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Six Accounting Tasks that We Can Quickly Automate for Time Saving
  • Newsletter

Six Accounting Tasks that We Can Quickly Automate for Time Saving

Now it is time to reinvent accounting and get rid of some repetitive manual accounting processes. Many accounting and financial operations tasks can be readily automated resulting in smoother time savings, smoother operation and increased profitability.

Several accounting tasks have already transformed by enabling them to be automated from manual.

Different tools are in use to automate different accounting tasks though all are designed to improve efficiency by reducing repetitive manual work. As manual work is lessened, the accountants can free themselves from manual data entry and bookkeeping and devote their time to providing value-added advice on corporate taxation and tax incentives.

Here are six accounting tasks that you can immediately consider automating for time-saving with some basic understanding of automating accounting processes.

1. Bookkeeping

The most time consuming and repetitive task in accounting is undoubtedly data entry and perhaps the scariest amongst accountants during monthly and yearly closing time. Calculating returns and taxes are all about huge amounts of data and take hours and days for accountants to make manual entries and calculations with the associated risk of incorrect data entry inadvertently.

Data analytics software available in the market can save hours wasted on data entry with mostly 100% accuracy. Choose a software that can easily integrate into existing systems and tools including spreadsheets and CSV files enabling you to carry out calculations from multiple sources and secure it at a single location.

2. Invoicing

The process of sending and receiving invoices can also be easily automated with many benefits derived.

If you go for software designed for cloud accounting for small businesses that integrate invoicing software, you can create and edit invoices easily for emailing. Besides, the software will monitor if invoices have been paid or not and send automatic reminders making the process of invoicing faster, easier and more accurate. As data recognition and data upload are automatic, there is no need for manual data entry.

3. Tax Filing

For tax filing, accountants usually send clients a tax form for filling out tax details. Clients then take a printout of the tax form, fill and scan and then mail the filled-in form in a PDF format involving many embarrassing manual steps. Once the information reaches, the info is manually checked by the accountant for storing in a shared file.

We can easily avoid this manual and time-consuming task by replacing it with web forms and collecting information electronically. Templates from web forms can help you customize client information and allow clients to attach digital files that can be securely stored on an online platform. Easy integration with your emailing system is also possible with a web form software that can keep you posted on client’s tax information submission.

4. Expense Reporting

For many companies, much has changed over the last decade and a half about expense reporting for accountants. Previously these reports used to be handwritten or printed-out spreadsheets with receipts attached and submitted manually.

However, it is now possible for employees to automatically fill out and route expense reports without attaching supporting receipts as software is generally integrated with the payment platforms able to capture and store data.

Not only the accounting department but a great deal of administrative work is also taken away from the busy schedule of HRD.

5. Signature Authentication

Many accountants still demand tax paying clients to print the form, put signatures, scan and email it back to the accountants causing a huge discomfort and time wastage for the clients as they don’t have ready access to a printer or scanner most of the time.

Making use of eSignature technology in place of physical signatures with a pen and paper can be a much convenient and easy way to obtain customer signatures only needing the software provider to be compliant with the regulatory authority for eSignature.

6. Payroll services

Payroll can be time-consuming and a real nightmare for accounting professionals. Automated payroll software can take the burden off their shoulders by automatically calculating wages and applicable deductions such as TDS, PF, Gratuity, Bonus etc.

Even individual employees can securely access their payslips online, submit their attendance online and receive salary through electronic payments.

Automating accounting tasks will provide several advantages to the accounting and finance professionals however it also demands a careful selection with some advanced planning and research. Once the platform and software integrations are perfect, it would pave the way for a smooth accounting journey.

It is advised that you speak to somebody who is a qualified professional and has hands-on experience in accounting practice and automation. The best is to outsource accounting and finance services that can help you with necessary training besides an on-site demonstration.

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Chinese Corporates Eye on Singapore and Malaysia amongst Asean for Business Growth and Expansion
  • Newsletter, Singapore

Chinese Corporates Eye on Singapore and Malaysia amongst Asean for Business Growth and Expansion

The Chinese corporates are eyeing the Association of Southeast Asian Nations (ASEAN) with increasing focus on Singapore and Malaysia as these two countries are all set to witness significant growth and opportunities in business and investment over the next year.

Approximately 43 per cent of companies surveyed echoed their confidence in Singapore company incorporation and company registration in Malaysia as leaders of future growth and expansion in the emerging ASEAN economy and a majority of Chinese corporates hopeful on ASEAN economic potential expect to see their businesses grow in near future.

