liable to Manx income tax by virtue of Section 10, Income Tax Act 1970, which
states: every such person after residence in the Isle of Man for six months as
aforesaid shall be chargeable with income tax for the year commencing on the
sixth April as a person residing in

the Isle of Man.

3. Our practice, based on case law, is also to treat as tax resident individuals whose
visits to the Island over a period of four or more consecutive years exceed an

average of three months (which we take as 90 days) in each tax year. Where this
three month average rule is broken, the Assessor will regard the person as resident
from the fifth year. However, where it is clear when an individual first visits the Isle
of Man that they intend to make visits exceeding an average of 90 days in each tax
year over a period of four or more years, they will be treated a resident from the
beginning of the first year. Similarly, an individual will be treated as resident from
the beginning of the tax year in which they decide that they will make such visits. If
an individual needs to spend days in the Isle of Man for exceptional circumstances
beyond their control, those days will not be counted when considering this rule.

4. The Assessor does not count days of arrival and departure when determining the
number of days that a person has spent in the Isle of Man.

5. It should be noted that other countries often have similar rules, and it is possible
for an individual to be tax resident in more than one country as a consequence.

6. By virtue of Section 9, Income Tax Act 1970, individuals resident in the Isle of
Man, who shall have departed from the Isle of Man for the purpose only of
occasional residence elsewhere, shall be deemed, notwithstanding such
temporary absence, a person chargeable with income tax as a person residing in
the Isle of Man. However, where a normally-resident person is abroad for a
complete tax year they will be treated for tax purposes as non-resident for that tax
year. Furthermore, it is the practice of the Assessor to treat as permanently nonresident those
individuals who are abroad for two complete tax years or more. Where a length of
absence exceeding two tax years does not become clear until after the individual is
already abroad, the Assessor may need to revise the persons tax position from the
date that they left the Island. An individual returning to live in the Isle of Man after
an absence of more than two complete tax years will be treated by the Assessor as
a new resident.

7. Where questions arise in respect of an individuals residence status, the Assessor

will make appropriate enquiries and may look to guidance from relevant case law in
the United Kingdom.

8. For many years a key, if not the primary, test of establishing residence was that
an individual should have accommodation available in the Isle of Man retained for
their use based essentially on the 1904 case of Cooper v. Cadwalader (5 TC 101).
Simply relying on an available accommodation test, however, led to anomalies
when coupled with our system of taxing Manx residents on their worldwide income:
for example, where individuals have holiday homes in the Isle of Man. The UK, which
had similar practice to that of the Isle of Man, changed its approach from 6 April
1993 via Section 208, Finance Act 1993, which over-ruled the decision in Cooper v.
Cadwalader. The stance of the UK from that date was that the question of whether
an individual was in the UK for a temporary purpose only should be decided without
regard to any living accommodation available for their use in the UK.

9. The Assessor considers that the available accommodation test should no longer
determine Manx tax residence, although accommodation of a standard consistent
with being a permanent home is clearly an aspect of residence as mentioned in
paragraph 5 above. Further consideration will be given to bringing forward
legislation to make clear this approach, but it is not clear that new legislation will be
necessary.

10. The holiday home anomaly created by the available accommodation test was
addressed to a large extent by the Isle of Mans short-term residence extrastatutory concession (Government Circular 15/03), which prescribed a period of
presence in the Island that would be deemed not to create residency, despite the
over-riding statement that: Notwithstanding that an individual, who has
accommodation in the Isle of Man available for their use, is resident for income
tax purposes in any year in which he sets foot in the Isle of Man.

ASSESOR OF INCOME TAX

This Practice Note is intended only as a general guide and must be read in
conjunction with the appropriate legislation. It does not have any binding force and
does not affect a persons right of appeal on points concerning their own liability to
income tax.
Comments and suggestions for improvements of issued Practice Notes and
suggestions for future Practice Notes are always welcome.

HEADS OF INCOME

1.
2.
3.
4.
5.

6)

Income under Head Salaries

Income from House Property
Profits and Gains of Business or Profession
Capital Gains
Income from other Sources

Difference Categories The Metropolitan Area

The Metropolitan Council routinely compiles individual land use plans and plan amendments from
communities within the seven-county Twin Cities metropolitan area into a single regional data layer. A
principal goal of the Regional Planned Land Use dataset is to allow users to view, analyze and display
planned land use data for anywhere in the seven county metropolitan area with a consistent land use
classification scheme. The Metropolitan Council uses the Regional Planned Land Use (PLU) data to help
monitor growth and plan for regional services such as regional parks, transit service, and wastewater
collection and treatment.
Although the planned land use data is based on the locally adopted land use plans and designations for
each community, it represent only data that has been submitted to the Metropolitan Council for review per
the Metropolitan Land Planning Act of 1995 (Minn. Stat 473.864, Subd 2 and 473.175, Subd 1). See Data
Quality Information (Section 2 of this metadata) for specifics about the Metropolitan Land Planning Act
of 1995 under Completeness information.
Since there is no official State or Regional land use coding scheme that communities must conform with,
the variability of content and codes between communities' land use plans is nearly as vast as the number
of communities themselves (187). Differences among communities can range from the implementation of
different land use categories to conflicting definitions of similar categories. The PLU dataset attempts to
effectively level out the variability among communities by translating communities land use categories

