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How Robotic Process Automation (RPA) is Becoming Increasingly Relevant in Today’s Finance and Accounting (F&A)
  • Article

How Robotic Process Automation (RPA) is Becoming Increasingly Relevant in Today’s Finance and Accounting (F&A)?

Digitalisation is becoming increasingly relevant in every sphere of our lives, be it the economy, business, industry or society. One of the more recent tools to enhance the digitisation of internal business processes of a company is Robotic Process Automation. RPA implementation improves financial and accounting processes as they can run at higher speed with better quality output optimising Full Time Equivalent (FTE) and enabling the accounting and finance professionals to focus on more complex tasks.

What is RPA?

RPA doesn’t involve any physical robot. It essentially employs software robots running on a computer to automate repeatable high volume business processes. Mostly structured data are worked upon by combining artificial intelligence including machine learning, natural language processing etc.

We can define a set of instructions and enable RPA bots to mimic most of our interactions with computers for carrying out high volume error-free tasks with incredible speed and accuracy.

Why is RPA different from AI?

Most of us with a non-technical background seemingly baffled by these two words and their respective uses. Simply put RPA can deal with only structured data while AI due to its inherent intelligence can deal with unstructured data too. RPA technologies and applications haven’t become all that intelligent up till now.

Repetitive and rule-based tasks needing much manual effort can be easily handled by RPA however without any neural network providing intelligence gathering with experience. As a result, any changes in automation will go unnoticed by an RPA bot without detecting anything on its own. In an F&A context, when the legitimacy of business expenses can be validated by AI, RPA can’t just decide if a business expense on personal and family entertainment can be approved or not.

Why has Digitization and RPA become so critical as never before?

The last year has witnessed widespread financial disruptions for most of the companies due to pandemic when only technology and digitalisation stood by them as their saviours.

RPA as a recession-proof saviour for business continuity has become critical for business survival and growth. Automation driven by smart technologies e.g.ML and AI is enabling more robust and cheaper business solutions across all industries.

More F&A professionals are seeking RPA implementation and creating new business codes. Remote working as a new norm has heightened the need for greater operational flexibility coupled with higher capacity.

The world has now seen more digital transformation in the last few months than in the preceding decade, with more than 70% of global businesses planning to switch over to RPA and increase RPA spending soon.

As economic regrowth continues to hurt all businesses, organisations are reassessing integrating RPA in F&B functions and promoting automation to establish a cost-effective resilient work culture.

What are the benefits of implementing RPA in F&A?

Several opportunities exist for RPA to realize a competitive advantage and include

  • Cost savings in many geographies as robots cost much less, 10 to 20% of the cost of a full-time employee.
  • RPA can accomplish very high data accuracy consistently.
  • Can achieve reduced transaction times and improve efficiency.
  • Can work 24/7/365 and result in high FTE.
  • Cycle times can be reduced drastically improving throughput.
  • Can reduce employee attrition because of reduced frustration caused by repetitive draining daily tasks.
  • High speed achieved by RPA can help maintain deadlines during the financial year-end.
  • RPA being much flexible and scalable can put a significant brake on unnecessary cost escalation.

What are the areas of RPA applications in F&A?

Following are some areas where RPA can be implemented effectively for organizational growth and sustainability

  • Bookkeeping
  • Accounts Payable and Receivable
  • Invoicing
  • Vendor data management
  • Days sales outstanding
  • Logistics management
  • Client Onboarding
  • Reconciliations
  • Expense monitoring and management
  • Inventory management
  • Payroll
  • Tax compliance and reporting
In addition, some areas of operational accounting and finance, auditing, financial statement preparation, planning and forecasting can also be automated with RPA through AI deployment using improved ML algorithms.

What F&A tasks cannot be performed by RPA?

Not every F&A task can come under RPA and tasks usually not suitable for RPA include:

  • Complicated tasks such as allocating funds, performing due diligence etc.
  • Decision-making non-standard processes
  • Infrequent and uncertain processes
  • Processes needing improvements and streamlining
  • Processes with too many exceptions

How to implement RPA effectively in F&A?

Most RPA implementations are normally easy and straightforward, not requiring more than 3 months to identify processes, configure framework, validate and launch RPA bots into operations.

Below is a deployment guideline for effective use of RPA in F&A

  • Identifying high volume, error-prone and repetitive processes with a significant impact on both cost and revenue
  • Selecting sub-processes that can be easily automated with RPA e.g. standard processes with few exceptions
  • Selling ideas to top management and F&A team members with an approximate budget
  • Taking other business process owners in confidence
  • Fragmenting the F&A process into the sub and sub-sub processes to better understand the process flow
  • Considering improvement possibilities with ROI
  • Selecting a dedicated team to work on the project
  • Exploring and developing ways for RPA implementation and assessing benefits and challenges
  • Running a real-life test
  • Validating through repetitive tests
  • Launching and going live
  • Ensuring post RPA maintenance after launch
What are the challenges in implementing RPA?

RPA implementation challenges can be rather serious unless strategic thoughts and proactive actions are not planned religiously.

RPA is high-tech and needs skill and expertise in technology besides accounting knowledge. The non-availability of the right human resources is often a big challenge for effective implementation.

There are processes with exceptions needing separate ML algorithms that can increase the cost of implementation.

RPA implementation needs a cultural shift in an organisation and is always a serious challenge for a company due to the fear of redundancy amongst employees.

Choosing the wrong accounting process for RPA is a common mistake resulting in poor ROI and increased cost.

Proven validated practices are not known and followed causing huge wastage of time in debugging.

Many companies don’t have sound IT and security policies. F&A professionals working upon RPA implementation in pockets may cause serious adverse implications for IT security, infrastructure and the entire business as a whole.

Maintenance is vital to keep your RPA running and achieving desired process efficiency. It is usually observed that post-implementation protocols are missing due to inadequate IT infrastructure, offering challenges to the organisation.

How can F & A outsourcing facilitate RPA implementation?

You can put aside a lot of headaches by outsourcing F&A for a smoother RPA transition. There are several reasons businesses outsource their finance and accounting functions and RPA implementation and a few of those are

  1. There is no need to sell your ideas for RPA implementation to inhouse F&A professionals
  2. Accessibility to skilled manpower as technology-savvy accountants familiar with RPA implementation is hard to find for the in-house accounting team
  3. The outsourcing companies performing F&A functions as their core competency do invest heavily in ‘best practice processes, employee training and sophisticated technologies and software which are normally out of reach for most of the businesses in the SME sector
  4. As outsourcing companies are committed to a much higher level of accounting performance, they continuously keep themselves updated on the latest technologies and RPA opportunities
  5. During unforeseen and trying business times as with covid pandemic, outsourcing can offer increased RPA transition and ROI by avoiding the wrong selection of processes for automation
  6. Last but not least, outsourcing can reduce RPA implementation cost by more than 50%
  7. Continuous training of internal employees on RPA
Conclusion

RPA is going to stay and as RPA adoption by companies surges, the need for standard processes has become paramount. We humans, previously busy in routine manual tasks, must now concentrate more on managing exceptions for ensuring RPA implementation on a higher scale encompassing many more aspects of finance and accounting.

As an outsourced accounting and financial services provider, IMC commits itself for robust RPA implementation well considering all implications on existing operating models and continuously exploring ways to effectively adapt to the changing requirements of its customers.

As expertise, experience, strategic planning and vision are indispensable in leveraging the benefits of RPA, we at IMC would like to provide our best professional support and enter into discussions on your journey towards RPA implementation.

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Banking Industry and Key Players in Singapore
  • Article, Singapore

Banking Industry and Key Players in Singapore

Introduction

Banking is considered the backbone of every economy as it directly influences the

financial and economic development of a country and Singapore is no exception. The country’s robust economic development gathered pace as the banking sector grew and became stronger and efficient with time. The importance of the banking sector is equally recognised both in the developed and emerging economies.