The survey was conducted for the bank’s Borderless Business highlighting the China-Asean Corridor report and exploring prospects and opportunities for the future cross-border growth between both regions.

All the 43 China-based companies surveyed during last April considered Singapore and Malaysia as the most potential markets for growth and expansion opportunities of their businesses in the ASEAN.

While the highest number of China-based companies to the tune of 65% voted in favour of Malaysia, 60% of participants from the surveyed companies emphasized their future business focus on expanding in Singapore for increased market share by promoting sales and production opportunities. Thailand too figured in the list with 53% China-based companies expressing faith in the ability of this emerging ASEAN economy to do well during the post-covid period.

Singapore is being considered by the China-based corporations as a major regional procurement hub and 44% of these companies expressed their willingness to build a regional Research and Development (R&D) centre, an innovation centre basically in the country, as these companies plan to expand across ASEAN.

The survey observed that 56% of the companies have been focusing on the ever-increasing vast consumer market access as the most critical success factor while some 53% of similar companies considered government support and business incentives by the ASEAN as critical for business viability, stability and long term sustainability.

51% of the company participants mentioned that the availability of a reliable supplier base in the ASEAN is also one of the most significant rationales behind their business expansion in the ASEAN region while 47% of the companies were found in agreement with the fact that the presence of the Free Trade Agreements (FTA) network in the ASEAN is crucial for the world market access.

88% of companies noted that the Regional Comprehensive Economic Partnership (RCEP) in this region is one main reason for attracting foreign investments and even the China-based companies are seriously considering increasing their investments in the region by a minimum of 25% in the coming three to five years.

Chinese business houses were also seen to be aware of the risks and challenges within the ASEAN with 70% stressing upon the Covid-19 pandemic or other health issues. A good number of respondents, some 67%, considered ASEAN’s geopolitical instability and trade conflicts as business risks when another 67% of corporates raised concerns over the muted revival of the economies in this region along with a decrease in consumer spending.

One of the most important challenges cited was the way the Chinese business entities would align their business model to the existing ASEAN business environment and trade practices while initiating new business ventures in this region over the next six months and a year.

The survey revealed 56% of corporates strongly evaluating other business risks and challenges such as regional regulatory aspects, monetary transactions and payment methods and infrastructure besides relationship building with prospective suppliers. 56% of respondents have also been found strategizing on getting along with the regional supply chain and logistics.

During this survey, a sizable number of respondents comprising 58% of the China-based companies were found interested in executing digital transformation programmes and another 47% were seen looking for long term growth and sustainability driven by environmental, social and governmental (ESG) initiatives. Another 44% of the surveyed companies have been found eager in exploring new partnerships and joint ventures to enhance market share during business engagement in this ASEAN region.

Chinese companies have been seen seriously considering strategic support for business growth and expansion in the ASEAN. Approximately 60% of these Chinese companies were found desirable for suitable banking partners with a strong repute of finance and cash management potential and 56% of these companies also wanted to foray into trade financing services widely. Fundraising and corporate financing services projects are also being eyed upon by 56% of the corporates.

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The UAE Israel Conclude Double Taxation Avoidance Agreement (DTAA)
  • Newsletter, U.A.E

The UAE Israel Conclude Double Taxation Avoidance Agreement (DTAA)

To promote bilateral trade and investment between the two countries, the UAE and Israel entered into a Double Taxation Avoidance Agreement (DTAA) on Monday 31st May 2021.

It was first tweeted by the Israeli Finance Minister Israel Katz who described the move as a boost to develop business and investment between the two nations after signing the Abraham peace accord last year.

“The agreement will accelerate the development of economic relations and contribute to prosperity in both countries,” Katz said in his tweet.

Katz noted in a briefing that the treaty is primarily based on the OECD model and it will provide certainty and favourable conditions for business activity and will also strengthen the economic ties with the UAE.

The treaty is subject to the parliament and cabinet approval of Israel and is expected to come into force on 1st January 2022. “Israel is a party to 58 double taxation treaties,” Israel’s Finance Ministry remarked.

DTAA being a bilateral agreement, the two countries involved formulate and establish rules that apply to income and assets of the two countries, the Israeli Finance Ministry highlighted on its website.

The UAE has so far concluded 115 double taxation agreements with its trade partners to help avoid similar tax imposition by two countries on the same taxpayer, and for facilitating the exchange of goods, services and capital. It was in 2020 October that the UAE officially announced that it had reached a deal with Israel on avoiding double taxation.

