- NEWSLETTER, GLOBAL
- March 7, 2024
According to Thomson Reuters, in 2022, there were over 230 daily alerts for regulatory updates. This figure is unsurprising given the increasing regulatory focus on Operational Resilience, Artificial Intelligence (AI), Cyber Security, Data Privacy, and Environmental, Social, and Governance (ESG) criteria.
In 2023, significant cyber security and digital operational resilience policies took shape in the U.S. and the European Union, establishing a benchmark for other areas. This trend of regulatory development observed in 2023 is expected to persist and intensify in 2024.
What can we anticipate for 2024, and what preparations are necessary? Below are ten critical regulations and areas of emphasis on our radar.
- Regulatory Attention on AI
- SEC Cyber Security Regulations
- Cyber Security Maturity Model Certification (CMMC)
- NIST Cyber Security Framework (NIST CSF)
- Cyber Security Mandates for the Financial Industry
- Data Protection
- Focus on Operational Resilience
- The Gramm-Leach-Bliley Act
- Payment Card Industry Data Security Standard (PCI DSS) Compliance
- Equity and Environmental Sustainability
1. Regulatory Attention on AI
The recent increased regulatory analysis on artificial intelligence (AI) is understandable, given the rapid expansion of AI and generative AI (GenAI) use across multiple sectors. This focus is anticipated to persist into 2024 and onwards.
In January 2023, the National Institute of Standards and Technology (NIST) unveiled the NIST AI Risk Management Framework (AI RMF 1.0). Its goal is to enhance the integration of trustworthiness in the design, development, deployment, and assessment of AI products, services, and systems. Furthermore, a significant move by the White House involved issuing an Executive Order to ensure the safe and trustworthy creation and application of AI.
The European Union is actively working towards AI regulation as well. In December 2023, EU representatives agreed provisionally on extensive rules for the secure and reliable application of AI. A BBC report indicates that the EU Parliament is slated to vote on these AI Act proposals within the year, with the laws expected to be implemented by 2025. Other countries, including China, Canada, Brazil, South Korea, Singapore, the UK, and the UAE, are at different stages of implementing AI-specific regulations, poised for adoption shortly.
As AI technology advances and finds new applications within the Governance, Risk Management, and Compliance (GRC) sector, these regulations are also anticipated to advance and adapt with technological progress.
2. SEC Cyber Security Regulations
In today’s digital age, cyber threats pose one of the most significant risks to organizations, with the advent of AI technology further escalating the potential for cybercrimes through its availability for executing large-scale attacks. Regulatory bodies are diligently working to ensure that companies adopt adequate security measures to safeguard their assets and the interests of stakeholders.
In July 2023, the U.S. Securities and Exchange Commission (SEC) introduced the Cyber Security Risk Management, Strategy, Governance, and Incident Disclosure rules for public companies. These regulations mandate that:
Companies establish a comprehensive incident response mechanism, including immediate reporting to the SEC. Companies regularly disclose the cyber security expertise of their board members and senior management and the cyber security risk management practices they have adopted. For risk management, strategy, and governance disclosures, public companies must start including this information in their annual reports for fiscal years ending after December 15, 2023.
3. Cyber Security Maturity Model Certification (CMMC)
The Cyber Security Maturity Model Certification (CMMC), created by the U.S. Department of Defense, represents another significant cyber security standard and certification framework. It aims to ensure the secure handling of sensitive, yet unclassified information shared between the Department and its contractors and subcontractors.
This year, anticipation grows for the final rule of CMMC. In 2023, the proposed revision, CMMC 2.0, was forwarded to the Office of Information and Regulatory Affairs (OIRA) at the White House for evaluation. This updated version offers a robust scheme to safeguard the defense industrial base’s (DIB) critical unclassified data against sophisticated cyber threats. Expected modifications in the final rule are set to streamline the compliance process, lower the costs associated with assessments, and boost accountability, among other improvements.
4. NIST Cyber Security Framework (NIST CSF)
Beyond regulatory mandates, standard-setting entities also provide guidelines and frameworks to aid organizations in effectively managing cyber security threats. The NIST Cyber Security Framework stands out as a tool that organizations highly adopt. Initially released in 2014, this framework offers “a framework that can be utilized by organizations, regulatory authorities, and customers to establish, guide, evaluate, or enhance comprehensive cyber security strategies.”