Today’s Singapore is the top international financing hub in Southeast Asia, believing and implementing pro-business government policies and practices. Its strategic location as the gateway to the ASEAN coupled with its favourable policies has transformed this country into a banking hub in the region.

The total assets of the banking sector in Singapore is worth more than USD 2 trillion with over 200 banks operating in Singapore.

What is the Monetary Authority of Singapore and what role it played in the Banking Industry?

As the number of domestic financial institutions started growing rapidly along with the entry of foreign financial companies, the financial services sector in Singapore became more complex necessitating the need for better and more cohesive governance and regulatory approach. The Monetary Authority of Singapore was then established in 1971 to address this issue and played the dual roles of a central bank and the financial regulator.

MAS is the regulatory body for financial institutions in the banking, capital markets, insurance and payments sectors and formulated, implements and administers regulations and licensing requirements for these sectors.

More details about the financial institutions under MAS’s regulation and their authorised and regulated activities can be obtained from the Financial Institutions Directory provided in this link.

The Monetary Authority acts as an existing central bank in Singapore with its main function to ensure effective and smooth operations of financial institutions in perfect alignment with the national economic objective. The MAS is responsible for the following:

  1. Monetary policy implementation
  2. Banking systems supervisions
  3. Functioning as the banker to the government and the banks
  4. Controlling foreign exchange reserves
  5. Printing and Issuance of currency
  6. Issuing banking licences

What are the reasons for the thriving banking industry in Singapore?

Following are a few factors that contributed to the thriving banking industry in Singapore today.

  • Liberalisation of local banks
  • Expansion of overseas banks
  • M&A of foreign and local banks
  • Increased competitiveness for pricing and innovative services
  • Investment banking and wealth management services
  • Government policies of Tax and Secrecy rules
  • The phenomenal growth in the number of SMEs

How has the Singapore Banking industry been liberalized over the years?

The significant milestones in the development of Singapore’s banking industry are enumerated herewith in chronological order

  • 1999 to 2001, Liberalisation of the banking sector with a five-year liberalisation package with Qualifying Full Bank (QFB) licensing of foreign banks with an increased number of places of business and removal of 40 per cent foreign shareholding limit in local banks was lifted
  • 2001 marked the second phase of measures granting 20 Restricted Bank licenses over the two years for freeing up competition in the wholesale banking business with a bigger business domain, the restricted banks were re-classified as ‘wholesale banks’ to upgrade all offshore banks to wholesale banks over time
  • 2005, MAS increased the number of places of business for QFBs from 15 to 25
  • 2012, MAS further increased the privileges of QFBs to 50 places of business and introduced Significantly Rooted Foreign Bank (SRFB) framework for the domestic market and depositor protection
  • 2018, introduction of Fast and Secure Transfers (FAST) networks for allowing access to NBFCs
  • 2019, issuance of 5 digital bank licences, 2 digital full banks and 3 digital wholesale banks

Why has the private banking industry grown significantly in Singapore?

The reasons for the private banking industry growth are

  • Increased number of HNIs in Asia
  • Banking secrecy policies
  • Value-added banking services including wealth and lifestyle advisory services, investment strategies, asset protection etc.
  • High banking standard
  • Vibrant and growing capital market
  • Expensive banking activities

What is SME Banking Services in Singapore?

SMEs contribute significantly to Singapore’s GDP and both local and foreign banks offer financial services to these enterprises including trade financing, loans, deposits and insurance. Besides issuing commercial credits, the Singapore government provides various financing schemes to support SMEs in expanding their operations. Maybank, Standard Chartered, City bank, RHB, HSBC and many other banks have SME financing facilities.

What are the different types of Banks in Singapore?

Most of the Singapore banks provide a wide range of banking services to their clients, all corporates, individuals and government agencies including commercial and retail banking, private banking to HNIs etc. There are two types of banks

  • Local Banks
  • Foreign Banks
  • Full banks, Six foreign banks are given QFB status and include HSBC, Citibank, Standard Chartered, Maybank, ABN AMRO and BNP Paribas
  • Wholesale Banks offer similar ranges of services except Singapore Dollar retail banking
  • Wholesale banks are branches of foreign banks in Singapore and include ING Bank, National Australia Bank, Barclays Bank, Deutsche Bank
  • Offshore Banks are also branches of foreign banks and a few of them are Korea Development Bank, Bank of New Zealand, Canadian Imperial Bank of Commerce etc.
  • Merchant banks offer specialized services such as corporate finance, underwriting of shares and bonds, mergers and acquisitions, portfolio management, consultancy etc. Credit Suisse Singapore Ltd, Barclays Merchant Bank Singapore Ltd, ANZ Singapore Ltd, Axis Bank Ltd are some of the well-known merchant banks in Singapore

What are the main banks in Singapore?

The three main local banks are

  • Development Bank of Singapore
  • Oversea Chinese Banking Corporation, OCBC
  • United Overseas Bank, UOB

The six main foreign banks in Singapore include

  • The Hong Kong and Shanghai Banking Corporation (HSBC) Singapore
  • Standard Chartered
  • ABN-AMRO Singapore
  • Maybank
  • BNP Paribas and,
  • Citibank

What are the Banking Laws and Regulations in Singapore?

Besides regulatory legislations, the banking laws and regulations in Singapore provide a broad legal framework for the banking industry to remain in conformity with the latest developments and changes in the world’s banking and finance sectors. All banking regulations are passed and approved by the Parliament.

The banking industry acts include the following

  • Banking Act – The Banking Act governs commercial banks in Singapore
  • Monetary Authority of Singapore Act governs all matters related to and connected to MAS and its operations
  • Anti Money Laundering Regulations
  • Payment & Settlement Systems Guidelines
  • Securities and Futures Act
Conclusion

An economic support package of USD 125 Million has been announced by the MAS for the financial and FinTech sectors to fight against the impending challenges of the covid 19 pandemic and reposition Singapore on a strong foot for immediate recovery and future growth of the banking and financing sector.

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Opening a Bank Account in Singapore for New Company Formation
  • Article, Singapore

Opening a Bank Account in Singapore for New Company Formation

As an investor, if you are looking for a Singapore company incorporation for the first time, you need to open a current corporate account with a bank operating in the country to enable you to receive funds from your customers as well as manage the cash for the company’s operations.

Some banks in Singapore can be opened remotely without your physical presence whereas some other banks require you to be personally present while opening a bank account for your new business.

BANKS ALLOWING YOU REMOTE ACCOUNT OPENING

1. OVERSEAS CHINESE BANKING CORPORATION (OCBC) is a multinational banking and financial services corporation based in Singapore. Two types of accounts are usually opened and are

Business Growth Account for 100% Local Shareholders and Directors Only. A start-up friendly account suitable for Online Banking purposes with no initial deposit and minimum balance requirement. It needs

  • Account maintenance fee of SGD 10 per month but not levied for the first two months.
  • No service fee but incidental overdraft charges of  SGD 30
  • SGD 50 early Account Closure Fee if closed before one year
  • Cheque Book Fee of SGD 25 per cheque book except for the first one
  • For transactions, a free bundled package via Velocity@ocbc is available with Free unlimited GIRO and FAST transactions

Business Entrepreneur Account Plus is for both the local and foreign shareholders and directors with or without Business Operations in Singapore. The account features are

  • Minimum Initial Deposit of SGD 30,000
  • Minimum Balance of SGD 30,000.
  • No account maintenance fee
  • A monthly service fee of SGD 50
  • SGD 30 if balance falls below the minimum level
  • Early Account Closure Fee of SGD 50 for accounts closed within 6 months of opening
  • Cheque books are issued at no cost and each cheque costs S$0.75
  • A GIRO transaction fee of SGD 0.10 through Velocity@ocbc for every transaction