and descriptions into a common classification scheme developed and endorsed by MetroGIS (a regional
GIS data sharing consortium) participants while retaining each communities' original categories.
Although the comparability of land use plans between communities has greatly improved as a result of
this translation or 'regionalization' of communities' land use codes, it is possible that not all community
land use definitions have been precisely translated into the most appropriate regional land use category.
In conjunction with other regional information (i.e., land use trend data, households and jobs forecasts),
the PLU data can help communities more easily understand regional and sub-regional planning goals and
Council staff, working with individual local units of government, can better plan for the future needs and
financing of regional services.
- Contact individual communities for more information on their locally adopted planned land use
categories.
- See Data Quality Information (Section 2 of this metadata) for specifics about the development of the
regional dataset and its accuracy.
- See Entities and Attributes Information (Section 5 of this metadata) for specifics about the regional land
use codes and categories.

This dataset is the result of the compilation of interpreted planned land

use for each community in the Twin Cities metropolitan area. Although
the data is based on the locally adopted land use designations of each
community, they represent those designation that have been submitted
to the Metropolitan Council per the Metropolitan Land Planning Act of
1995 (Minn. Stat 473.864, Subs 2 and 473.175, Subs 1). Locally adopted
planned land use designations and corresponding regional
interpretations are subject to modification through comprehensive plan
amendments. Amendment information will be updated quarterly. For
more information regarding any locally adopted planned land use
designation, contact the individual community.
By acceptance of this data, the user agrees to include a copy of this
metadata record, including the liability disclaimer, whenever the user

transmits or provides the GIS Data (or any portion of it) to another user.

We recommend that other interested parties download this dataset from

the Data Finder web site (www.datafinder.org) to ensure that the most
current dat

A principal goal of the Regional Planned Land Use (PLU) dataset is to

allow users to view, analyze and display planned land use data for
anywhere in the seven-county Twin Cities metropolitan area with a
consistent land use classification scheme. In conjunction with other
regional information (i.e., land use trend data, households and jobs
forecasts), the PLU data can help communities more easily understand
regional and sub-regional planning goals and Metropolitan Council
staff, working with individual local units of government, can better
monitor growth and plan for the future needs and financing of regional
services such as regional parks, transit service, and wastewater
collection and treatment.
Since there is no official State or Regional land use coding scheme that
communities must conform with, the variability of content and codes
between communities' land use plans is nearly as vast as the number of
communities themselves (187). Differences among communities can
range from the implementation of different land use categories to
conflicting definitions of similar categories.

PLANNING FOR VARIOUS ZONES

Prior to the issuance of a building permit by the Building Division,

information concerning zoning regulations must be obtained from the
Department of Planning and Development. Each piece of property within
the City is part of a designated zoning district. The zoning district
specifies the permitted land uses, such as residential, commercial or
industrial, and the minimum distances or setbacks from the property lines
for buildings, accessory structures, fences as well as maximum height
restrictions. If the permit request is for new construction, architectural
design and landscaping standards may apply to the property or project.
The above items must be addressed before the Building Division can issue
a building permit.
PERMITS REQUIRED
The California Building Code requires that no building or structure
regulated by the code shall be erected, constructed, enlarged, altered,
repaired, moved, improved, converted or demolished without first
obtaining a separate building permit for each building or structure. Some
examples of projects requiring permits are as follows:
Room Additions
Sewer Replacement
Covered Patios (wood or metal)
Water Heater Replacement
Heater/Air Conditioners
Decks over 30 in height
Lawn Sprinkler System
Reroof of Structure
Masonry Block Fences
Swimming Pools and Other Recreational Bathing Pools Over 18 Deep

Water Softeners
Any and All Electrical Work
Any and all Plumbing Work
PERMITS EXEMPTED
Some examples of work not requiring permits are:
One story detached accessory buildings used as tool and/or storage sheds
or playhouses and under 120 square feet of floor area. Fences not over 6 ft.
in height. (Except masonry or concrete) Retaining walls under 4 ft. in
height (including foundation). Recreational and Bathing Pools Less Than
18 Deep. Platforms, walks and driveways under 30" high. Painting,
papering and similar finish work. Window awnings projecting not more
than 54". Unless otherwise exempted, separate plumbing, electrical, and
mechanical permits will be required for the above exempted items.