The National Institute of Standards and Technology (NIST) unveiled a revised version of the framework for public feedback in the second half of 2023. This updated draft, or Framework 2.0, is designed to “mirror the evolving cyber security environment and streamline the application of the CSF across various organizations.” The NIST has announced that the definitive edition of CSF 2.0 is slated for release in early 2024.
5. Cyber Security Mandates for the Financial Industry
The financial industry, a prime target for cyber threats due to its significant data and monetary assets, is under increased regulatory scrutiny.
The New York Department of Financial Services (NYDFS) has updated its pioneering Cyber Security Regulation as of November 2023, initially established in 2017. This regulation mandates that entities under its jurisdiction, such as banks, insurance firms, and various financial services providers, implement robust cyber risk management and governance practices. This includes establishing a comprehensive cyber security program to safeguard consumer data, drafting detailed policies, appointing a Chief Information Security Officer (CISO) for data and system security, and enforcing strong controls.
The revised regulations introduce stricter governance protocols, more frequent risk evaluations, enhanced safeguards against unauthorized system access, improved incident reporting procedures, and more. These changes underscore the importance for organizations to closely monitor the evolving NYDFS Cyber Security Regulation, which is likely to influence similar standards across other regions.
Entities governed by these regulations must ensure compliance by April 29, 2024.
6. Data Protection
The safeguarding of Personally Identifiable Information (PII) remains a critical concern for regulatory bodies around the globe.
In the United States, the implementation of the new California Consumer Privacy Act (CCPA) regulations has been postponed to March 29, 2024. The California Privacy Rights Act (CPRA), approved by California voters in 2020, has revised the CCPA, introducing enhanced privacy measures. It sets new benchmarks for collecting, storing, and utilising consumer data and introduces “additional responsibilities for handling personal information, including enabling consumers to opt out of their data being shared.”
The CPRA also led to the formation of the California Privacy Protection Agency (CPPA), tasked with the law’s implementation and enforcement starting July 1, 2022. However, enforcement was scheduled to begin on July 1, 2023. Nevertheless, the agency only finalized its initial regulations under the CPRA by March 29, 2023.
Following this delay, a California court extended the deadline for enforcing these new rules by a year. However, legislative amendments under the CCPA were activated on January 1, 2023, and are currently effective.
In November 2023, the CPPA proposed a novel regulatory scheme for “automated decision-making technology” (ADMT), establishing necessary safeguards for how businesses employ these technologies. Additionally, the agency has released updated draft regulations concerning risk assessments and cyber security audits.
7. Focus on Operational Resilience
The attention and measures regarding operational resilience in the financial industry continue to escalate. In the United Kingdom, the Bank of England, the Financial Conduct Authority, and the Prudential Regulation Authority have collaboratively issued a consultation document titled “Operational resilience: Critical third parties to the UK financial sector (PRA CP26/23 and FCA CP23/30)” in the previous month. The final date for submitting feedback is set for March 15, 2024. Furthermore, these regulatory bodies plan to propose a joint policy statement on applying their enforcement powers on essential third-party service providers.
In the EU, the Digital Operational Resilience Act (DORA) is designed to bolster the management of information and communications technology (ICT) and digital risks, especially regarding third-party involvements, thereby enhancing digital operational resilience within the region’s financial sector. It mandates a comprehensive set of requirements covering areas such as a risk management framework, handling and reporting incidents, and implementing a digital operational resilience testing program, among other aspects. Passed by the European Parliament in November 2022, the act sets a compliance deadline of January 17, 2025, for regulated bodies. This initiates a critical one-year period for financial sector entities to align with DORA’s stipulations.
As operational resilience becomes increasingly crucial across various sectors, DORA is a pivotal regulation, signalling a potential trend for similar initiatives to be adopted by other sectoral and federal regulatory bodies. In September 2023, the UK’s Department for Science, Innovation and Technology issued a legal document to modify the term ‘fundamental rights and freedoms’ in the data protection laws. This revision aims to align the language with rights acknowledged by UK legislation, moving away from the rights preserved under EU law. Should the UK Parliament endorse this change, it is anticipated to be enacted at the beginning of 2024.
8. The Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act (GLBA) is a crucial regulation aimed at safeguarding consumer financial privacy by mandating that financial institutions disclose their practices regarding information sharing with their customers and protect sensitive information.
In a significant update in October 2023, two decades following the initial implementation of the GLBA Safeguards Rule, the Federal Trade Commission (FTC) revised this rule. The revision stipulates that non-bank financial companies must inform the FTC about data breaches impacting at least 500 consumers. These notifications must be made to the agency as swiftly as possible, 30 days after the breach is discovered.
