- Article, Singapore
- February 17, 2021
To run a business effectively, the owner needs to make certain changes, adaptations, and improvisations from time to time. These changes give rise to expenditures. Apart from these, businesses also have to bear certain fixed costs. So, business expenses are those that one needs to pay for running the business smoothly. While preparing the annual returns, most organizations calculate their expenses that encompasses all the business expenditures, fixed or variable, to make sure that the total income is minimized.
However, most of our expenditures cannot be recognized as deductible expenses. Before discussing the list of deductible or non-deductible expenses, you should know the basic difference between the two.
So, all the expenses that can be deducted from a business’s income before it is subjected to taxation are known as deductible expenses. Whereas all the expenses that cannot be subtracted from a business’s income before taxation are known as non-deductible expenses.
Deductible expenses help in reducing one’s tax liability. A non-deductible expense, on the other hand, does not affect your tax bill. Expenses that are always deductible include investment losses, charitable contributions, etc. A business can claim a tax deduction only if the expenses are exclusively and wholly incurred in income production. Still there, are some complexities to comprehend the distinguishment in expenses.
For expenses to fit into the category of deductible expenses, it needs to satisfy the following conditions:
- Expenses that are solely incurred in the production of income.
- Expenses that are not a contingent liability, i.e. it is not dependent on any event that may or may not occur in the coming future. In other words, expenses must be incurred. An expense is said to be ‘incurred’ only when the legal liability to pay such expense has arisen, regardless of the actual payment date.
- Expenses that are revenue, and not capital, in nature.
- Expenses that aren’t specifically prohibited from deduction under any provisions of the Income Tax Act.
Non-deductible business expenses are those which do not fulfill the above-mentioned conditions. This includes your personal expenses like travel, leisure, entertainment, basically that are not related to the running of your business, and capital expenses that are expenses incurred for incorporating a company’s purchase of fixed assets. A vast majority of your personal spendings are non-tax-deductible. The tax authority considers does not consider natural expenditures in favor of a reduction in the amount of money you are having at your disposal. Deductible expenses, for example, a loss resulting from office embezzlement or stock trading, for instance, are considered to actually reduce the amount of income you effectively earn, thereby resulting in a lower base of tax.
Deductions considered as context-specific
Several expenses can be deducted from your income only under specific cases. Like, money spent on clothing expenses is deductible, only up to a certain specified limit, if it can be deemed a business expense. Healthcare spending is a deductible expense, only up to the extent where it doesn’t exceed 7.5 percent of your adjusted gross income. The canvas, brushes, and oil you purchased for your paintings are deductible only if you can demonstrate that you were treating the art of painting as a money-making venture and not a hobby, for instance.
Therefore, tax-filers usually must necessarily go through the relevant section of the tax code or consult a professional tax accountant before they can actually determine if a particular expense is deductible or not.
Itemizing Your Deductions
Note that even if you have deductible expenses, itemizing your deductions is crucial before subtracting these from your actual taxable income. For individual filers, this implies filling out Schedule A, where you are required to list and add up all of your deductible expenses for the financial year you are filing the return for. The Internal Revenue Service of Singapore permits you to take a “standard deduction” if you have decided not to itemize your deductible expenses.
The standard deduction assumes that even those filers who don’t wish to take the time and effort for itemizing deductions will most likely have deductible expenses and allows them to reduce their gross income by some standard amount depending upon their marital status and age. It is an extremely convenient solution for those filers whose itemized deductions would fall below or only slightly exceed the standard deduction.
Let’s consider certain examples of Deductible and non-deductible expenses.
Deductible Expenses
- Accounting fee
- Administrative expenses
- Advertisement
- Auditors’ remuneration
- Commission
- CPF, foreign workers’ levy, skills development levy
- Directors’ fees
- Directors’ remuneration
- Employee Equity-based Remuneration (EEBR) Scheme
- Employment Assistance Payment (EAP)
- Entertainment
- Exchange loss (revenue and trade in nature)
- Exhibition expense
- Periodicals & newspapers
- Postage
- Printing and stationery
- Property tax
- Provision for doubtful and bad debts
- Provision for obsolete stocks (specific)
- Secretarial fees
- Staff remuneration (Salary, bonus, and allowance)
- Staff training
- Staff Welfare/Benefits
- Statutory and regulatory expenses
- Stock obsolescence
- Supplementary retirement scheme
Non-deductible expenses
- Amortization
- Bad debts (non-trade debtors)
- Certificate of Entitlement (COE) for vehicles
- Depreciation (you can claim capital allowances in its place)
- Dividend payments made on preference shares
- Donation
- Impairment loss on non-trade debts
- Singapore income tax and any tax levied on an income from a country outside Singapore
- Installation of fixed assets
- Interest expenses on non-income-producing assets(Interest adjustment)
- Legal and professional fees (capital or Non-trade transactions)
- Medical expense (amount exceeding 1%/2% of total remuneration if a company is under PMBS or TMIS
- Motor vehicle expenses (RU-Plated and S-plated cars)
- Penalties
- Prepaid expenses (not concerning the relevant basis period)
- Domestic and Private expenses (which are not incurred for business purpose)
- Private hire car
- Provision for bad and doubtful debts (Note impairment loss on trade)
- Provision of obsolete stocks (general)
- Ex-gratia retrenchment payments and outplacement support cost, where there is a complete business cessation.