2. UNITED OVERSEAS BANK (UOB) is a leading bank in Asia operating in Singapore. There are three types of bank accounts available to the business communities and include

E-Business Account is suitable for all  startups and comes with the following features

  • Deposit of SGD 1000 during account opening
  • SGD 35 as a yearly fee
  • Minimum daily balance of SGD 5000
  • An additional service fee of SGD 15 if the minimum daily balance falls below the required level
  • Early account closing within 6 months attracts a fee of SGD 30
  • Cheque Book Fee is SGD 0.75 per cheque
  • SGD 20 per transaction

BizTransact Account is good for those doing online transactions and offers the below-mentioned features  

  • An initial deposit of SGD 1000
  • No annual fee
  • Minimum daily balance of SGD 80,000
  • An additional service charge of SGD 80 for a low account balance
  • SGD 200 for early account closing within one year
  • Cheque Book is complimentary for the first 30 cheques per month and then charged at S$0.75 per cheque
  • No transaction fee if monthly subscription done for BIBPlus Premium Services

SGD Current Account is ideal for businesses carrying out both online and over-the-counter transactions and comes with the following features

  • An initial deposit of SGD 1000
  • Annual fees of SGD 35
  • Minimum daily balance of SGD 10,000
  • An extra service fee of SGD 35 low account balance
  • SGD 30 towards account closing within 6 months
  • No Cheque Book Fee for the first 30 cheques in a month and then charged at S$0.75 per cheque
  • SGD 20 transaction fee per month if BIBPlus Premium Services subscription is done

3. THE DEVELOPMENT BANK OF SINGAPORE (DBS BANK) is a multinational banking and financial services corporation in Singapore offering the following bank accounts to the entrepreneurs

A business Digital Account is an ideal option for Small Business startups, with a low minimum balance. And online transactions facilities with the below mentioned features

  • An initial deposit of SGD 1000
  • No minimum balance
  • No extra charges for low account balance
  • Free GIRO transactions
  • SGD 18 monthly fees
  • SGD 25 per cheque book

A corporate Multi-Currency Account is ideally suited for companies with a business presence in many countries who can open a single account and do banking in 12 different currencies. The account comes with features as

  • SGD 3000 initial deposit
  • Minimum balance of SGD 10,000
  • SGD 40 monthly fee
  • Low balance charges of SGD 35
  • Free cheque book facility
  • No transaction fee for GIRO and SGD 20 for FAST

Standard Chartered and City Banks are also popular and offer a single type of account.

BANKS NEEDING YOUR PHYSICAL PRESENCE WHILE ACCOUNT OPENING

Other banking solutions that are available in Singapore normally require the physical presence of foreign investors while opening a bank account. Some of the notable and popular banks with an established market presence in Singapore are discussed below.

1. MAYBANK alias Malayan Banking Berhad, Malaysia is a very popular bank in Singapore offers

FlexiBiz account offers attractive options to young entrepreneurs and startup companies with no monthly charges, no minimum account balance, good interest rates on balance maintained and 24 hours free net banking facility.

  • SGD 1000 for account opening
  • SGD 50 for the closing of accounts before 6 months
  • A cheque book fee of SGD 0.5 only when the minimum balance falls below 30,000 SGD

PremierBiz account offers 0.318% interest per annum with a free cheque book facility  and needs

  • SGD 1000 during account opening
  • SGD 30,000 minimum balance

SGD 50 for early account closure

2. CIMB Bank is headquartered in Kuala Lumpur, Malaysia is a strong bank and offers the following account types

SGD Current Account with no interest and no monthly fee needing

  • SGD 8000 initial deposit
  • SGD 8000 minimum balance
  • SGD 40 for early account closure in less than 6 months
  • SGD 35 for balance below 8000 SGD
  • Free cheque book

SGD BusinessGo with 0.30% interest per annum and no monthly fee requiring

  • SGD 30,000 initial deposit
  • SGD 30,000 minimum account balance
  • SGD 40 for early account closure
  • SGD 88 fall below the service fee
  • First cheque book free and then SGD 25 for every cheque book

3. RHB BANK headquartered in Kuala Lumpur, Malaysia is a well-named and popular bank in South East Asia including Singapore and provides two types of bank accounts with unlimited free transactions

Bizpower Quad account offers a competitive interest rate of 0.188% to the account holders with the below features

  • A minimum initial deposit of SGD 1000
  • Average daily balance of SGD 5000
  • A service fee of SGD 25 if the daily balance falls below a minimum level
  • Closure of account within 6 months attracts SGD 60
  • Offers preferential FD rates for a balance of SGD 50K and above
  • Provides two free cheque books during account opening and afterwards at SGD 5 per cheque book

Bizpower Quad+ offers a better interest of 0.588% per annum and needs

  • Minimum deposit of SGD 30,000
  • Average daily balance of SGD 20,000
  • SGD 50 for non-maintenance for daily balance
  • Early account closure fee of 200 SGD
  • Preferential FD rates are offered for a minimum 200K balance
  • Provides complimentary cheque books

The bank’s price guide shared above may vary bank to bank based on business activity and structure of the Company.

The private banking industry is expanding rapidly in Singapore as they are offering high-end sophisticated banking solutions e.g. corporate and investment banking apart from traditional lending and borrowing activities. Singapore banks are professional, providing a high level of service, security, safety and banking secrecy coupled with tax-friendly attitude towards their customers and extremely cooperate with new investors for new company set up in Singapore.

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Why is it Beneficial to Start a Business in the Dubai Free Zone
  • Article, U.A.E

Why is it Beneficial to Start a Business in the Dubai Free Zone?

Overview

Dubai is a geographically strategic location as the confluence of the East and West and enhances business growth beyond all borders. It is the gateway to the rich oil economies and an obvious choice for international investors and entrepreneurs.

Dubai Government has embarked upon its relentless effort to transform the city into an enviable global logistics hub supported by solid aviation and supply chain networks. Dubai also implements an agile and business-friendly regulatory environment.

The city is supported by a solid and stable economy and forward-looking policies, planned development and infrastructure initiatives. A metropolitan city and home to more than 3 million expats from many countries across the globe, Dubai promotes technology and innovation in all spheres of life consistently outperforming many other international cities in global indicators e.g. prosperity, happiness and living standard.

The city enjoys world-class infrastructure facilities and transportation networks including high-quality communication systems. It is very well connected with all leading economies in the world through air and sea.

Business set up in Dubai Free Zone is ideal for start-ups because of a host of factors such as e-governance and other support services, and easy fundraising potential.

What are Free Zones?

Free Zones are special economic zones that offer customs duty benefits and tax concessions to investors and they are each governed by a special framework of rules and regulations. They are designed to encourage foreign investment with 100% ownership for all nationalities along with easier start-up processes, labour and immigration procedures, and other legal services.

How many Free Zones are there in Dubai?

There are more than 30 Free Zones operating in Dubai out of which 19 are participating Free Zones and most of them cater to specific sectors, providing industry-specific licenses trading, industrial activities and different types of services.

The city is surrounded by these Free Zones that accommodate all businesses, from startups to SMEs to large multinationals.  All businesses activities are benefitted from  well developed logistics and supply-chain networks.

The major Dubai Free Zones are

  • Dubai Silicon Oasis
  • Dubai Airport Free Zone
  • Dubai Design District
  • Dubai Healthcare City
  • Dubai International Academic City
  • Dubai Internet City
  • Dubai International Financial Centre
  • Dubai Knowledge Village
  • Dubai Media City
  • Dubai Gold and Diamond Park
  • Dubai Multi Commodities Centre (DMCC)
  • International Media Production Zone
  • Jebel Ali Free Zone
  • Dubai Production City
  • Dubai World Central (Dubai South)
  • Dubai Studio City
  • Dubai World Trade Centre Free Zone
  • Dubai CommerCity

There are some Free Zones that are less costly and more economical for business operations and include

  • Dubai Silicon Oasis (DSO) DSO is the mecca of cutting-edge technology and development in Dubai
  • Jebel Ali Free Zone (JAFZA)
  • Dubai Media City (DMC)
  • Dubai Healthcare City (DHC)
  • Sharjah Media City (SHAMS)


Are all the Free Zones suitable for all types of businesses?