After the peace accord, several commercial agreements have been reached between the two countries and almost USD 280 million in trade treaties were signed within a couple of months. As per reports, the diplomatic and trade normalization between the two countries could give rise to more than USD 4 billion bilateral trade between the two countries.

The UAE also made a revelation saying that it was planning for a USD 10 billion investment fund for the strategic sectors in Israel besides the USD 3 billion joint investment fund established by the UAE, the US and Israel together after the accord.

Finance and economy experts welcomed the tax treaty in anticipation that it would enhance bilateral trade and investment relations in future and promote new company formation in Dubai by Israeli investors.

“Under the agreement, tax deductions, dividends and royalties are capped. The double taxation treaty would make the two countries more competitive and promote economic activity. It will make the two nations more attractive to international investors,” an expert remarked.

As per the experts, the tax treaties between the countries would help promote foreign investment flow between the two countries as investors only invest money after satisfactory earnings after deductible tax playing the most crucial role in foreign investments.

“Having a treaty in place, UAE entities will be able to repatriate returns on investment with a reduced rate of tax from Israel in form of dividend, interest or royalties whereas Israeli businesses will continue to enjoy tax exemptions on their investment in the UAE. This treaty not only will boost investment into the UAE from Israel but also from the global players having investments in Israel to route investment into UAE,” an Industry expert commented.

“We have a huge surge in investment into real estate from Israel whereas UAE outbound investment goes into Israel’s technology and defence sectors. It is a great initiative towards business harmonisation between both the countries, a high-level industry professional remarked.

“In countries that have worldwide taxation, a non-resident citizen who is working in UAE could be liable to pay tax on their income in their home country as well as in the country in which it is earned. UAE being part of an international tax framework, it provides important protection and benefits for UAE companies and expatriates,” emphasized an expert.

To avoid the same income being taxed twice, the UAE has signed double taxation treaties with many countries, as the Government has understood it as unfair and potentially discouraging for international trade and business that could adversely impact future business setup in Dubai and other emirates.

The DTAA however could be tricky and companies and individuals are advised to seek professional help from a reputed and professional accounting firm.

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The Growing Trend of Foundations in the UAE
  • Newsletter, U.A.E

The Growing Trend of Foundations in the UAE

What is a Foundation?

Foundation, a less familiar concept than trust is defined as a hybrid of trust and a company resembling a company in which it is a body corporate without any shareholder. It has a separate legal personality with its property like a company. A foundation is governed by a council following its charter and regulations (its constitutional documents) in much the same way that a company is managed by its board of directors following its constitutional documents.

Foundations have no beneficial owners and are, therefore ’ownerless’ structures even where the foundation property is held for the benefit of beneficiaries.


How is a Foundation formed in the UAE?

A Foundation is constituted by the below-mentioned components
  • A Founder, at least one founder as an individual or legal entity.
  • A Council constituted by the Founder with a minimum of two members to manage the foundation.
  • A Guardian as an individual or legal entity appointed by the Founder for mentoring.
  • An appointed Registered Agent Registered Agent only compulsory in RAK ICC with a necessary license from the regulatory authorities.
  • Beneficiaries appointed by the Founder as an individual, group or entity authorized to receive and make payments.
  • A Registered Office as the address of the Registered Agent.
 

What are the different types of Foundations?

Every Foundation has different government regulations and varies depending on the purpose of creating such an entity and include
  • Exclusively charitable.
  • Not charitable.
  • Benefits persons identified in its Charter or By-Laws.
  • A combination of the above three.
 

What are the reasons for the popularity of Foundations in the UAE?

A variety of foundation structures are being implemented to hold trading companies, real estate and liquid investments as investors are pouring in for business setup in Dubai and other six emirates. It is becoming a popular vehicle and offering many benefits including
  • Asset protection as assets are not readily accessible to creditors, governments or other family members.
  • Privacy as the beneficiary details are kept private ensuring the reduced risk of claims and legal actions from third parties against the founders and their families.
  • The flexibility of legal and beneficial ownership enabling families intergenerational legacy planning and wealth protection in different international jurisdictions.
  • Efficient succession planning based on the wishes of the founder under the terms of the foundation with no scope for probates.
  • Better governance of the family in line with a professionally managed corporate governance.
  • Facilitates charities depending on the wishes of the founder.
  • Maintenance of legacy.
 