- Transport (S-plated and RU-plated cars)
- Newsletter, Singapore
- February 11, 2021
A free trade agreement (FTA) between the United Kingdom (UK) and Singapore has come into force since the 1st of January 2021, enacting companies to derive the same trading benefits even when the UK leaves the European Union.
The EU-Singapore Free Trade Agreement is not applicable any further for trade between the two nations as soon as the new deal kicked in, noted the Singapore Ministry of Trade and Industry (MTI).
The UK is Singapore’s third and second-largest trading partner for goods and services and also the top investment destination in Europe. Singapore, on the other hand, becomes the UK’s largest trade and investment partner in South-east Asia and many UK citizens opt for Singapore company incorporation.
The UK-Singapore FTA was signed on December 10th, 2020 by Minister for Trade and Industry Chan Chun Sing and UK Secretary of State for International Trade Elizabeth Truss.
The Ministry of Trade and Industry (MTI) said the UK-Singapore FTA offers certainty and clarity in trading arrangements between both countries.
Both countries completed their respective domestic procedures for the FTA’s provisional application that allowed them to make provisional treaty commitments until the FTA got vetted by both countries.
The most relevant features of this FTA include the elimination of tariff for goods trade, EU & ASEAN combination, business-friendly rules of origin, waiver of technical and non-tariff barriers, enhanced market access to the services sector, more opportunities in government procurement, and enhanced intellectual property rights.
Similar timelines as in the EU FTA will be followed for tariff reductions with tariffs abolished for 84% of all tariff lines for every Singapore product entering the UK from January 2021. As agreed in the FTA with the EU, the remaining products will be freed from tariff from 21 November 2024.
As agreed with the EU, Singapore and UK companies will continue to use EU materials and parts in their exports to each other’s markets. Similarly, materials and parts used by Singapore and sourced from other ASEAN member states may also qualify under liberal rules of origin for exports to the UK supporting bilateral trade between the two countries.
The UK Singapore FTA removes unnecessary barriers to bilateral trade between the two countries and focuses on reducing overall costs of exports for Singapore and UK business entities. The primary purpose is to ensure a level playing field for companies from both countries and enhance trade between Singapore and the UK. Electronics, automotive and parts, renewable energy, pharmaceuticals, and meat and meat products are the main sectors to benefit from this FTA.
Asian food products from Singapore will receive greater market access in the UK and will get a tariff-free entry under flexible rules of origin. Though evidence is needed that these food products are manufactured in Singapore any need for proving the ingredients grown or produced in Singapore is not essential.
The trade agreement allows both countries to continue enjoying the benefits of comprehensive Intellectual Property Rights including copyright etc.
The UK FTA provides enhanced market access for service providers, professionals and investors, and will create a level playing field for businesses in each other’s markets. The agreement covers services such as architecture, engineering, management consultancy, advertising, computer-related, environmental, postal and courier, maintenance and repair of ships and aircraft, international maritime transport, and hotels and restaurant services.
The FTA will also support financial services businesses in both countries. Existing UK Banks in Singapore will be allowed to expand their businesses through more Singapore company formation for banking and other financial services.
The UK will also grant Singapore companies enhanced access to participate in UK government procurement opportunities at both the city and municipal level. Companies that will benefit include those in the transport, financial services, and utility sectors.
The UK Singapore FTA not only maintains the same benefits that Singapore and UK companies were receiving under the trade agreement with the EU but widens the opportunities for companies of either country encouraging businesses to utilize every available benefit.
Finally, with this agreement, Singapore and the UK have committed to start negotiations for a high standard investment protection agreement within two years of the FTA coming into force, and aim to conclude the negotiations within four years.
The Minister of Trade and Industry added, “This will ensure that our bilateral investments will be covered by robust and up-to-date treaty protections, and provide our businesses and investors with the certainty of investment protection.”
- India, Newsletter
- February 11, 2021
India continues to provide a thriving business environment to foreign investors since economic liberalization in 1991 and its economy is all set to touch new highs in 2021 with businesses returning to the pre-pandemic level.
Though the covid19 is still not completely gone, Indians have learned to fight this menace. Fewer cases are being reported daily and the average number of infections is down by more than 70 percent from peak levels. Vaccines have also arrived in the market raising hopes and optimism amongst business owners and investors in addition to the proposed growth-oriented and business-friendly union budget for the coming financial year.