Before you go for a Free Zone, you need to carefully ascertain what advantages are offered in that Free Zone for your business. While Jebel Ali Free Zone gives you easy access to air and sea routes most appropriate for shopping business, a DMCC company formation needs to be considered mostly for trading businesses and JAFZA company formation would be best for logistics businesses.

As a regional hub for many sectors including aviation, financial services, logistics, trade, media, tourism, information and communication technology, and healthcare, Dubai offers a host of benefits and cluster effects to companies in those sectors that choose Dubai as a base.

Which free zones suit your business most can be found from this link.

Why should I incorporate my business in Dubai Free Zones?

Dubai is widely known as the Future City and heaven for startups because of its thriving technology and innovation ecosystem and supportive government policies. It is untrue that Dubai is expensive, rather it is one of the most cost-effective choices for setting up a business due to zero tax, no import-export duty including many more cost benefits. With the development of both physical and digital infrastructure including other business amenities, Dubai has started to attract more and more foreign businesses and become home to more than 70% of fortune 500 companies.

 There are multiple benefits of setting up your business in Dubai Free Zone and the most notable ones are enumerated as under.

  • 100% Foreign Ownership needing no local UAE citizen as a sponsor.
  • 100% Repatriation benefits on capital and profits
  • No Foreign Exchange regulation and simple and easy transactions
  • No Import/Export duty and free global trade
  • Straightforward Immigration process including Residence and Employment visas
  • Easy and convenient Company Incorporation with simple licensing procedures
  • Easy and simple Workforce engagement and conducive employment rules for foreign expats
  • Tax-free business environment both for corporates and individuals with 15 years tax exemption renewable for another 15 years
  • No mandatory initial capital requirements
  • Easy access to huge MENASA market
  • Availability of several incubators and accelerators such as DIFC FinTech Hive etc.
  • Easy access to funding with 19 Venture Capitalists (the highest in MENA region) as well as P2P and Islamic Funding
  • Economic Assistance by Dubai government through 20% Capital project cost allocation to startups and SMEs, 27 million USD through ‘Smartprenuer’ initiative


How can you Set Up a Company in Dubai Freezone?

Registering a foreign company in the Dubai Free Zone is easy but becomes easier when you outsource the services of a reputed and professional service provider based in Dubai to avoid some complexities and impediments experienced from time to time. It typically takes three weeks once you decide on the specific free zone to incorporate your business.

More details of the Dubai Free Zone company formation process can be found in this link.

How can IMC help you in a successful business set-up in the Dubai Free Zone?

We at IMC are a team of highly experienced and qualified professionals with a proven track record of providing high value-added PRO services backed by our global business insight and local knowledge.

We have been operating in Dubai and the UAE for more than a decade and also have our operational bases in many parts of the Middle East and other GCC nations.

We believe in continuous learning and keep ourselves updated and well informed about the rapidly changing business laws and regulations in the UAE and Dubai.

Once you hire us, we shall help you in business-related documentation including translation and attestation, all immigration and licensing formalities, banking and all other legal processes and also assist you in developing a strong and transparent relationship with the authorities for continued business growth and development.

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Key Things to Consider When Managing Payroll in Singapore
  • Article, Singapore

Key Things to Consider When Managing Payroll in Singapore

Singapore Employment Act mandates that as an employer in Singapore, you must pay the salary of your employees a minimum once a month and within 7 days once the salary period ends based on the terms and conditions of the employment contract.

Payroll management can be tricky and complex however there are professional, experienced and reliable payroll services in Singapore that can effectively address all your issues related to payroll management including CPF contributions, leave claims, taxes, employee benefits etc. and ensure regulatory compliance of timely salary payments to your employees.

How is salary defined?

Remuneration is commonly known as salary that is paid for work performed as per employment contract and includes allowances except provident fund contribution paid by the employer, travelling allowances, on the job expenses, retirement benefits etc.

What should be the frequency of disbursement of salary?

The Employment Act defines that employers pay the salary every month as a minimum.

For regular work, the salary must be paid within 7 days after the end of the salary period and for overtime, the date of salary payment may be extended up to 14 days maximum.

How can the salary be paid?

Payslips for individual employees must be generated before paying the salary and can be paid on working days at the place of work or any other place mutually agreed between the employer and the employee. Salary can be directly deposited in bank accounts.

What items are mandatory in a payslip?

Every payslip must have a mention of the following items

  • Full name of employer.
  • Basic salary.
  • Date of payment or dates if payment is made more than once.
  • Allowances paid for salary period, such as all fixed allowances, e.g. transport. All ad-hoc allowances, e.g. one-off uniform allowance.
  • Start and end date of the salary period.
  • Total overtime hours worked and payments made.
  • Full name of the employee.
  • The basic rate of pay.
  • Total number of hours or days worked or pieces produced.
  • Any other additional payment for each salary period, such as Bonuses, Rest day pay, Public holiday pay.
  • Overtime payment dates.
  • Net salary paid in total
  • Deductions made for each salary period including the mandatory deductions e.g. provident fund contribution and any other deductions e.g. leave of absence.

How long the records of payslips must be retained?

All the payslip records must be retained and maintained for at least two years for all current employees and either in hard or soft forms. Two years’ ex-employee payslips must be retained for a year after the employee leaves the organisation.

What are the mandatory payroll contributions in Singapore?

The Singapore Employment Act stipulates some mandatory contributions to be made by the employers to the employees and are

1. Central Provident Fund (CPF)

In Singapore, both employers and employees must make mandatory contributions in a social security savings scheme known as CPF.

An employer must make CPF contributions at the monthly rates specified in the CPF Act and recover individual employee’s share of the contribution by deducting the same from their salaries.

CPF contributions must be made at the end of every month and failing to pay by the 14th of the next month may attract penalties including late payment interest charges and in cases hefty fines up to SGD 5,000 and even imprisonment or both.

The CPF contribution rate applicable for your employee is determined by the nature of citizenship like Singapore Citizen or Singapore Permanent Resident (SPR) and its status, salary band and total monthly wages. The allocation rates differ from contribution rates and depend on age group and employee type.

CPF contributions are compulsory for the following payments

  • Basic salary per month
  • Incentives, Allowances and Commissions
  • Bonuses paid annually
  • NSmen make-up pay
  • Payments for overtime

CPF contributions are not payable for gifts and reimbursements.

There are different caps applicable for Ordinary Wage and Additional Wages and CPF contribution is calculated accordingly. The maximum contribution for ordinary wages is calculated at SGD 6,000 at present.

The maximum of additional wage’s contribution towards CPF contribution equals to ordinary wage contribution of SGD 72000 minus SGD 102,000 annually.

Details of CPF contribution and allocation rates applicable for employers can be obtained from this link.

2. Ethnic Fund

An ethnic fund contribution must be made by the employer based on the ethnicity of the employee every month and deposited to the respective welfare funds along with the employee’s contribution.

3. Skill Development Levy

Irrespective of being a full-time, part-time, casual, or foreign employee, employers need to make mandatory contributions towards a skill development levy and its calculation varies depending on the salary of the employee. The first SGD 4,500 of monthly salary attracts a 0.25% levy with SGD 2 as a minimum.

4. Foreign Workers Levy

Employers are required to pay levies if they hire

Employing foreign workers with work permits or S passes attract foreign workers levy based on the qualifications of employees and the sector-specific business activities of the employers.