This updated regulation is scheduled to be enforced 180 days following its announcement in the Federal Register, with expectations pointing towards a 2024 enactment.
9. Payment Card Industry Data Security Standard (PCI DSS) Compliance
The Payment Card Industry Data Security Standard (PCI DSS) is a crucial benchmark for safeguarding cardholder information. This internationally acknowledged framework is essential for entities that handle, process, or transmit cardholder information, offering detailed technical and procedural guidelines to ensure data protection.
The newest iteration, PCI DSS version 4.0, is set to be enforced starting March 31, 2024. This version, released by the PCI Security Standards Council in March 2022, provides a two-year window for organizations to adapt to and incorporate the revisions.
As stated in the official announcement, the update to version 4.0 from 3.2.1 is designed to counteract evolving security threats and leverage new technologies for enhanced threat mitigation.
Discover the journey with Corporater to achieve and maintain PCI DSS compliance.
10. Equity and Environmental Sustainability
The commitment to diversity, equity, inclusion (DEI), and environmental sustainability is becoming increasingly critical for businesses and regulatory bodies worldwide. Notably, 22 states adjusted their minimum wage rates in the United States at the start of 2024. Moreover, anticipated in April is the Department of Labor’s (DOL) finalisation of amendments to regulations concerning exemptions from the Fair Labor Standards Act’s (FLSA) overtime and minimum wage mandates for certain salaried employees.
Additionally, a new DOL rule came into effect at the beginning of 2024, mandating businesses with 100 or more workers in specific high-risk sectors to electronically report incidents of injury and illness to the Occupational Safety and Health Administration (OSHA).
In Europe, the European Parliament endorsed the Corporate Sustainability Reporting Directive (CSRD) in November 2022. This directive mandates member states to adopt enhanced sustainability reporting standards within 18 months, aiming to improve transparency and decision-making regarding sustainability for investors and stakeholders. This directive emphasizes the need for large corporations and publicly traded small and medium-sized enterprises (SMEs) to disclose information on various sustainability aspects, including environmental, social, human rights, and governance issues, as noted by the European Council.
The directive’s enforcement will be phased in from 2024 to 2028, starting with entities already under the non-financial reporting directive (NFRD) reporting in 2025 for the 2024 fiscal year.
Here are a few important rules businesses should keep an eye on this year. Companies need a simple, smart, and tech-based way to handle compliance to keep up with the quick changes in rules and regulations. This method helps them stay updated with new regulations, cut down costs, and have a clearer view of their compliance situation. IMC Compliance Management makes it easier for companies to start and stick to their compliance plans, making sure they follow the necessary rules and standards.
Thus, IMC, an implementation partner of Corporater, helps assist in GRC solutions. Corporater is a global software company that enables medium and large organizations worldwide to manage their business with integrated solutions for GRC built on a single platform. Find out how IMC can make your compliance efforts better – book a demo tailored just for you today!
- Publications
- March 1, 2024
“The Art of Building Company Culture” is designed to equip you with key strategies and insights for creating a positive workplace environment. It underscores the pivotal role of HR in fostering a culture that drives success. To access the eBook and embark on your journey toward building a thriving company culture, simply fill out the form below. We look forward to supporting you every step of the way.
Please complete your details below to download:
- Article, U.A.E
- February 29, 2024
The Cabinet Decision No.10 of 2024, which came into effect on March 1, 2024, has been announced. The Federal Tax Authority (FTA) has outlined important dates for corporate tax registration, and it’s crucial to act swiftly. If you miss the deadline, you could be facing an AED 10,000 ($2700.00) fine.
The first deadline for juridical persons is May 31, 2024. This is part of the new tax rules from the FTA, reflecting the Corporate Taxation Law that kicked in last June, affecting all financial periods starting from then.
For any businesses commenced before March 1, 2024, you need to register for corporate tax by the dates mentioned below. And if you’re a new business by March 1, 2024, you have three months to register.
| Month of Licence issuance irrespective of year of issuance | Deadline to apply for Corporate Tax Registration |
|---|---|
| 1 January – 31 January | 31 May 2024 |
| 1 February – 28/29 February | 31 May 2024 |
| 1 March – 31 March | 30 June 2024 |
| 1 April – 30 April | 30 June 2024 |
| 1 May – 31 May | 31 July 2024 |
| 1 June – 30 June | 31 August 2024 |
| 1 July – 31 July | 30 September 2024 |
| 1 August – 31 August | 31 October 2024 |
| 1 September – 30 September | 31 October 2024 |
| 1 October – 31 October | 30 November 2024 |
| 1 November – 30 November | 30 November 2024 |
| 1 December – 31 December | 31 December 2024 |
Ready for Tax Success?