The IMF predicts more than 11 percent GDP growth for India and even Nomura expects India to be the fastest-growing Asian economy in 2021 with a forecast of around 10 percent economic growth in 2021 and far exceeding that of China and Singapore.
Other agencies including Standard & Poor (S&P) and Fitch have also revised their ratings of India’s growth forecasts on account of India’s success in containing the virus and speeding its economic revival. For the next financial year 2021-22, S&P has now projected India’s growth to rebound at 10 percent and Fitch Ratings at 11 percent.
Indian government regularly eased foreign investment policies to encourage FDI inflow facilitating the economic development of the country. Low labor costs, attractive incentives for new manufacturing enterprises, skilled and talented human capital, and a reduced corporate tax rate are driving India towards becoming an alternative hub for the global manufacturing supply chain.
The Government has also introduced its number of policy actions to make the country a global manufacturing hub with the visionary plan of ‘Atma Nirbhar Bharat’ or ‘Self Reliant India’. ‘Vocal for Local’, ‘Swachh Bharat’ and ‘Make in India’ initiatives have been supported by business-friendly reforms and various incentive schemes to attract foreign companies and investments into the country.
The year before last, the government of India lowered the corporate tax rates for new manufacturing companies from 25 percent to 15 percent, effective tax rate being 17.01 percent, inclusive of surcharge and cess allowing India to compete with other ASEAN emerging economies for foreign investment. India’s huge domestic market with more than 1.3 billion population including its diverse business sectors also lures foreign investors for setting up a company in India.
In November 2020, the government also planned to incentivize 10 core sectors through an extension of the Production-Linked Incentive (PLI) scheme with incentives totaling INR 1.46 trillion i.e. approximately USD19.54 billion annually. Three sectors already benefiting from PLI are mobile manufacturing and electric components, pharmaceutical, and medical device manufacturing.
With an initiative of automatic faceless compliance route, ease of doing business has been vastly improved as well the total elimination of bribery and corruption and the recent clearance of Apple’s three major manufacturing partners including Foxconn, Wistron, and Pegatron along with Samsung Electronics for USD 143 billion Make-in-India investments are the proof of it.
The following business sectors are very attractive for investments and new company formation in India
The Fast Moving Consumer Goods (FMCG) sector growing 10 percent annually and expected to double in 2021 to a whopping USD 11.15 trillion is the fourth largest contributor to Indian GDP, fuelled by rising income and growing youth population, increasing disposable income in rural India with lower market penetration, investment approval of 100 percent equity in single-brand retail and up to 51 percent in multi-brand retail, consistent demand through the year and PLI.
India, popularly known as the pharmacy of the world is the largest provider of generic medicines globally and is the third-largest pharmaceuticals industry in the world by volume. Rising healthcare awareness due to the pandemic will act as a major driver of growth for this sector.
Pandemic has forced many Indians to avoid physical brick and mortar stores and go for online shopping. The huge Indian population is set to take the ecommerce and logistics business to almost USD 200 billion by 2026 from USD 38.5 billion some three years back.
The Indian electronic components market also holds great promise and would grow exponentially due to the lower cost of manufacturing, rising local demand, and rapidly developing electronic-based allied industries.
Increasing ‘work from home’ norms increased IT spending in India that is set to grow at a six percent CAGR touching USD 81.9 billion marks in 2021. The social restriction has accelerated the adoption of digital technologies across segments and enhanced IT infrastructure spending.
India drew the highest ever FDI in the first five months of this financial year, from April-August 2020, totaling US$35.73 billion.
- Newsletter, Saudi Arabia
- February 11, 2021
It was in the news recently that Saudi Arabia has been actively pursuing to promote its bilateral relations and collaborative efforts with France to boost the digital economy.
It is not new and during 2018 April, Saudi Arabia’s Crown Prince Mohammed bin Salman had met President Emmanuel Macron for putting discussions on collaboration in the digital economy and renewable energy sectors with a shared vision and forward-looking investments for company formation in Saudi Arabia.
The two countries are looking to expand beyond mere business and investments and working on technology and knowledge transfer efforts in the areas of digital technology and entertainment.
In a meeting held in the recent past, Saudi Arabia’s Minister of Communications and Information Technology Eng. Abdullah bin Amer Al-Sawahah has discussed with the Ambassador of France to the Kingdom of Saudi Arabia Ludovic Pouille, various measures of enhancing initiatives in these areas.
Saudi Minister Eng. Al-Sawahah emphasized the Kingdom’s digital structure supporting megaprojects, the presence, and availability of a supportive digital legal framework besides the human capital of national cadres with a high degree of professionalism that contributed to accelerating Saudi Arabia’s digital transformation.
The minister also highlighted that Saudi Arabia is striving for developing capabilities and capacities in the telecommunications and information technology sectors by increasing Saudi National cadres and supporting raising participation from Saudi women.