Where in UAE are the Foundations flourishing?

Foundations have become a popular option for regional wealth structuring and succession planning in the UAE and a growing number of foundations are now available across UAE and are mostly similar with a few exceptions.
  • The Dubai International Financial Center (DIFC), under the governance of the Foundations Law, DIFC Law No. 3 of 2018.
  • The Abu Dhabi Global Market ( ADGM) under the Foundations Regulations 2017 and
  • The RAK International Corporate Centre (RAK ICC) following the RAK ICC Foundations Regulations 2019.

Initially foundations were formed in the DIFC and then followed by ADGM and RAK ICC.

 

How the Foundations in DIFC, ADGM and RAKICC differ?

 
DIFC

The DIFC is the sole regime that allows DIFC company formation to get transformed into a Foundation.

DIFC Foundations are allowed exclusively for charitable purposes where ADGM may not allow unless a Guardian is appointed mandatorily.

A DIFC Foundation can issue securities representing the value of the contributed assets from the contributor and their entitlement to the same and allows user arbitration for dispute resolution. USD 200 is required for registration and yearly renewal of foundations.

 

ADGM

While the identity of the Council Members is available in the DIFC, it is kept confidential from the public in the ADGM.

It is the only regime where foundations are not needed to file and audit accounts unless demanded by the Registrar. Records of accounts however must be prepared and maintained as in other regimes.

ADGM Foundations are not allowed only for charity without additional purposes. USD 200 is applicable as the fee towards registration and renewal every year.

 

RAK ICC

RAK ICC does not maintain a publicly accessible register of information about a Foundation.

Information related to the Foundation benefits from the applicable privacy laws in the UAE and will not be disclosed unless required by the relevant authorities.

Within RAK ICC however, a Registered agent is a mandatory requirement whereas with DIFC and ADGM it is only optional.

Fees: Registration Fee / Annual Renewal (fee as at 2021): AED 750 (approximately USD 200).


What is the essence of a Foundation?

A Foundation is an establishment that can consolidate property and assets under one legal entity and are normally used for the following purposes
  • Private wealth management and preservation.
  • Tax planning.
  • Asset and creditor protection.
  • Succession planning.
  • Financial planning.
 
 

Foundations are also used for charitable purposes

 

Foundations often need legal help for effective wealth preservation through appropriate structuring which can ensure safe and undisputed transfer of assets to the beneficiaries and successors. IMC with a team of legal professionals can render requisite support and help you achieve your goals in this regard.

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UAE Issues Amendments in VAT Executive Regulations Reducing Penalties for Tax Non-compliance
  • Newsletter, U.A.E

UAE Issues Amendments in VAT Executive Regulations Reducing Penalties for Tax Non-compliance

Cabinet Decision No. 49 of 2021 has announced amendments of certain provisions of the old cabinet decision No. 40 of 2017 regulating the Administrative Penalties for Violation of Tax Laws in the UAE. This has also been confirmed by the Federal Tax Authority (FTA) on 29th May 2021.

Before this newly issued cabinet decision 49 of 2021, heavy penalties often used to be imposed on taxpayers for non-compliance with the VAT and excise rules and regulations. Though the imposition of the high penalty was originally aimed for increased tax compliance, it often put the taxpayers in difficult and stressful situations.

The amendments brought in are designed to help tax registrants and support them in fulfilling their tax obligations. It is hoped that the relaxation of penalties passed by the government should enhance the competitiveness of UAE for conducting business.

“The new amendment will become effective on 28th June 2021 and will reduce many administrative penalties imposed for violating tax laws. This comes as part of the wise leadership’s directives to implement the tax system according to the best standards that ensure further growth for the national economy and help achieve transparency and economic momentum, providing an ideal and resilient tax legislative environment that encourages self-compliance and keeps pace with change through constant issuance of decisions in accordance with phased requirements,” highlighted Khalid Ali Al-Bustani, the Director-General of the FTA in a press release on Saturday.

The Director-General wanted the tax registrants to avail the benefits announced in the new amendment. The newly passed decision offers additional reliefs to the tax-paying business sectors and shall support them in meeting their tax obligations with ease effectively contributing towards the enhancement of UAE’s economic growth.

Al-Bustani also stated that 16 different types of administrative penalties under the old cabinet decision of 2017 have either been reduced or the earlier method of calculating penalties amended (TAXP001). He also explained that the reductions are primarily enacted for tax penalties including administrative violations on Tax Procedures, Federal Decree-Law on Excise Tax, and Federal Decree-Law on Value Added Tax (VAT).