IMC is your go-to expert for Corporate Tax in the U.A.E. We’re dedicated to assisting you in keeping up with tax regulations so you can focus on growing your business. IMC Group believes in empowering businesses with the knowledge and tools they need for complete tax compliance.
Trust us to guide you through these changes with ease and confidence.
Remember, it’s not just about avoiding fines – it’s about ensuring your business thrives under the new tax laws. Let IMC help you get there.
- Article, Global
- February 27, 2024
In today’s rapidly changing business environment, the need for effective Governance, Risk, and Compliance (GRC) management is more critical than ever. With the expansion of economic, geopolitical, social, healthcare, cybersecurity challenges, and more, the complexity of GRC tasks has significantly increased, particularly in sectors like healthcare.
Background:
Solution:
IMC steps in with solutions tailored to the unique GRC hurdles faced by this healthcare firm. As an implementation partner of Corporater, a renowned software company, IMC crafts holistic strategies to navigate these GRC complexities. Corporater’s platform offers a unified solution for managing GRC across medium to large organizations, emphasizing data protection, regulatory compliance frameworks, and risk management in clinical settings. Our strategy includes regular compliance checks, compliance-oriented training for staff, and promoting a culture focused on compliance and risk consciousness among medical professionals. By embracing technology, we aim to streamline GRC processes and enhance cooperation between healthcare providers and regulatory authorities.
Key Elements:
Leveraging Technology and Expertise:
Result:
IMC’s initiatives lead to enhanced precision and innovation in healthcare GRC, enabling organizations to protect patient information, comply with regulations, and manage the risks associated with clinical research. By employing a knowledge graph to monitor clinical trial risks, healthcare organizations can link vast datasets, including trial specifics, participant data, progress, and outcomes, improving patient safety, regulatory compliance, and the speed of drug development.
The focus on precision in healthcare promotes a secure, compliant atmosphere that supports the adoption of innovative technologies for better patient care. IMC, in collaboration with Corporater, continues to push the boundaries of GRC excellence in the evolving healthcare sector.
Conclusion:
The adoption of knowledge graphs has significantly enhanced the GRC capabilities of the company, positioning it as a leader in integrating cutting-edge technologies for comprehensive governance, risk management, and compliance. The dynamic adaptability of knowledge graphs ensures the company stays ahead in the rapidly changing regulatory landscape.
Join us in exploring the future of GRC, where its potential to improve the efficiency and effectiveness of your organization’s GRC strategies is boundless. IMC’s commitment to revolutionizing GRC in government sectors is evident through strategic partnerships, expertise, and customized solutions. Corporater enables organizations to align their governance, performance, risk, and compliance efforts with strategic goals, promoting a unified strategy that boosts organizational efficiency and supports sustainable growth.
- Publications
- February 20, 2024
Please complete your details below to download:
- NEWSLETTER,U.A.E
- February 14, 2024
In the dynamic landscape of the Middle East, the M&A market has yet again demonstrated significant resilience throughout 2023, despite facing formidable global economic and geopolitical challenges. The region performed steadfastly, largely steered by regional sovereign wealth funds (SWFs) and government-related entities (GREs). Leading organizations largely diversified their portfolios away from their reliance on hydrocarbons. Some of the prime sectors riding the growth trajectory and witnessing investment activity include fintech, healthcare, agribusiness, and renewable energy.
Looking ahead to 2024, indicators suggest a continuation of robust activity. However, there’s an increased potential for deal flow driven by investment platforms that were launched in the later months of 2023 or early 2024. These platforms will go a long way, enabling SWFs and GREs to extend their global investment footprint to nurture alternative investments. Naturally, forward-thinking organizations would be seeking M&A transaction advisory services in Dubai to remain on the right track.
Broader Investment Reach
SWFs and GREs, in recent years, have actively pursued broader and often more prominent investments in sectors like renewable energy and infrastructure. In developed economies, they have acquired significant stakes in key assets. In 2024, this trend is likely to persist, particularly with the geopolitical landscape impacting the deal flow. This will support oil prices in the Middle East.