The two national representatives also reviewed Saudi Arabia’s efforts towards stimulating innovation and investment in the overall technology sector including new business setup in Saudi Arabia and other investment opportunities for French technology companies in the Kingdom’s telecommunications and information technology sector.
Digital technologies are a crucial aspect of Saudi Arabia’s economic diversification plan Vision 2030 that was launched in 2016.
Vision 2030 put forward several strategic goals for the Information and Communication Technology (ICT) sectors including the expansion of high-speed broadband coverage to 90% of households in densely populated cities and 66% of households in other urban areas.
The vision also aimed at strengthening partnerships with the private sector for the development of new ICT infrastructure and enhance the expansion of digital services in society to curb unnecessary bureaucracy.
Saudi Arabia’s Vision 2030 heavily relies on the experience and technological know-how of friendly nations including France to realize its objectives. There are mega-projects in Saudi Arabia where France is already contributing, mainly in the field of tourism and hospitality.
France’s relations with Saudi Arabia are old and apart from technology, business and investments also focus on common strategic interests such as preserving security in a troubled region, the mutual commitment to combating terrorism, and a convergence of views on regional crises. There are regular periodic bilateral official visits between the two countries that demonstrate a strong and strategic partnership between France and Saudi Arabia.
There are discussions and dialogues in many areas that create a solid ground for confidence and regular pass official exchanges on bilateral issues including human rights, fundamental freedoms to women most important to France.
Digitalization affects every aspect of Saudi life and can improve production, services, including healthcare, agriculture, transport, education, climate change, and public governance. Keeping this in mind Saudi Arabia formed the 2020 Digitization Task Force and framed many policy actions.
The task force tabled the main four recommendations namely Enabling and Supporting Resilient Digital Infrastructure, Supporting the Healthy Development and Adoption of Artificial Intelligence (AI), Laying the Foundations for Smart Cities, and Driving Digital Inclusion and Growing Digital Skills.
Areas of Smart Infrastructure, Energy, Transport, Water and Waste, Social and Buildings have been identified as key areas based on which key policy actions have been framed.
The Kingdom of Saudi Arabia also identified many Elements of ICT Infrastructure needed for smart cities such as data warehouses, sensors, and actuation Technology, networks, advanced applications, and analytics.
- Bahrain, Newsletter
- February 11, 2021
The investment promotion agency of the Kingdom of Bahrain surpassed targeted investment by attracting a whopping close to 1 billion USD in foreign direct investment in 2020, despite the adverse economic impact of covid 19 pandemics.
It was announced in a press briefing after a board meeting of the Economic Development Board (EDB) chaired remotely by His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince Prime Minister and EDB chairman.
The EDB attracted USD 885 million as a foreign investment last year that would create more than 4,300 employments during the next three years, the board reported.
Accumulated investments in the kingdom over the past 10 years continued to grow touching around 1 billion USD annually.
The quantum of accumulated foreign direct investments as a percentage of the kingdom’s GDP in 2019 was around 78 per cent, almost double the world average of 42 per cent as per reports published by UN Conference on Trade and Development (UNCTAD) and the International Monetary Fund (IMF). FDI in Bahrain stood at 28.9 billion USD in 2019, as per UNCTAD data.
During the meeting, Royal Highness Prince Salman reiterated the importance of economic diversification in non-oil businesses as a measure of sustaining and growing the national economy that can help capitalise on the country’s economic resilience.
This economic resilience, as well as other national competencies, allowed the kingdom to navigate its way through a variety of global challenges, His Highness emphasized.
His Highness Prince Salman also pointed out that the economic stimulus package announced has exceeded all past packages launched following directives from His Majesty King Hamad. The economic stimulus has been aimed to mitigate the adverse economic impact of Covid-19 and played a pivotal role in promoting recovery and sustaining positive growth across healthcare and several other essential economic sectors.
He also remarked that Bahrain has taken timely, careful and balanced actions to alleviate the impact of the pandemic on the community and the country’s economy.
Precautionary and preventive measures based on community awareness and co-operation, while continuing to allow movement for daily necessities and commercial and economic activities and maintaining open borders for travellers, had a clear impact on reducing Covid-19 repercussions at all levels.
HRH Prince Salman emphasised that the government will continue to implement wide-ranging economic strategies and attract foreign investment in developing the national economy.
This will in turn enable the private sector to play a greater role in economic growth, create further job opportunities for citizens and enhance the kingdom’s economic and investment position both regionally and globally.
Praising last year’s success of EDB in attracting foreign companies for business setup in Bahrain, he noted that Bahrainis continue to remain at the heart of all development plans.
During the meeting, EDB’s chief executive Khalid Humaidan informed board members about the latest economic indicators and developments regarding the performance of the national economy and investment position.
H.E. Khalid Humaidan said, “Despite the challenges faced across the globe due to COVID-19, we were able to continue the momentum from 2019, attracting hundreds of millions of dollars in investment from around the world.