Al-Bustani added

“The amendment includes fundamental amendments that provide more facilities to help taxable persons achieve self-compliance and encourage the speeding up of voluntary declaration. Under these amendments, a late payment penalty will not be imposed on voluntary disclosures if payment is settled within 20 business days of submitting the voluntary disclosure, and the sooner the taxable person declares and pays due tax according to periods specified by the decision, the lower the value of the penalties will be. This constitutes an incentive and a good opportunity for tax registrants who have errors in declarations, tax assessments, or requests for tax refunds, to speed up the implementation of voluntary declaration procedures and avoid increasing penalties.”

In a press briefing, FTA noted that the tax authority shall redetermine the administrative penalties (TAXP002) enforced on the taxpayers before the final rollout of the amendment scheduled on 28th June 2021 and will include the reassessment of the penalties which have not been fully paid, to be equal to 30% of the total of such unpaid penalties. It was emphasized that to take advantage of such a scheme, the taxpayers must settle their payable tax in full by no later than December 31st, 2021, and 30% of the total administrative penalties due and unpaid by 27th June 2021, by no later than December 31st, 2021. The detailed implementation procedure shall however be decided on a later date, the FTA remarked.

Two new detailed clarifications on this amendment have already been published by the FTA within the framework of the ‘public clarification service’ provided on the FTA’s official website and as a part of their ongoing awareness program.

The public clarifications hosted on FTA’s website are meant for making the existing and potential taxpayers more acquainted with tax aspects with easier and simpler explanations and help them put into effect the UAE’s tax principles effectively.

01

The first public clarification (TAXP001) includes some basic amendments made to the table of administrative violations and penalties related to the application of Federal Law on Tax Procedures (Cabinet decision No. 51 2021) for ensuring the right interpretation of these amended penalties and with added certainty.

02

The second public clarification (TAXP001) specifies the methods and procedures used for re-determining some of the administrative penalties imposed in the old cabinet decision that would come in force before the effective due date of the new amendment on 28th June 2021.

The Cabinet Decision No. 49 of 2021 however presents both opportunities and threats to businesses falling under VAT executive regulations.

Though an early voluntary disclosure of any tax fallout is encouraged with the enactment of nominal penalties, it would be quite a large amount for cases where non-compliance is not detected timely and not disclosed. It becomes of paramount importance to critically review records and audit findings for identification of non-compliance in VAT payment and preferably get their systems re-audited by an experienced and qualified third party.

It is also important for companies to identify the applicability of disclosure by reviewing VAT treatments in previous years.

It shall also be equally necessary to identify any unpaid tax penalties if the companies can benefit from the tax reliefs announced.


How IMC can help you?

IMC with its many years of extensive and proven experience in tax compliance, management and planning in the GCC region and especially in the UAE can support companies in identifying all taxation and planning aspects of businesses in light of the recent amendments.

Once a business is aware of any tax errors, it will need to consider which penalties may be applicable (e.g. penalties for the errors, late payment penalties, etc.) and the steps that should be taken to minimize the impact of the penalties.

The new amendments in VAT executive regulations are welcome and expected to address the requirement clarifications of the business community before rollout.

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Dubai-business Outlook for Startups and SMEs during Covid Pandemic
  • Newsletter, U.A.E

Dubai-business Outlook for Startups and SMEs during Covid Pandemic

Dubai is one of the most open economies in the world with a strategic location between Asia, Africa, and Europe. Even at a time when the pandemic gripped the world in 2020, Dubai witnessed USD 3.26 billion FDI  during the first half of 2020 and ranked fourth globally with several new business setups in Dubai.

To fuel entrepreneurship and grow the country’s SME sector, a special position of Minister of State for Entrepreneurship and SMEs was created during the July 2020 cabinet reshuffle. The Dubai government also initiated several support services to enhance the non-oil private sector’s contribution to economic growth and in line with the Dubai Vision 2021.

The Dubai government is leading from the front to mitigate the adverse effects of the covid pandemic and regulatory authorities are relentlessly striving to develop and ease regulatory and legal frameworks for Dubai company incorporation besides the identification of alternative funding routes and providing additional government support.