What deductions are not allowed in the foreign workers’ salary?

Singapore Employment of Foreign Manpower Act stipulates that expenses incurred on foreign employees for the following reasons are not deductible from the salary of foreign workers

  • Recruiting costs
  • Medical expenses
  • Medical insurance premiums paid
  • Work pass renewal costs
  • Costs of repatriation
  • Payment made towards levies
  • Security bond payment
  • Mandatory training expenses

What salary payments are not compulsory in Singapore?

The salary payment of the 13th month Annual Wage Supplement (AWS), bonuses and variable pay is not compulsory unless specifically mentioned either in the employment contract or the collective agreement reached with the employee union.

Is outsourcing Payroll Services beneficial in Singapore?

Payroll management is a non-core business activity and involves many complexities and hidden costs in Singapore. There are multiple benefits of outsourcing payroll services in Singapore as it offers huge savings on cost, time and valuable resources and ensures real-time payroll management, payroll reporting, tax support and regulatory compliance.

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Singapore Emerges as the New Silicon Valley in Asia
  • Article, Singapore

Singapore Emerges as the New Silicon Valley in Asia

Singapore is a hotbed for new business ventures. It may be viewed as the Silicon Valley of Asia, thanks to its convenient location and the opportunities open to investors. Tencent, ByteDance and Alibaba built regional hubs in Singapore. According to news reports, ByteDance is planning to add hundreds of jobs over the next three years; joining an international coterie of tech giants that already have headquarters or significant operations in Singapore.

Singapore- The New Silicon Valley of Asia

Recent global politics and trade wars between the US and China, made many tech experts believe that a new technological epicentre is readily emerging and Singapore in all likelihood will take that sweet spot due to its independent political status and unprecedented financial growth led by robust innovative technologies.

Singapore, soon after being independent in 1959 had become the manufacturing and financial centre due to its open and business-friendly policies and slowly became the most sought business destination to the global MNCs, SMEs, startups, and companies driven by technology over the years. More than 80% of the world’s top technology companies have their presence in this small island nation and many more are still rushing to doing business in Singapore.

Key Factors helping Singapore emerge as the New Silicon Valley of Asia

Singapore, the tiny sea city in South East Asia, has secured the top spot as the most potential world-leading technology hub and left New York behind for its Government Policy reforms, Ease of doing business, Advanced IT Infrastructure, Digital Support Initiatives, Intellectual Property Laws, English speaking skilled talent pool, Ease of access to funds including the presence of many high tech firms from USA, China and many other parts of the world.

Government Policy Reforms

Government policy reforms which are insignificant play over the last two decades have started bearing fruits now promoting business and investment in the country due to lower taxes, fewer capital restrictions, and liberal immigration policies. In its commitment to sustainable economic development, the country is mobilizing all possible resources and rolling out policy reforms to build robust technical infrastructure and investment opportunities.

The Smart Nation initiative, launched in 2014, is focusing on increased technology penetration into every aspect of the country’s urban and rural population.

Many government establishments have also been incorporated to help new businesses e.g. Economic Development Board (EDB) and the Standards, Productivity and Innovation Board.

The Government has also prioritized studying and learning technology courses to fill the talent gap including the introduction of several tech-focused graduate programs to produce local tech talent. Many companies encouraged by the government are already having satellite engineering teams in Vietnam and India for practising engineers.

Singapore Visa Programme, TechPass Singapore has been launched recently to allow established tech entrepreneurs, leaders, or technical experts from around the world to enter Singapore and contribute to the various tech innovations.

In a visionary move, the National University of Singapore launched a startup-incubation space called Block 71 in a renovated industrial building way back in 2011 embracing an identical strategy introduced in Silicon Valley.

Singapore Blockchain Innovation Programme (SBIP) has also been initiated recently to help companies commercialize blockchain technology.

Intellectual Property Rights

There is a strong IP regulatory framework prevailing in Singapore offering confidence to high technology companies that their R&D investments are well protected in this country.

Strategic Location

In the World Bank’s “Doing Business” 2020 rankings, Singapore ranked as second best and only after New Zealand also securing its rightful position amongst the first six countries for ease of starting a business. With world-class IT infrastructure, the country provides the most suitable conditions required for technology development.

Investor friendly business climate

The sea city Singapore is small in size however acts as the gateway to many parts of Asia and provides easy access to the fast-growing billion-dollar tech markets.

Technology Initiatives

The Singapore government is also promoting an AI hub and developing a dedicated data science consortium besides the SBIP and continuously striving to required technological amenities to technology startups.

Singapore also has a National Trade Platform that serves connecting businesses by establishing links between importers, exporters, banks, logistics firms, customs, shipping agents, and other stakeholders.

Technology Ecosystems-Presence of International Tech Firms

Singapore enjoys good diplomatic relations with both the USA and China and many big American technology companies are already there in Singapore for quite some time now including IBM, Google, Facebook Inc, Twitter, Microsoft and Salesforce.

Early this year, some other fast-growing technology companies have migrated into Singapore to expand their existing businesses in the USA and China and include Zoom, Twitter, PayPal, Tencent, Alibaba, and ByteDance, the artificial intelligence company.

The presence of high profile tech companies as well as other foreign companies wanting to relocate to Singapore equates to big investments flowing into the Republic amid the ongoing COVID-19 pandemic.

English speaking country

Language can be the biggest barrier in business communication and Singapore speaks and officiates in English, a universal language making it is for foreign companies to incorporate their business in the country. Many international schools are also available in the country offering good education and learning to the children of foreign business executives.
Access to Capital

As the angel investing ecosystem was behind the rapid progress of technology companies, especially the startups in Silicon Valley through the early years providing requisite capital and financial support, likewise the venture capitalists with more than 150 VC funds are becoming the money source for the Singapore tech companies for the last six years. As per a report published by Enterprise Singapore, venture funding has grown up more than 10 times in Singapore since 2018.

Singapore has a large network of technology startups that have attracted significant government subsidies lately. The government has assured 85% or a maximum of $0.5 million investment in approved start-ups in Singapore under Singapore’s Technology Incubation Scheme.

Conclusion

Everything is in favour of Singapore in its race for becoming the new Silicon Valley in Asia except the availability of tech talents that is in high demand. While large enterprises are capable of sourcing talents, smaller start-ups are finding it difficult to get talented employees. However, Government is strategizing and implementing measures to address this issue.

The pandemic may have slowed investor and business expansion momentum around the world, but global technology corporations have been booming in a time when digital interactions have replaced physical ones out of necessity.

Foreign company registration in Singapore is straightforward and particularly so if a well-reputed local PRO services company is hired.

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How to Start a Business in Qatar as a Foreigner
  • Article, Qatar

How to Start a Business in Qatar as a Foreigner?

Qatar National Vision 2030, a development plan launched in 2008 spearheaded the country’s economic diversification in non-oil sectors and brought in many changes in foreign investment policies and procedures over the years. Company formation in Qatar is mainly attractive to foreign investors due to the country’s rich economy, world-class infrastructure and one of the lowest corporate tax rates.

The Al Ula agreement reached on January 5 at the Gulf Cooperation Council (GCC)’s 41st summit removing economic and diplomatic blockade on Qatar by other GCC nations including Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt is also positive news for foreign investors.

Who can start a business in Qatar?

As a foreign investor, you can only start doing business in Qatar if you have a minimum authorized share capital of USD 55,000 and at least one local Qatari partner. Private LLC companies are the most common business setups with the foreign investor owning a maximum of 49 per cent shareholding while the rest 51 per cent is held by the Qatari partner, usually a professional passive Qatari shareholder. Though restricted, the Ministry of Business and Trade may approve 100 per cent foreign ownership on a case to case basis and in certain specific sectors e.g. agriculture, health, education, tourism, IT, entertainment etc.