Economies that are currently grappling with severe issues like high inflation rates, conflicts, interest rates, and geopolitical uncertainties will benefit from fresh opportunities. Several governments are actively engaging SWFs and GREs in the Middle East to invest in domestic assets and projects, aiming to bridge financial gaps beyond their own resources. Outbound M&A, involving global cross-border transactions, is poised to become a prominent trend.
Besides, investments are likely to pour into different industries like healthcare, technology, AI, fintech, nuclear, agribusiness, and renewable energy. In M&A activities, ESG (environmental, social, and governance) are likely to play a crucial role. Particularly, the UAE is working on its commitments made during COP 28 in 2023. This is evident from its launch of a $30 billion climate fund for investing in different ESG projects.
Inbound Investment and Favorable Regulatory Environment
Inbound investment is projected to remain active as Middle East governments focus on developing leisure, energy infrastructure, and tourism assets. These investments often take the form of joint ventures, with incoming partners providing vital technology or expertise. The legal and regulatory framework in the Middle East, influenced by principles from British and American systems, has seen an uptick in Middle East registered Special Purpose Vehicles (SPVs) used for investment purposes, both domestically and internationally. Businesses entering the Middle East or operating in the UAE are looking for transaction advisory services in Dubai for professional guidance.
Moreover, there has been an increased traction in M&A transactions backed by warranty and indemnity insurance. The London insurance market proved to be receptive to such initiatives, and this trend is likely to dominate 2024 too.
The Outlook for Middle East Regional and Outward-Bound M&A Activities
Both regional and outward-bound M&A appear promising in the Middle East although the performance in 2023 looks a bit subdued compared to expectations. GREs and SWFs are likely to play a significant role in a diverse range of M&A deals in 2024. The focus lies on technology, renewables, infrastructure, and healthcare.
The IMC Group continues to be a reliable partner for businesses seeking due diligence services in Dubai amidst increasing M&A activities.
- NEWSLETTER, GLOBAL
- February 14, 2024
Access to a Global Talent Base
Recruiting and retaining skilled finance professionals has turned out to be an arduous task for many organizations. Studies reveal that 91% of senior managers faced challenges in finding skilled accounting and finance talent in 2022. The most difficult part for them was to find skilled professionals to tackle bookkeeping, analysis and budget, accounts receivable and payable, planning and analysis.
With remote work environments appealing to professionals, along with issues like inflexible work arrangements and burnout prompted a sizable section of professionals to look out for alternative opportunities for employment.
Outsourcing accounting and finance presents a compelling solution amidst this challenge. Successful businesses are tapping into outsourced professionals, ranging from entry-level accountants to seasoned CFOs. This empowers businesses with the power to assemble a tailored team to address their specific needs. The cost-effectiveness, flexibility, and cost-effectiveness that outsourcing brings to the table make it an attractive option for organizations looking forward to streamlining their financial capabilities.
Focus Shifts to Cybersecurity
Do you know that the financial services sector is 300 times more susceptible to cyberattacks compared to other sectors? The escalating threat from adverse actors makes it imperative to adopt robust cybersecurity measures in the financial services sector. Cybercriminals largely target financial data, which justifies why businesses should prioritize securing their finance and accounting operations against malicious players.
Outsourcing finance and accounting services to responsible teams of professionals serves as a proactive defence system against evolving threats. Thanks to their expertise, organizations gain access to sophisticated security solutions while optimizing their internal resources. This is a strategic approach that enhances data protection and helps your employees focus on the core competencies without compromising security.
Enhancing Technology
The rapid advancement of technology continues to revolutionize accounting practices, offering lucrative opportunities for automation and better efficiency. However, many organizations struggle to explore the complexities of technological integration and upgrade their systems.
When you outsource technology consulting services, you can seamlessly adopt technology. Experienced professionals can guide businesses through the process of selecting and implementing accounting systems, leveraging cloud-based solutions, and optimizing technological infrastructure. This explains why successful organizations entrust these responsibilities to external specialists and stay ahead of the technological curve.
Outsource Accounting and Financial Operations to Experts
It’s imperative to carry out a close evaluation of internal capabilities and external requirements before outsourcing finance and accounting operations. In the first place, you need to scrutinize your existing processes, technological readiness, and talent pools. Before you outsource finance and accounting services, carry out thorough research, get recommendations, and evaluate their compatibility with your organizational culture.
The IMC Group continues to be a reliable partner for outsourcing accounting and finance services. For further insights or assistance with outsourcing solutions tailored to the needs of your business, feel free to reach out to our team at IMC Group.