“We find a paradigm shift in the thought process of investors. The freedom to do business and safety are the key drivers of growth in the SME sector. The paperless e-governance added to the transparency and precision in administrative matters. Over the past decade, the UAE has evolved as the most sought-after destination for investors to set up their establishment so that they can cater to clients in MENA, and South Asia,” highlighted Syam Panayickal Prabhu, Founder and Managing Director, Aurion.

Dubai’s 50 free zones reverberate at the core of its startup ecosystem comprising some of the world’s leading free zones including Dubai Silicon Oasis (DSOA) or IFZA, Dubai International Financial Centre (DIFC), Jebel Ali Free Zone (JAFZA), and Dubai Multi Commodities Centre (DMCC) and offer numerous advantages to new businesses including 100% foreign ownership, zero corporate tax, nil import-export duties, 100 percent repatriation of revenues and profits, minimum documentation requirements and easier startup, easy recruitment and visa processes.

Saud Salim Al Mazrouei, Director, Hamriyah Free Zone Authority added, “Free zones are a driving force in the growth of the economy in the UAE. They help stimulate economic development, create jobs, boost and diversify exports, and expedite the industrialization process of an economy at lower costs for the government. Incidents like the Covid-19 pandemic with a sudden drop in oil price can serve as a catalyst for long-term sustainable economic reform.

There are also 6 business accelerators and 5 incubators in Dubai to support startups and SMEs including DIFC’s FinTech Hive and Dtec at DSOA providing support through startup incubation and venture capital funding. The Dubai Future Accelerators program facilitates partnerships between public and private sector organizations and startups in Dubai.

Dubai has long been eyeing a leading world position in innovation and technology, and financial technology acronymed as FinTech playing the most pivotal role in accelerating the business growth of Dubai startups during the covid pandemic. DIFC FinTech Hive is offering accelerator programs for FinTech startups with a total of USD 100 million funding support that has already benefited four companies.   

Most important for the growth of the SMEs and startups is the availability of funds and Dubai is continuing its efforts to look for additional and alternative funding for addressing economic diversification strategy. Venture capital and crowdfunding are being encouraged by the Dubai government for sustaining startups and SMEs even with lower assets and proven and credible track records. As per a survey conducted by Dubai SMEs, almost 9 percent of SMEs received additional funding through the venture capital route.

Dubai also offers abundant diverse and talented human capital and secured top global ranking in terms of employee training and workforce motivation.

Though the IMF and World Bank have lowered the economic recovery forecast for all major economies, Dubai expects a fast V-shaped recovery in 2021 facilitated by Dubai Expo 2020 which promises to add USD 33.4 billion to the UAE economy by 2031.

As the consequences of the Covid-19 pandemic becoming severe, the Dubai government has started firing its arsenals on all cylinders to boost the economic diversification program and focusing on some strategic sectors including commercial trade, tourism, renewable energy, manufacturing, media, financial services, aviation and healthcare, and all SMEs and startups in general.

The increased economic contribution of private sectors to the national GDP is at the top of Dubai’s agenda as per the UAE’s Vision 2021 which was 70% some two years ago and is now expected to reach 80 percent by 2021.

In Dubai, almost 99 percent of companies from the private sector belong to the SME and Startup category and are projected to contribute nearly 46 percent of Dubai’s GDP.

“As always, the UAE is doing a fantastic job at attracting international interest on all levels of business and lifestyle, and therefore, it remains a top-ranked international destination to do business and to live”, commented Karl Hougaard, Founder and Managing Partner, Trade License Zone in a recent interview.

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Saudi Arabia Surpasses SR 2 Trillion FDI Amidst Covid Pandemic
  • Newsletter, Saudi Arabia

Saudi Arabia Surpasses SR 2 Trillion FDI Amidst Covid Pandemic

Saudi Central Bank (SAMA) data reveals that 2020 witnessed the highest inflow of foreign investments in the Kingdom of Saudi Arabia (KSA) surpassing SR 2 trillion (USD 0.53 trillion) and rising 9 per cent YOY despite global economic turmoil caused by covid 19 pandemics. A USD 46.21 billion as new investment from overseas was generated by the KSA that promoted new foreign company formation in Saudi Arabia.

The whooping FDI was termed as significant by Fadhel Al- Buainain, a member of Shoura Council and positioned Saudi Arabia as one of the most attractive destinations for foreign investors because of diversified government investment programs and supportive legislative processes of the country’s investment ecosystem.

Al-Buainain also a director of Saudi Financial Association highlighted that SR173.3 billion investment at a time of global travel restrictions reinforced the fact that KSA effectively handled the challenges caused by the pandemic and successfully addressed the issue of the country’s reserve.