“Investors are increasingly turning to the region’s tried-and-tested business environment, where our commitment to building a pro-investor ecosystem is backed up by robust regulation. This, and our longstanding economic diversification efforts, show Bahrain is focused on enabling growth in a wide range of sectors,” he also added.
He also cited some examples of some of the most prominent local, regional, and international investments in the kingdom, including from GCC, European, and Asian companies to support his statements.
Several prominent business entities after company formation in Bahrain have launched operations in the Kingdom with funds raised from local, regional and international companies. They have invested in several major sectors including financial services, manufacturing notably in Mondelez’s 90 million USD biscuit factory, logistics and retail services, education including the American University in Bahrain, healthcare services, real estate, tourism, transport and also in Information and Communications Technology showcasing Amazon Web Services (AWS) hyperscale data centre as the most noted and first in this region.
- Newsletter, U.A.E
- February 11, 2021
Established by Dubai Chamber in 2016, Dubai Startup Hub is the first initiative of its kind in the Middle East and North Africa region that emphasises public and private sector collaboration for promoting innovation and entrepreneurship as key economic drivers of Dubai and the UAE.
The initiative provides a multi-programme platform for global entrepreneurs to explore business opportunities in Dubai and enables them to benefit from a set of initiatives and services including Market Access Program, Emirati Development Program, Dubai Smartpreneur Competition, and the Co-Founder Dubai Program, among others.
Dubai Startup Hub initiative has launched eight guides to help startups in the UAE do business, as the Chamber concluded its fifth and final ‘Networking Series’.
Organised in cooperation with Virtuzone, the Series convened from mid-October to mid-December 2020 and focused on eight industrial sectors.
The key sectors identified include Fintech, Healthcare, Transportation, Education, F&B, Social Impact, Sustainability, and Travel, Tourism & Hospitality.
The fifth edition of Dubai Chamber’s Networking Series attracted more than 360 participants including 22 per cent Emirati entrepreneurs besides global startup owners desirous for new company formation in Dubai participating in the virtual event.
Natalia Sycheva, Senior Manager, special projects and Entrepreneurship in Dubai Chamber noted, “The guides are an innovative new tool to help promising startups in each of the target sectors,”
She also highlighted saying, “They form part of the Chamber’s plan to address the repercussions of the Covid-19 pandemic, where a significant chunk of our investments has been earmarked for knowledge-building and providing information for entrepreneurs and startups at this critical time.”
“The Dubai Startup Hub’s mandate is to support emerging companies and help them understand and navigate the procedures for establishing businesses in Dubai,” she explained.
“The initiative serves to facilitate the exchange of knowledge and lays solid foundations for partnership and cooperation, all to drive growth in the emirate’s startup scene. This ultimately boosts Dubai’s entrepreneurial ecosystem and strengthens its position as a global destination for new businesses,” she also added.
Entrepreneurs willing to know and learn more on the Dubai market can now make use of this industry guide to better equip themselves on the know-hows and can continuously receive sectoral updates for informed business decisions. This initiative will also equally benefit the business startup consultants in Dubai to discharge their responsibilities.
For Delivery, Logistics and Transport businesses, the key elements addressed are
- Key market statistics e.g. Dubai’s 11th position as the world’s logistics-friendly country in the world, Dubai International airport as the world’s 6th busiest cargo traffic, its strategic location as the gateway to the Arab, African and Asian countries and its logistics market ranked first among the top 55 global logistics markets in logistics etc.
- Dubai customs being the main regulatory body
- Licensing and authorities
- Incubators and accelerators
- Important industry events and conferences
- Choosing between various free zones and mainland options
- Steps for starting a logistics business
For the Fintech Industry, the important aspects covered are
- Key market statistics highlighting UAE as MENA’s largest fintech hub with 39 per cent yearly growth of fintech startups since 2012 and the 2nd largest outward remittance country in the world 44 billion remittance market size
- Dubai Financial Services Authority (DFSA), Securities and Commodities Authority and Central Bank of Dubai as regulators
- DIFC as the licensing authority
- DIFC Fintech Hive as the prime accelerator
- Industry events and conferences
- Easy steps for a startup business and fundraising including crowd funding
For Healthcare business, the guide focuses on
- Important market statistics e.g. healthcare sector accounting 3.6 per cent of UAE’s GDP with a total of 3397 healthcare facilities licensing between January to June 2020
- Dubai Health Authority (DHA) as the regulatory authority
- Dubai Future Accelerator (DFA) as the prime accelerator
- Main Events and conferences
- Dubai Department of Economic Development (DED), Dubai Healthcare City (DHCC) for health tech licensing and other information
- Startup steps and financing guidance
- For F&B startups, the guide highlights
- Dubai F&B market is estimated to grow by 6.9 per cent YoY, UAE’s National Food Security Strategy 2051 stresses upon local domestic food processing for self-reliance, a tremendous surge in demand for packaged food etc.