What are the company structures available in Qatar?

The business structures available in Qatar are as under

  • Sole Proprietorship Company
  • General Partnership Company
  • Shareholding Company
  • International Engineering Consultancy Office(IECO)
  • Simple Partnership Company
  • Limited Liability Company
  • Branch Office
  • Representative Office
 

If you don’t want a Qatari shareholder or don’t want to make any big investment either, you can enter into an agency agreement with a professional agent or distributor.

How to set up an e-commerce business in Qatar?

Qatar being a rich country with a high level of disposable income of its citizens, e-commerce business having only 20 per cent penetration can provide huge business opportunities to foreign investors. The internet penetration is almost 100 per cent with high-speed internet availability.

Moreover, you don’t necessarily require a permanent residence to be a partner in an online business and can even start an online business while on a business visa. The first thing you need to do is getting your business registered with the Ministry of Commerce and Industry (MOCI), the Qatar Financial Centre (QFC) or Qatar Science and Technology Park (QSTP).

Why Qatar Free Zones (QFZ) and How to Register a Free Zone Company?

Qatar Free Zone Authority (QFZA), Qatar Science & Technology Park (QSTP) and Qatar Financial Center (QFC) are the three regulatory bodies entrusted with the overall administration, management and control of QFZ.

Free zone Company formation in Qatar is fast and straightforward and provides foreign investors with several benefits including 100 per cent foreign company ownership, zero corporate income tax, no personal income tax, 100 per cent import and export duties tax exemption, entire repatriation of capital and profits and no foreign currency restrictions.

What is the procedure to set up a Limited Liability Company (LLC) in Qatar?

The most common form of business structure, LLC set up in Qatar involves the following steps

  • Acceptance of Proposal
  • Name approval and documents submission e.g. AOA etc.
  • Apply for Tax Card and issuance of company stamp
  • Application for computer card on receipt of trade license
  • Ministry of labour registration and visa quota requirement submission for employees
  • Registration with Chamber of Commerce
  • Notarization at the Ministry of Justice for commercial registration
  • Application for Trade License and Municipality inspection
  • Corporate bank account opening, making an initial deposit
  • Providing documents for office space
 

How to set up a Branch Office in Qatar?

A branch office can have 100 per cent ownership and is not regarded as a separate legal entity and a permanent establishment. It is only permitted if you have a legal contract to perform a state project and needs to be authorised by the Ministry of Economy and Commerce and fully taxable. The process for setting up a branch office is almost similar to those required for LLC with an additional requirement of permanent tax card application within a month from the receipt of commercial registration.

How is the Taxation for businesses in Qatar?

Companies with 100 per cent foreign ownership including those with partial shareholding are levied with a flat rate of 10 per cent income tax on the profits generated through business activities. This corporate tax rate is lower than compared to many other countries in the world.

Payments made to non-resident entities without any permanent establishment in Qatar attract withholding tax for the companies at a 5 per cent unified rate and includes interest, royalties, technical fees, commissions, brokerage fees etc.

Companies owned by Qatari and GCC nationals are tax-exempt but need to file tax and audited financial statements if the capital exceeds QAR 2 million.

Private associations and foundations; non-profit organizations; salaries, wages, and allowances; gross income from legacies and inheritances are free of tax too.

How to Employ staff when setting up a business in Qatar?

The hiring of employees can start only after you set up your business and receive your computer card. Approval from the Ministry of Labor and Ministry of Interior is mandatory for foreign employees before signing local employment contracts. All such employees must provide an attested copy of their degree certificate to the Ministry of Labor.

Why engage Support Services when starting up a business in Qatar?

Many business consulting firms can offer you help in your journey as an investor in Qatar by providing legal support and even finding professional Qatari partners for your company.

A business consultant can also organize office spaces for you through real estate brokers and as there is an increasing trend for coworking spaces in Qatar, your consultant with a local base can help you find one for huge cost savings.

Accounting services in Qatar can also be a great source of help in automating and managing your accounts, eliminating the need for internal accountants and accounting infrastructure, preparing financial statements on time, providing cost-saving suggestions and ensuring timely compliance with the regulatory requirements.

Conclusion

Although highly rewarding, a new business set up in Qatar is often complex with lots of regulatory requirements and complications. As financial risks may not be completely overruled, it is advised that you outsource accounting and taxation services in Qatar. Engaging a professional PRO services company with a local presence and knowledge of the society, culture and economy of Qatar can go a long way to help you cross over the initial bumps and achieve a successful business enterprise.

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How to Start a Business in Kuwait as a Foreigner
  • Article, Kuwait

How to Start a Business in Kuwait as a Foreigner?

With 1.4 million citizens, 3.3 million expatriates and 6 per cent of global oil reserves, Kuwait is a rich country with a bounty of natural resources, a global top ten oil exporter. Though the economy is primarily oil-based, the national development plan, New Kuwait Vision 2035 stresses economic diversification and enacted many reforms that help the country improve from 97 to 83 among 190 countries in the World Bank’s 2020 Doing Business Report.

What are the business opportunities in Kuwait?

Company formation in Kuwait can be immensely beneficial to foreign investors promising innovation and growth and mainly due to the below-mentioned reasons

  • Water, power, land and labour are cheap and some are highly subsidized up to a whopping 86 percent.
  • Rich and business savvy Kuwaiti nationals.
  • Significant expansion in the building, project and construction industry.
  • $104 billion National Development Plan for the construction of major roadways, a new airport terminal, new hospitals, new residential complexes, a new Kuwait University campus.
  • New oil refinery, oil exploration, new power projects, and a new railway and metro system.
  • Private construction and project development.
  • Several project opportunities e.g. a proposed $10 billion electricity generation projects.
  • The automotive, oil and gas, computers/ICT, telecommunications equipment, and construction equipment sectors look promising with recent government initiatives.
  • Government’s high priority for healthcare infrastructure.
  • Politically strategic country.
  • A young local population.
  • High average income and high domestic consumption.
  • A well-managed financial market and a strong banking sector.
  • Good quality infrastructure.
  • Strategically located close to three major markets including Iraq, Saudi Arabia and Iran.

Who can start a business in Kuwait?

The foreign direct investment law 2013 only allows 100 percent foreign ownership if approved by the Kuwait Direct Investment Promotion Authority (KDIPA). Either Kuwaitis or GCC nationals must own a minimum of 51 per cent of any business share.

Total foreign ownership is only considered if the business set up is perceived as capable of creating employment and diversifying the nation’s economy. Besides, the business establishment must also contribute to export promotion and gainfully utilise Kuwaiti services and natural resources.

As per the latest reports from KDIPA, 37 foreign firms have so far been approved for 100 per cent foreign ownership.

What business structures are available in Kuwait?

If you are looking for investment opportunities in Kuwait as a foreigner, the country offers you many business vehicles to choose from.

A Limited Liability Company (LLC) structure, known as WLL (With Limited Liability) is most common, easy and fast to incorporate with a minimum share capital of 1000 KD. An LLC however, is not permitted to take part in banking or insurance sectors, with a maximum of 49 per cent stakeholding.

A joint-stock company alias Kuwaiti Shareholding Company (KSC) also permits a maximum of 49 per cent foreign equity participation and can be publicly traded on a local stock exchange whereas a closed KSC doesn’t permit publicly trading of shares.

A limited liability partnership is a partnership structure with two categories of partners, one being general partners liable for the business’s debts and the other one limited liability partners and profits distributed proportionally based on shares held.

A branch doesn’t need any sponsor and is only permitted for GCC nationals. Other foreign business establishments can only set up a branch office if approved by KDIPA.

Agency involves an agreement with a local commercial agent/distributor if you as a foreign investor are not willing to set up a local company in Kuwait. A commercial agent is normally paid a fixed fee or a percentage of profits from your Kuwaiti business with all terms and conditions detailed in the agency agreement.