“Certainly, foreign capital is looking for opportunities in emerging markets . . . especially the Saudi market, which provides investment opportunities, safety and rewarding returns, in addition to important partnerships in major global pioneering projects,” Al-Buainain noted.

Partnerships were led by the sovereign wealth fund and the Public Investment Fund and opportunities were presented as a part of the Vision 2030 program, he added.

The increased FDI inflow was attributed to “the significant improvement in the investment environment in the Kingdom” and the up gradation of investment laws, remarked Talat Zaki Hafiz, an economist and financial analyst by profession. He also highlighted big government projects e.g. The Line and renewable energy projects as additional attractions for global investors.

Hafiz said, “The announcement of the SR27 trillions ($7 trillion) that will be spent by the government over the coming 10 years has attracted the attention of foreign investors.”

He also added, “I believe the decision of the government to diversify its economy away from oil has created huge investment opportunities to foreign and local investors.”

KSA issued 466 investment licenses to foreign investors for doing business in Saudi Arabia in the fourth quarter of 2020, a 60 per cent increase compared to the previous year and December adding 189 investment licenses. The overall FDI rose by more than 20 per cent during 2020 and increased 80 per cent to touch USD 1.9 billion with the economy growing to pre-pandemic levels. KSA also made remarkable improvement in the World Bank’s ‘ease of doing business ‘ index, advancing 30 points in the global ranking.

Issam Abousleiman, World Bank regional director for GCC said, “Saudi Arabia’s impressive reforms in doing business this year show its commitment to fulfilling the main pillar of its National Vision 2030 — a thriving economy.”

“Easing the business climate for local entrepreneurs to thrive as well as foreign investors to work in the Kingdom shows a forward path to creating more jobs for Saudi youth and women, and creating sustainable, inclusive growth,” he highlighted.

New businesses and startups witnessed the maximum surge with the cost of starting a new business dipping to an all-time low of 5.4 per cent of per capita income compared to 16.7 per cent in other parts of the MENA region.

“One of the most important factors that attracted foreign investors is the issuance of new legislation and amendments in some existing legislation,” noted Ayed Alblaihshi, a municipal investment specialist.

Access to the online construction permit, easy availability of electricity, enhanced access to credit, easy export and import laws including more transparent insolvency rules are some of the reforms that aided the country in achieving this feat, the World Bank reported.

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UK Prepares for Free-Trade Deal with GCC Countries
  • Newsletter

UK Prepares for Free-Trade Deal with GCC Countries

The opportunity and freedom to strike global trade deals have long been cited as one of the main reasons for the UK leaving the European Union (EU).

In recent times it was also supported by Lord Edward Lister, co-chair of the UAE-UK Business council and a former Downing St chief of staff, revealing to business forums that the UK has made initial advancements towards striking free-trade deals with the Arabian Gulf countries.

Citing trade and business partnership with the UAE as unprecedented, Mr Lister, spoke to an online forum on Wednesday, 28th April 2021 and claimed that significant developments have been taking place for establishing trade ties with the GCC countries.

“There is a lot of work underway at the moment – the consultation is shortly about to start on it – on new trade arrangements into the Gulf, which will be a free-trade agreement,” he added and pointed out the involvement of the UK government in this regard.

“As the UAE reaches its 50th anniversary, the two countries’ friendship is going through a revival at the moment”, commented Ahmed Ali Al Sayegh, Minister of State of UAE & Chairman of ADGM and a co-chair of the business council.

Me. Al Sayegh also highlighted that the UAE and the UK have been taking leadership roles in the covid 19 vaccination drive and are optimistic of complete recovery from the pandemic with a resurgence from the social and economic issues caused by Covid-19.

The UAE Minister of State also noted saying, “This is such a pivotal year for both countries and it offers us an unprecedented opportunity for growing our trade and investment relationship.”

“We have both taken great strides in addressing the Covid crisis by vaccinating and hopefully our economies will be growing back through the investments we are making in infrastructure, technology and skills,” he commented.

It was one year ago when the UK left the EU politically and excited from the Union’s single market at the end of 2020. Since quitting, the UK wanted to forge new trade deals with potential economic partners in the world and especially with the Arabian Gulf countries providing better market access and a more conducive business and investment climate.