- Dubai Municipality as the sole controller of food safety and licensing through DED and Food watch platform
- UAE Food and Beverage as the accelerator
- Important events and conferences including Halal Expo, SIAL Middle East etc.
- For Travel, Tourism and Hospitality business, the guide specifies
- Key market statistics e.g. Dubai’s ranking as 4th most popular global tourist destination and 3rd in International tourism spending approximately AED 102.47 billion in 2019 etc.
- Department of Tourism and Commerce Marketing ( DTCM) acts as the business regulator
- INTELAK HUB and WAMDA as accelerators
- Digital Travel MEA, Arab Medical Travel as important events
Similarly, for startups in sustainability and education businesses, all important and pertinent information is provided in the respective guides.
- Newsletter, U.A.E
- February 11, 2021
Tel Aviv-based venture fund Liquid Capital and Dubai-based Vault Investments jointly announced agreeing and launch a joint Venture Debt Investment fund with more than $100 million based in Dubai. It shall deploy debt financing aiming for technology financing across the Middle East, North Africa, and Europe and benefitting from already used and available technologies by Liquidity Capital for its newly formed offices in Dubai.
This joint venture stands as the living testimony of recent diplomatic ties between the two countries as a result of the Abraham Accords easing and normalizing bilateral relations between Israel and the UAE. The two firms will benefit by using the existing technologies in the Middle East and explore opportunities for Middle Eastern startups and companies with growth potential and help them become competitive globally.
Debt financing as opposed to equity financing will fuel technology financing in the Middle East, North Africa and Europe, and will deploy technology already in use by Liquidity in its company’s Asia-Pacific and US investments. As part of the partnership, Liquidity Capital and Vault investment will engage in DMCC company formation, to more strategically locate investments in the region.
The joint venture stands as a significant step forward in the speedy diplomatic and economic relationships between Israel and the United Arab Emirates and at the backdrop of the recent peace agreements between those countries. Coming together, Liquidity Capital and Vault Investments will better explore and capitalize on the region’s growing and sound technological know-how including adequate available capital to unlock opportunities for business set up in Dubai for Middle Eastern startups and growth companies.
“The United Arab Emirates, the Gulf Cooperation Council countries and the Middle East as a whole are overflowing with technology,” remarked Sultan Ali Lootah of Vault Investments. “The partnership between Vault Investments and Liquidity Capital will create new growth in the region, and the facilities and services we provide will be a positive anchor for entrepreneurs. We believe that our partnership will provide success in the future through our combined leadership in Dubai,” he also added.
Ron Daniel, CEO and Founder of Liquidity Capital said, “Beyond the personal excitement by this first of its kind fund, and the wonderful relationship with Sultan Lootah of Vault Investments and his team, I strongly believe the new fund is a game-changer in both the availability of non-dilutive growth capital in the region and for the fast distribution of tech products from the Middle East and globally. The new climate in the region brings a lot of potentials to capture. Non-dilutive debt is an asset class now transforming successful companies into unicorns and Liquidity Capital is at the forefront of this by marrying technology and credit know-how.”
Avner Stepak, Controlling Shareholder at Meitav Dash and Chairman at Liquidity Capital noted “We are thrilled to cooperate with one of the most significant business groups of Dubai and incorporate an innovative fund that will help technology companies, mainly from our region, finance rapid growth, based on Liquidity’s great online underwriting technology. Sultan Lootah and his team will become great partners of ours and I strongly believe that this is just the beginning of several future joint businesses.”
Navas Ebin Muhammed, Partner at Vault Investments added, “We are very excited about this partnership with Liquidity Capital. Non-dilutive growth capital is the need of the hour and together we can play a significant role in helping companies that will redefine the collective future of humanity.”
Established in 2017, Liquidity Capital is a global fund manager providing growth capital through funds focused on the US, Asia and the Middle East. Mars Growth Capital, the Singapore based subsidiary of Liquidity Capital and its partner MUFG manage and administer the company’s South East Asia program. Liquidity’s newly-released proprietary platform, Liquidity Dynamics, is one of the most advanced, real-time predictive modelling SAAS platforms for investment professionals from Vault and many other companies.
Vault Investments was founded in 2012 and is considered to be one of Dubai’s most prominent investment companies engaged in investing in many companies besides offering investment advisory services to both private organizations and governments. A dynamic, diversified, innovative and cross-border approach towards investment helped Vault investments to exploit both innovation and technical and financial expertise of its team to evaluate potential opportunities.
- Article, Oman
- February 7, 2021
The Omanis Ministry of Commerce and Industry, (MOCI) issued the Executive Regulations of the new FCIL in June 2020 which specified provisions relating registration of the foreign investment projects including benefits available to specified projects and land allocation for investment and business purposes and, an inspection of the projects by the Omani regulatory authorities.