A joint venture company, a JV is formed by a venture of two or more legal and natural persons with no separate legal entity and without any need of getting registered with the Ministry of Commerce and Industry and usually used in construction projects and conducted under the trade license of the Kuwaiti partner.

How to set up a business in Kuwait?

Setting up a business in Kuwait is not cumbersome, costs you KD 323 (approx. 1000 USD) and takes around a month. The steps involved are almost similar irrespective of the company types and include

  • Submitting an application with details of your company’s capital, shareholding and other information to the department of companies of the Ministry of Commerce and Industry (MOCI) for registration.
  • A background check by the ministry of commerce through the local municipality and the ministry of interior.
  • Reserving a unique company name and submitting it to the Company Registry for name approval.
  • Retrieving the letter addressed to the bank by the department of companies.
  • Depositing your company’s paid-up capital at the bank and collect the receipt.
  • Scheduling inspection by the local municipality and obtaining NOC within two weeks.
  • Submitting Memorandum of Association (MOA) to the department of companies and receiving approval.
  • Notarizing the MOA before a public notary.
  • Filing signed and notarized copy of MOA with the department of companies.
  • Registering with the commercial registry and receiving a Certificate of Registration (CR).
  • Obtaining Commercial License from the department of companies.
  • Registering with Kuwait Chamber of Commerce and Industry.
  • Registering with the Public Authority for Civil Information.
  • Registering with the Department of Labour and Social Affairs.

How are businesses taxed in Kuwait?

Businesses owned by the Kuwaitis or GCC nationals are free from corporate income tax (CIT). GCC companies with foreign ownership are taxed based on the extent of foreign ownership. CIT is levied on the profits and capital gains of foreign corporations carrying out business or trade-in Kuwait either directly or through an agent.

Income earned from activities in Kuwait is only considered for CIT subject to tax in Kuwait and at a flat rate of 15 per cent.

The religious tax Zakat is imposed on all publicly traded and closed Kuwaiti shareholding companies at a rate of 1 per cent of net company profits.

The country’s tax law does not levy withholding tax but all public and private entities are mandated to retain a 5 per cent sum of contract amount till that time a tax clearance certificate is presented.

Even though tax treaties are with several countries for the avoidance of double taxation, the interpretation is not always consistent or in line with the guidelines giving rise to frequent disputes.

What is the labour law in Kuwait?

Every business registered in Kuwait must employ local Kuwaitis based on applicable sector-specific requirements that may vary from 3 to 60 per cent of the total headcount.

Social Security contributions are mandatory for all employees at a rate of 10.50 per cent while the employer has to contribute a sum equal to11.5 per cent of the monthly salary of employees, up to a maximum of 2,750 KD towards the Financial Remuneration Fund.

Conclusion

Careful selection of business partners is the single most important step to a foreign investor while doing business in Kuwait. Outsourcing taxation, accounting and legal services can protect your business from future liabilities.

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Why and How to Set up a Business in Oman 2021
  • Article, Oman

Why and How to Set up a Business in Oman 2021?

For centuries, Oman has been engaged in overseas trading with its marine business vessels navigating across African, European and Asian shores. It is the third-largest country in the Arabian Peninsula and used to be mainly an agriculture-based economy before the discovery of oil and gas in 1964.

Oman started focusing on industrialization and economic diversification into non-oil sectors during the early 70s of the last century under the able and visionary leadership of Sultan Qaboos Bin Said who had undertaken many economic and social reforms to attract foreign investors for doing business in Oman.

 

Why set up a Business in Oman?

Many present-day economists and financial analysts say across the globe consider Oman as an ideal country for long-term business and investment opportunities because of its

  • Strategic location.
  • Diversified Economy.
  • 100% foreign ownership in free zones and 70% in most sectors .
  • Low corporate tax rates for companies with double taxation avoidance agreements with many countries .
  • Membership with international agencies e.g. WTO, GCC, GAFTA.
  • Foreign Trade Agreements with USA, Singapore, Iceland, Norway, Switzerland.
  • Political and economic stability.
  • Low Tax with zero personal income tax rate.
  • No restriction on capital or profit repatriation, currency exchanges or dividend transfers.
  • Tax exemptions on import of plant and machinery as well as raw materials for 5 years from the commencement of operation.
  • Modern infrastructure with good roads, airports, seaports and communications.
  • Investor-friendly business regulations .
 
 

 

What Corporate structures are available in Oman?

The Omani government does not put any restrictions on foreign investment and company formation in Oman. However, businesses in certain sectors including banking and finance, insurance, tourism, telecommunication, industrial factories, mining, food and beverages, schools, hospitals and employment agencies need specific permits to operate.

The company structures that are available to the foreign investors in Oman include

  • Limited Liability Company
  • Partnership
  • Closed Joint Stock Company
  •  Joint venture
  • Public Joint Stock Company
  • Branch of a foreign company
 
 

Foreigners are allowed a maximum of 70% ownership in a company registered in Oman. Citizens of countries enjoying free trade agreement (FTA) with Oman can have higher % age of ownership.

The minimum share capital requirement for a foreign-owned LLC is OMR 150,000 whereas an LLC with 100% ownership of Omanis or GCC or FTA nationals, the minimum capital requirement is much lower, OMR 20,000.

The minimum share capital requirements for public and closed joint-stock companies is OMR 500,000 and OMR 2 million respectively.

Minimum capital requirements are substantially higher for banks, insurance companies including lending and financial companies.

 

How to set up a fully Foreign Owned LLC Company in Oman?

The most common type of locally incorporated company in Oman is an LLC and its formation involves the following chronological process steps

  • Reserving a company name.
  • Registering with Oman Chamber of Commerce and Industry (OCCI).
  • Applying for Municipal License.
  • Registering with a local PRO.
  • Leasing arrangement for office space and warehouse.
  • Registering with the Ministry of Commerce and Industry (MOCI) for Commercial Registration (CR).
  • Preparing the documents.
  • Registering with the Ministry of Finance (MOF).
  • Registering with Customs.
  • Registering with the Ministry of Manpower (MOM).
  • Designing a company seal.
 

 

What documents are needed for setting up a 100% foreign-owned LLC in Oman?

The following documents are needed for an LLC in Oman

  • The board of resolution of foreign shareholders.
  • Memorandum and Articles of Association of foreign shareholders.
  • Duly audited accounts as proof of a minimum of three years of operation.
  • Tax registration certificate.
  • Copies of Passport / Identity card of shareholders and authorized signatories.
  • Receipt of initial deposit.

 

What is a foreign branch and How to incorporate a branch Office in Oman?

A foreign-owned company once entered into a contract with the Omani government or quasi-government establishment gets entitled to register and operate in Oman as a foreign branch. It doesn’t have a separate legal entity and is not a permanent structure. A branch office in Oman needs a local agent as a sponsor for managing visas and licenses. A minimum of 12% tax is the rate applicable to a foreign branch office. The same process steps need to be followed as in an LLC for setting up a foreign branch except paying a bank guarantee for obtaining an operational license.

 

Why prefer Free Zones in Oman for setting up a company?

Oman has three free zones and two special economic zones that provide incentives including tax holidays, import duty waiver, exemption on initial share capital requirements and 100% foreign ownership.

 

How foreign business entities are taxed in Oman?

Oman follows a uniform income tax rate for all types of business establishments irrespective of being either a corporate entity or a registered entity or unregistered.

Apart from Sole proprietorship businesses, the income tax rate is 15% for all taxpayers and LLCs that fulfill the conditions of SMEs.

Omani proprietorships and LLCs that meet some specified requirements are taxed at 3 %.

Income generated from the sale of petroleum products comes under the purview of petroleum tax and at a 55% rate.

There are no regional or local income taxes in Oman.