- NEWSLETTER,SINGAPORE
- February 13, 2024
With the business environment booming in Singapore, the focus on Environmental, Social, and Governance (ESG) principles has intensified significantly in recent years. The need for ESG reporting Singapore is such that forward-thinking entities are working with professional teams to ensure compliance. The country is known for its robust business infrastructure and commitment to sustainability. It stands at the forefront of the ESG movement, showing the way from the front.
In this edition of our newsletter, we will take you through a journey where you can explore ESG practices in Singapore in detail. Get familiarized with the regulatory framework, emerging trends, and the essential roles businesses should play to comply with ESG guidelines. We have presented you with further insights into sustainable finance and stakeholder engagement.
ESG in Singapore: Why does it matter to Businesses?
ESG principles in Singapore serve as a guide for commercial entities, incorporating environmental, social, and governance factors into their operations and decision-making processes. In Singapore, complying with these principles is not just a trend but a fundamental aspect of corporate governance.
For new and established businesses in Singapore, creating an ESG strategy is crucial. With professional support from established players in the industry, entities can formulate these tactics.
At the heart of Singapore’s commitment to sustainability lies a robust regulatory framework designed to incentivize and enforce ESG practices. Key regulatory bodies such as the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have introduced guidelines and initiatives to promote transparency and accountability among corporations. Singapore continues to enhance its corporate governance landscape, with improvements seen across various sectors according to the “Governance and Transparency Index 2021”. This demonstrates the dedication of the country to fostering a culture of transparency and accountability.
Emerging Trends of ESG Principles in Singapore
The adoption of ESG principles in Singapore has witnessed a surge in recent years. This has largely been driven by factors like increasing investor scrutiny, changing consumer preferences, and regulatory norms. Businesses operating in different verticals of the industry are embracing sustainability initiatives. They consider them as a moral requirement, along with a strategic advantage for businesses.
According to a recent study, 84% of the surveyed companies in Singapore incorporated ESG principles into their business strategies. Most of these entities seek ESG advisory services from professional companies to remain on track. A majority of investors stated that they would pay a premium for companies with strong ESG performance. This demonstrates the correlation between sustainability and financial performance.
Innovation and Technology
Innovation and technology play a pivotal role in the context of sustainability. The thriving business ecosystem in Singapore for research institutions and startups is witnessing groundbreaking solutions to address environmental challenges. These guidelines further promote social equity and enhance governance practices. One notable example is the collaboration between the National University of Singapore (NUS) and various industry partners to develop sustainable solutions for waste management. The Circular Economy Innovation Network (CEIN) and other similar initiatives foster better collaboration and innovation to drive sustainable development.
Thanks to ESG software implementation, businesses can now adhere to the prescribed principles and stay ahead.
Sustainable Finance
In recent years, sustainable finance has emerged as a key factor for ESG integration in Singapore. This provides financial institutions with tools and frameworks to support environmentally and socially responsible investments. As a top player in the financial hub, Singapore has positioned itself at the forefront of this movement.
The MAS has also introduced initiatives such as the Green Finance Action Plan and the Sustainability Linked Loan Grant Scheme to promote sustainable finance practices among financial institutions and corporates. All these efforts are channelling capital towards sustainable projects and businesses while managing environmental and social risks.
Stakeholder Engagement
Effective stakeholder engagement is essential for the successful implementation of ESG principles. In Singapore, businesses are increasingly recognizing the importance of engaging stakeholders. These include investors, employees, customers, and communities.
Studies reveal that 68% of investors in Singapore prioritize stakeholder engagement as a critical factor while evaluating the ESG performance of a company. This marks the growing importance of building trust and transparency through meaningful stakeholder dialogue.
The evolving landscape in Singapore explains the value of ESG advisory services from professional teams.
Why is ESG Advisory Services Crucial for Businesses in Singapore?
Considering the importance of accurate ESG reporting Singapore, successful businesses are turning to experienced experts for comprehensive assistance. The IMC Group continues to be a reliable partner for ESG advisory. With proactive measures and strategic initiatives, this company helps its clients uphold the highest standards of corporate governance. The professionals also assist corporates in ESG software implementation to streamline their operations in Singapore. A holistic understanding of regulatory frameworks and emerging trends can mitigate risks and open up fresh opportunities for growth and innovation.
- NEWSLETTER,U.A.E
- February 13, 2024
The last few years have witnessed the UAE emerge as a major destination for FDI, attracting global players. While there was a major decline in FDI in 2022 due to socio-economic and geopolitical issues, the country continues to be one of the most stable investment destinations globally.