The Minister of Commerce, Industry and Investment Promotion formerly known as MOCI issued Ministerial Decision (MD) No. 209/2020 during December 2029 and finally decided on the list of activities that foreign investors are prohibited from participating and conferring the activities to Omani investors for safeguarding the national products and entrepreneurship projects.
In accordance with the latest MD, an Omani investor can make investments in all activities and if desires can enter a partnership with a foreign investor. Any exception to the prohibited list can only be granted with express written permission of the Minister of Commerce, Industry and Investment Promotion.
The Sultanate of Oman vide MD 209/2020 has issued a list of prohibited activities that cannot be undertaken under the new FCIL.
The full list of the activities prohibiting foreign investors is enumerated in detail however most of the activities are most unlikely to be of any great interest to major international investors.
Importantly prohibition of retail sales of fuel would limit future liberalisation of the retail fuel market anymore unless and until the Ministry considers granting an exception and permits foreign investment in such activities.
The conditions and procedures for granting exceptional approval have not been mentioned in the MD and likely to be considered on a case by case basis.
Additionally, any restriction on shipping and unloading of goods are not very clearly spelt out and may have broader interpretation. It will remain to be seen how these are interpreted by the Ministry in practice without any further clarification in between.
The reservation of drinking water to Omani investors generally considered as an attractive business will support local investors as foreign investors will no longer be able to participate in this business.
The new Foreign Capital Investment Law published in July 2019 came into force from January 2020 and made great relaxation to the rules and regulations of foreign investment. It also simplified and streamlined the registration and business licensing procedures keeping in mind the interests of rights and incentives of foreign investors matching those of the local Omani investors.
The most important of the changes in the new FCIL was the permission of 100% foreign ownership in many business sectors in Oman.
Bottom line
The list of prohibited activities mostly contains activities that are less lucrative to international investors, and Oman, with its continued effort to promote FDI by improving ease of doing business, is expected to maintain and increase FDI inflow in the country as well as help generate local employment.
- Article, U.A.E
- February 3, 2021
Summary
Dubai is increasingly growing as one of the most attractive international business hubs due to the UAE government’s initiatives in economic policy reforms. Dubai has a competitive and diverse business environment with numerous opportunities. However, from a legal and administrative standpoint, there exists bureaucracy and stringent regulations for an entity willing for a business set up in Dubai.
PRO Services
Pro service providers are equipped with specialized knowledge and expertise in core business areas including law, marketing, accounting etc. They allow customers to focus and excel in fundamental business concerns, take responsibility for end business outcomes.
Dubai Pro services are mainly needed because company owners are not aware of all the applicable laws including labour contracts, residence Visa and other visa applications. Liasioning with different government departments for approvals also becomes an uphill task at times without dedicated internal resources for effectively dealing with government officials which is almost an everyday chore.
Services offered by Dubai PRO Services
The scope of Dubai PRO services normally includes
- New Company and Branch setup
- Resident and Employee visa
- Labor and Immigration cards
- Emirates ID card
- Passport
- Approval and renewal of Trade License
- Regulatory approvals and NOCs
- Notarization of legal documents
- Annual License renewals, automatic status updates and timely reminders
- Opening Corporate Bank Account
Benefits of outsourcing PRO Services in Dubai
1. Saves Money
PRO services often reduce the cost of document processing and clearing. It also eliminates the need for any internal PRO and administrative set up resulting in a drastic reduction in salary and other fixed costs.
2. Saves Time
Time is money and outsourcing of PRO services can help you save a lot of time. You can concentrate on the core areas of your business rather than standing in queues in various government offices.
3. Reduces Hassles
From picking up documents to handing them over to your offices are all done by PRO services on-time after necessary clearing from government offices and relieve you of your daily worries.
4. Provides Automated Reminders
PRO services keep all the records of your essential company documents and provide automated timely reminders for renewal requirements such as trade license and employee visa renewals.
5. Increases Business Efficiency and Growth
As the huge burden of judicial and government responsibilities are taken away, you can come up with innovative business strategies for future growth and expansion.
6. Improves Company Reputations and Goodwill
PROs act as company extensions in the Government departments improving public relations through their expertise, knowledge and professionalism and generate a positive longtime image in the government and amongst the business communities.
7. Protects from Fines and Penalties
Professional PRO services help companies remain updated with renewals and regulatory compliances e.g. government licenses, visas and registration policies. Businesses in Dubai can be subjected to heavy fines and penalties in case of failure to comply with UAEs rules and regulations.
8. Transparency
Every government fees and incidental spendings are supported by valid receipts and documents enhancing transparency and maintenance of cost.
Criteria for selection of your PRO Services in Dubai
1. Awareness of Dubai business environment
As a business owner in Dubai, you need to know your competitors on how they are handling their PRO related issues. Your chosen PRO services should be well acquainted with similar businesses in Dubai and their modus of Operandi.