VAT has recently been introduced in Oman during April 2021 at a flat 5% rate as per Oman VAT Executive Regulation.

 

Are there any tax incentives announced by Oman to counter the effect of the pandemic?

A five-year tax exemption was proposed as an economic stimulus plan on 9th March 2021 for new businesses in manufacturing, agriculture, fishing, mining, tourism, and logistics and services that can bring economic diversification to the country and the tax exemption would be effective from the date of registration in the commercial registration certificate.

Some other tax measures have also been announced including

  • Exempting hotel establishments from tax during assessment years 2020 and 2021.
  • Permitting tax payment in installment during 2021 without any penalty.
  • Suspending withholding tax on dividends and interest for an additional period of five years, from the tax year 2020.
  • Permitting unlimited carry forward of losses for tax losses incurred for the assessment year 2020.
  • Reducing tax rate to 12% (from 15%) for small and medium-sized enterprises (SMEs) for the tax years 2020 and 2021.
  • Exempting tourism businesses from both tourism and municipal tax levy until the end of 2021.
  • A grant of a preliminary license for a certain type of business (subject to certain terms and conditions) sufficient to allow them to conduct commercial and investment activities without waiting for the issuance of the final license.
  • Granting permit for ready hiring of three expatriates on the issuance of commercial registration.

 

Conclusion

Even though the e-commerce market in Oman is in infancy, it was valued at more than USD 2 billion in 2020 and projected to touch USD 6 billion by 2026 growing at a CAGR of more than 20%.

The construction and logistics sectors though severely impacted by the pandemic are expected to witness a K shaped recovery as the Sultanate is undertaking many new initiatives.

Oman also stood committed to the international business fraternity as it signed the OECD tax treaty to prevent Base Erosion and Profit Shifting (BEPS).

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How to Set up a Business in the Kingdom of Saudi Arabia
  • Article, Saudi Arabia

How to Set up a Business in the Kingdom of Saudi Arabia?

Essentially an oil-based economy, Saudi Arabia enjoys a great global reputation as a business-friendly nation. The country is a member of several international institutions including WTO, G20, GCC, OPEC etc. and offers huge investment opportunities. Construction, real estate, healthcare and life sciences, education, energy, chemicals, IT and Industrial Manufacturing are the most sought after non-oil business sectors for company registration in Saudi Arabia.

Saudi Arabia recently made significant improvement in all its global business indices rankings and as per the latest “ease of doing business” report of the World Bank advanced 30 places to 62nd from its 92nd ranking in 2018.

The World Bank reported the Kingdom as one of the greatest reformers in economic and social aspects propelled by the Saudi Vision 2030 which introduced many regulatory and policy reforms to simplify doing business in Saudi Arabia and attract foreign investment in the country.

The Kingdom has been a staunch advocate of technological innovation to bring improvement in many diverse areas such as education, health care and desalination and power distribution. King Abdulaziz City for Science and Technology (KACST)) as well as the already planned USD 500 billion high-tech mega-city will also help in fuelling the country’s economic growth.

What are the business structures in Saudi Arabia?

The following business structures are available in Saudi Arabia as per the company regulations

  • Branches of a foreign company most commonly incorporated by foreign investors.
  • Joint Stock Company.
  • Joint ventures.
  • Representative Office (Technical and Scientific Office, TSO).
  • Limited Liability Companies also preferred by most foreign investors.
  • Limited partnership.
  • General partnership.

What are the procedures to set up a business in Saudi Arabia?

To open a company branch office in Saudi Arabia, or to set up an LLC, the waiting time is usually three to six months before you get the commercial registration from the Saudi Arabia Ministry of Commerce and Industry. The steps involved are as under

  • Obtaining an investment license from the Saudi Arabian General Investment Authority (SAGIA).
  • Notarizing the articles of association.
  • Opening a local bank account and making the initial deposit.
  • Registering with the Customs department.
  • Registering with the Ministry of Labor.
  • Register with the Mudad Business Portal to facilitate admin and finance procedures for your business entity.
  • Reserving the company name and submitting AOA, articles of association and other mandatory documents.
  • Making payment for company registration.
  • Registering with the General Organization for Social Insurance (GOSI).
  • Registering with the Chamber of Commerce.
  • Obtaining a municipality license.
  • Registering with the electronic Qiwa HR portal.

All documents needed for submission must be translated into the Arabic language for filing with the regulatory bodies.

Who can set up a business in Saudi Arabia?

All non-Saudi nationals as per the foreign investment act are allowed to make investments in the Kingdom and can become stakeholders in minority, majority or 100 per cent foreign-owned ventures. However, there are sectors where foreign investment is not allowed as per the “negative list” issued by the government.

The sectors not included on the negative list should be treated as open to foreign investments. Saudi foreign investment act allows equal opportunities to non-Saudi firms. Expropriation of foreign-owned assets is only permitted as an exception under Saudi laws. The Kingdom permits buying property and allows businesses to sponsor their employees.

Why are foreigners preferring Saudi Arabia as a future business destination?

Specifically designed to attract foreign investment, Saudi Arabia extends the following incentives to the foreign investors

  • Export credit financing.
  • Subsidized power, water and natural gas.
  • Financial incentives for R&D projects that enable economic growth.
  • Loan facilities for industrial investments both in public and private sectors.
  • For foreign investors investing in some underdeveloped provinces including Jazan, Najran, Al-Baha, Al-Jouf, Ha’il and Northern territory, the government allows 10-year tax concessions.
  • Customs duty waiver on some specific materials, machinery and equipment.
  • Employment-related support by Human Resources Development Fund (HRDF).
  • No major restrictions by the Saudi Arabia Monetary Authority (SAMA) on the inward or outward movement of funds by companies.
  • An LLC can be incorporated by one shareholder instead of a minimum of two mandated earlier.
  • Reduction in minimum share capital requirement for JSCs to SR500,000 from SR2,000,000).
  • Reduction in the minimum number of shareholders for JSCs to two from five.
  • Reduction in yearly statutory reserve requirements for LLC shareholders to 30 per cent from 50 per cent earlier.

How is the tax structure in Saudi Arabia?

A resident corporation is taxed on income generated in Saudi Arabia and considered resident when registered as per the regulations for companies in Saudi Arabia or its head office in the country.

Any non-resident carrying out income generation activities through a permanent entity is taxed on income accrued to it.

Only non-Saudi investors are liable for income tax and GCC nationals are treated as Saudi citizens for tax purposes. Non-Saudi taxpayer’s share of a resident company or a Non-resident’s income from a permanent establishment in Saudi Arabia attracts 20 per cent corporate income tax and Zakat at a flat 2.5 per cent rate.

A company in Saudi Arabia having both Saudi and foreign shareholders is liable for corporate income tax based on the portion of taxable income from the non-Saudi operation, while only religious tax Zakat is applied to Saudi business activities. Saudi Arabia doesn’t provide any foreign tax relief to foreign companies.

Withholding tax is levied while distributing dividends to the non-residents including non-resident GCC shareholders and at a 5 per cent rate.

Capital gains are subject to Zakat and the government doesn’t levy any tax on capital duty, stamp duty and real estate duty.

There is no withholding tax on payments made to non-residents for the import of goods.

Conclusion

The Ministry of Investment of Saudi Arabia (MISA) has several branches in Riyadh, Jeddah, Dammam, Medina, and Jubail to serve the investors and address their issues.

Many industrial sites are built to attract foreign investors in Riyadh, Jeddah, Dammam, Qaseem, Al-Ahsa and Mecca offering subsidiary companies tax exemptions for 5 years with subsidized electricity, water, fuel etc.

Due to the covid pandemic, the Saudi government deferred income tax and zakat filing for 3 including the postponement of filing of withholding tax returns for the months. of March, April and May for 3 months. The government is also planning additional tax and financial incentives to mitigate the adverse effects of the pandemic.

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