As per the World Investment Report 2023 (WIR) of 2022, FDI inflow in the UAE hit $22.7 billion, recording a 10% increment compared to the previous year and outperforming other Gulf countries. Forward-thinking businesses hire professional services for company formation in Dubai, eyeing the lucrative opportunities.
Major Investors and Sectors in the UAE
The UAE stands out as a major investment hub, attracting businesses amidst global uncertainties. The country leaves no stone unturned to enhance its financial inflow. Particularly, the UAE-India Comprehensive Economic Partnership Agreement (CEPA) has been facilitating trade and fostering stronger business ties. Entities in the UAE can benefit from a multiplicity of perks under the CEPA. For instance, the provisions include 0% customs duties on most of the tariff lines and preferential access for marketing that benefitted both nations. Bilateral trade between the two countries witnessed a 27.5% spike within one year after the CEPA was signed.
In the energy sector, the UAE has enhanced its involvement with China. In May 2023, the two countries signed three agreements with the nuclear energy organizations in China. FDI in the energy sector will be a strong foothold in the country.
International tech entrepreneurs also find the UAE a major hub for investment. The country boasts a progressive tech infrastructure, drawing a pool of investors. This goes a long way in rapidly scaling up businesses and seeking early exit routes. Thus, the Gulf country appeals to significant start-ups, which hosts three of the six unicorns in the Middle East.
The key investment sectors in the UAE are:
- Greenfield Projects
- Healthcare
- Stock Markets
- Renewable Energy
- Real Estate
Opportunities of FDI in the UAE
The UAE has taken several strategic measures to attract FDI. These include waiving taxes and restrictions on capital repatriation, allowing the movement of free labor in the UAE, and incentives to foreign investors. The 2021 Commercial Companies Law (CCL) reforms further boosted FDI, enabling 100% foreign ownership of onshore entities in the UAE in certain sectors. Previously, the limit was fixed at 49%.
In the UAE, investment avenues are of three major types:
- Positive list activities that allow 100% foreign ownership of onshore entities
- Free zone entities in the UAE enjoying 100% foreign ownership
- 51% Emirati-owned and 49% foreign-owned onshore businesses
In 2022, the Ministry of Economy in the UAE launched the NextGenFDI, a nationwide initiative to attract global businesses operating digitally. These businesses got their market entry and thus, they could launch their ventures and scale them within the UAE. NextGenFDI facilitated fast company incorporation, pacified banking services, helped in issuing bulk visas, and provided lease incentives for tech companies moving to the UAE.
Through Hub71, Abu Dhabi has established a unique tech ecosystem across the world to bring investors and founders together, grow tech companies, and scale them. A new license for start-ups, technology companies, and entrepreneurs was also introduced by the Dubai International Financial Centre at just $1,500 per year. UAE also established the Invest in Dubai platform, which investors found beneficial in procuring trade licenses to launch their businesses swiftly.
Key Threats for Investors in the UAE
Although the UAE appears to be an alluring destination for investors, considering the prime threats is worth it. A lot of new laws and regulations have become effective in the country. Global entities operating in the UAE find it challenging to understand and implement necessary tactics to adhere to the same. This turns out to be a time and cost-intensive process, which often alienates SME businesses, particularly the ones from other countries. The regulatory uncertainty in the UAE will test its attractiveness, particularly in comparison to established economies in Europe.
A greater capital inflow also puts the UAE at risk of illegal activities like financing terrorists and money laundering. Since 2022, the UAE has been on the ‘grey list’ of the Financial Action Task Force, which serves as a threat to foreign investment.
Key Predictions for 2024
- M&A activities, along with projects driven by renewable and Greenfield sectors with sizable corporate restructuring and asset portfolio consolidations will pick up pace to do away with non-sustainable assets based on fossil fuels
- A spike in M&A activities driven by the education and healthcare sectors is on the cards with a growth in the population in the UAE
- The UAE will witness the establishment of start-ups focussing on digital and technological innovations
- Established corporate companies in the UAE will be focussing on ESG ratings due to the country’s involvement in COP28
- Foreign investors in the UAE will make the most of legal reforms and business platforms involving investment, data privacy, protection, and regulation
Professional Assistance for Setting up a Business in the UAE
While the FDI growth in the UAE may experience some moderation in 2024 and face challenges from regional competition and regulatory concerns, its strategic initiatives, diverse investment opportunities, and commitment to sustainability are likely to sustain its attractiveness to foreign investors. The IMC Group continues to be one of the most trusted business setup consultants in Dubai. With professional support, businesses can confidently adhere to new legal norms and establish their identities in the UAE.