2. Adequate knowledge of the laws of the land
The PRO services in Dubai you choose need to be well-versed with the law of the land for ensuring appropriate business need identification for PRO services.
3. Proven Experience
Your chosen PRO services need to have the right and proven experience preferably with exposure to international laws and regulations.
4. Affordability
PRO services always come with a cost. Selecting the right option as per your affordability without sacrificing the service quality is always a must.
5. Referrals
Before hiring any pro services in Dubai, it is advisable to check from your peer companies, friends and other sources about their quality and cost of services.
6. Scope and terms of services
Critically reviewing all the clauses of the business agreement and clearly understanding the scope of services is important before signing the contract.
Summing up
Doing business in Dubai comes with lots of regulatory challenges and an experienced and expert PRO services can be your real support.
- Article, India
- January 29, 2021
Key Considerations
When a Candian citizen wants to start a business in India, the following considerations are to be kept in mind
- Understanding the Indian market regarding the Indian Economic environment, Canada India trade and investment and resources for Canadian investors.
- Opportunities for Canadian investors in various sectors including automotive, telecommunication, oil and gas, transportation, medical devices and healthcare, environmental technologies, food processing etc.
- Preliminary assessment of readiness through research and identification of target markets, business plan preparation and market entry and, export strategy
- Understanding import regulations and licensing
- Investment analysis about investment procedures, types of company formation, taxation, labour force and exchange control
- Finances and financing including India’s financial systems, import and export financing, types and sources of financial assistance
- Legal aspects encompassing such as labour laws, intellectual property protection, litigation and arbitration, standards and conformity, performance guarantees and contractual obligations
- Risk management analysis including political risks, foreign exchange risks, customer risks, corruption etc.
Key Company Types
Three types of company formation are possible in India
- Public Company needing 7 or more persons
- Private Company needing 2 or more persons
- One Person Company, basically a private company owned by a single person
The foreign investments in India are governed by the rules and policies of FDI, FEMA, RBI and Companies Act 2013. To establish its business any foreign entity has the following options:
- Joint Venture with an Indian Company
- Liaison Office
- Limited Liability Partnerships (LLPs)
- Wholly owned subsidiary company
- Branch Office
Key Documentation Requirements
Following documents are required for setting up a private limited company in India
- Photographs of shareholders and Directors
- Pan card
- Rent agreement
- List of Directors and shareholders
- Authorized representative
- NOC from the owner of registered office space
- Address proof
- Business address proof
- Constitutional documents; AoA, MoA
- Identity Proof; Passport, Driving license
- Prior registrations, if any
Key Process Steps
- Application for Digital Signature Certificate usually takes a day
- Application for a company name; availability and reservation, generally takes 3 days
- Drafting of AoA, MoA and preparation of documents, stamp duty payment and documents notarization, takes 2 days normally
- Application for company registration, application for DIN allotment, PAN and TAN, takes 2 days
- Application processing by Authority, issuance of the certificate of incorporation, also takes 2 days
Key Online Resources
Following are some resources that can provide additional insights to Canadian citizens for a good start of their Indian businesses
- The Ministry-of-Corporate-Affairs regulating corporate affairs in India
- The-Associated-Chambers-of-Commerce-and-Industry of India
- The Canada-India-Business-Council, Canada’s only private sector
- The CIA-World-Factbook
- The Confederation-of-Indian-Industry’s web site provides news and resources about India’s industrial sectors.
- Directorate-General-of-Commercial-Intelligence-and-Statistics (DGCI&S), the official organization for the collection, compilation and dissemination of India’s trade statistics and commercial information
- Directorate-General-of-Foreign-Trade
- The Reserve-Bank-of-India (RBI) with a large database on Indian economy
- Federation-of-Indian-Chambers-of-Commerce-and-Industry
- High-Commission-of-India-in-Ottawa with a range of information about the country
- The India-Brand-Equity-Foundation (IBEF) is a public-private partnership between the Ministry of Commerce and Industry, the Government of India and the Confederation of Indian Industry providing a range of free FDI guides and sectoral presentations with sector-specific-government-ministries
- IndiaMART, a portal for the Indian marketplace
- India-Finance-and-Investment-Guide, a resource for taxes, investment and export-import policies
- The Ministry-of-Commerce-and-Industry with an import-export data bank on the country’s economic activity
- The directory of Indian Government official websites
- Ministry-of-Micro-Small-and-Medium-Enterprises
Bottom line
Canada and India share the similar legal heritage of English common law, and in some respects, the two legal systems are almost identical. This facilitates acclimatization of a Canadian citizen with Indian corporate laws and in turn the business environment.
International trade being inherently more complex than domestic trade, retaining a legal, experienced and qualified professional services company who is familiar with the laws and procedures and possess expert knowledge of the target market, is extremely important for company setup in India.
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