- NEWSLETTER,U.A.E
- February 13, 2024
As the UAE continues to solidify its position as a global business hub, recent changes in corporate tax laws have sparked significant interest among investors and corporations alike. As per the new regulations, businesses operating in free zones will be treated differently than the ones in the mainland. Entities often look out for corporate tax advisory in Dubai before finalizing whether to operate in the UAE’s free zones or the mainland. With professional support, businesses can embrace the right track while adhering to the fresh tax regulations in the country.
An Overview of the Regulatory Framework in the UAE
In the UAE, free zones operate under distinct regulations and legal systems separate from those governing mainland entities. With over 40 multidisciplinary free zones across the country, Dubai continues to be a hotspot for global businesses. Each zone has its own regulatory authority. For instance, the DMCC (Dubai Multi Commodities Centre), JAFZA (Jebel Ali Free Zone), and Masdar City Free Zone in Abu Dhabi have historically offered enticing benefits like full profit repatriation and 100% foreign ownership.
Traditionally, free zones guaranteed zero personal and corporate income taxes for as long as 50 years, which significantly attracted investors. However, the landscape has evolved with the implementation of the UAE’s Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This led to the introduction of a 9% corporate tax, which became effective from June 1, 2023, although there were exemptions and considerations for businesses operating in free zones.
Mainland entities, on the other hand, are subject to the same rate of corporate tax of 9% on their taxable income exceeding Dh 375,000. They operate with strict restrictions, adhering to stringent reporting standards and can carry out businesses both internationally and domestically. Thanks to recent amendments to the Commercial Companies Law, these entities enjoy 100% ownership in some sectors that bridge the gap between free zones and mainland operations.
Tax Implications and Considerations
Under the new tax regime, free zone entities meeting specific criteria may still enjoy exemptions. According to Article 18 of the Corporate Tax Law, free zone entities in the UAE will be exempted from fulfilling certain conditions. These are referred to as Qualified free zone Persons (QFZPs). Here are the conditions to obtain the QFZP status.
- Maintaining adequate substance in the country
- Obtaining the qualifying income
- The entity operating in the free zone shouldn’t have been elected to be subject to corporate tax
- Adhering to the document requirements and transfer pricing rules
- Satisfy any other conditions that the Minister in charge might prescribe
Qualified free zone Persons (QFZPs), adhering to regulatory requirements and maintaining a substantial presence within the UAE, can benefit from a 0% tax rate on Qualifying Income, with a 9% rate applied to other taxable income.
Adapting to the new regulatory landscape presents challenges for both free zone and mainland entities. It is imperative to ensure compliance with the intricate requirements and documentation to mitigate the risk of penalties and maintain operational efficiency.
With professional corporate tax advisory in Dubai, entities can make informed decisions when it comes to something as serious as taxation.
Avoid a AED 10,000 fine by Meeting UAE's Corporate Tax Deadlines. Contact us for Expert Tax Compliance Guidance and Protect your Business.
Professional Tax Advisory Services in Dubai
While the new tax laws aim to harmonize regulations, they also present opportunities for entities to reassess their operational and tax structures. As MNCs explore these changes, strategic planning and compliance will continue to be the key to capitalize on emerging opportunities and mitigate risk strategically.
The IMC Group is a trusted team of professionals for complete corporate tax planning 2024. With experts available to guide you amidst the challenging corporate tax regime, you can comply with the prescribed norms.
Mainland entities will face the new corporate tax but with fewer operational restrictions than those imposed on free zone companies. They will also enjoy the corporate tax regime’s tax relief, allowing them to tap into benefits such as small business relief, business restructuring relief, and transfer within a qualifying group.
Adhering to new regulations might be challenging for both free zone and mainland entities, and it is crucial to navigate the complexities of the new tax law, ensuring compliance with the requirements and documentation to avoid penalties.
A Member Firm of Andersen Global
- 170+ Countries
- 390+ Locations
- 13,000+ Professionals
- 1800 + Global Partners
- 170+ Countries
- 390+ Locations
- 13,000+ Professionals
- 1800 + Global Partners
- 170+ Countries
- 390+ Locations
- 13,000+ Professionals
- 1800 + Global Partners