The former Chief of Staff aged 71, recently stepped down as the official envoy to the Gulf as he anticipated that developing circumstances of trade deals need someone else to play a bigger role and in a permanent capacity. He also sounded optimistic about the pandemic recovery and hoped for more resilient economies of the two countries with new trade and investment partnerships and business setup in Dubai.

The UAE and UK governments reached a partnership agreement in March, with Mubadala Investment Company as a strategic investment program and agreed to invest a total of 800 million pounds (USD 1.11 billion) in the British life sciences industry and stretched over the next five years.

Rebalancing the economy by adhering to some of the proven principles demonstrated by the UAE has also been a priority for London as the covid 19 pandemics has brought out some weaknesses of the British system to the surface.

“We’ve all learnt some terrible lessons from Covid,” Mr Lister remarked and also added saying, “We’ve got to have a much more resilient supply chain in place.” “The number one area there is food security and agricultural technology”, he noted emphasizing “The ‘build back better’ policy of the prime minister is a desire to increase economic production, particularly in the regions of Britain.”

Investments made jointly with a wealth fund for growth areas is a rare event for the British government as done in the Mubadala agreement in March, Mr Lister added.

He claimed that the recent partnership would unfold increased opportunities and the executive director of Mubadala’s UAE clusters, Badr Al Olama also reciprocated. As per him, this would lead to more investment opportunities and pave the path for more UAE and UK strategic investments and company formation in Dubai.

“We want to develop the new dynamic sectors such as energy transition and life sciences,” Mr Al Olama said.

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Oman Becomes the Fourth GCC Country to Implement VAT
  • Newsletter, Oman

Oman Becomes the Fourth GCC Country to Implement VAT

The Value Added Tax (VAT), a consumption tax system has been enforced in Oman on Friday, the 16th April 2021 and the Sultanate has become the fourth country to join the other three GCC member states including the UAE, Saudi Arabia, and Bahrain to introduce this tax.

VAT was originally planned by Oman Tax Authority (OTA) in October 2020 vide Ministerial Decision 53/2021 and Official Gazette no.1383 publishing the regulations with implementation requirements and provided almost six months to the Omanis to be prepared for this tax. The country also plans to enact income tax in the foreseeable future to become the first Gulf nation to do so.

Oman has levied a 5 per cent VAT in line with the ‘Oman Vision 2040’ to diversify its oil-based economy to non-oil sectors e.g. manufacturing, travels and tourism and logistics and also to address its Fiscal Balance Plan for the future.

Both UAE and Saudi Arabia introduced this tax system on 1st January 2018 followed by Bahrain which implemented VAT after one year on 1st January 2019. The Kingdom of Saudi Arabia has already increased its VAT rate by 3 times taking it to 15 per cent since July 2020 to support its healthcare system including relief works and preventive measures for the pandemic.

An OMR400 million (USD 1.04 billion) has been estimated to be raised from this consumption tax this year that comes around 1.5 per cent of the country’s GDP and would help bring down its fiscal deficit.

A Common VAT Agreement was signed by the six GCC countries in June 2016 and the 5% VAT rate announced by Oman is consistent with this GCC Unified Agreement. There are also provisions made in Oman VAT law for zero-rating and exemptions. It is to be noted that the 5 per cent tax rate is one of the lowest rates as per the prevailing global standard.

While Qatar has planned to implement the VAT system in the second or third quarter of 2021 almost streamlining its tax administration system, Dhareeba; the Kuwait government is yet to confirm the VAT implementation schedule. Kuwait parliament deferred the implementation date many times in the past however as reported by the International Monetary Fund (IMF), the country is likely to enact its VAT law by 2022.

The below-mentioned supplies are treated as zero-rated as per the Oman VAT Law and don’t attract VAT due to social necessity.

  • Supply of certain food products
  • Supply of some specified medicines and medical equipment
  • Investment in gold, silver, and platinum.
  • Supplies related to the transport of goods or passengers made internationally or within the GCC countries including services in connection with transport
  • Cargo and passengers related to international trade
  • Supplies related to oil, oil derivatives and natural gas
  • Some specific supplies made outside GCC countries under certain conditions
  • All goods and services exempt from VAT in Oman and supplied to non-GCC countries


As per conditions outlined in the Oman VAT Executive-Regulation, the following essential services are exempt from VAT as per the Oman VAT Law.

  • Financial services
  • Healthcare services
  • Goods and Services related to health care
  • Goods and services related to education
  • Resale of residential properties
  • Transport of local passengers
  • Renting of properties meant for residential purposes


Certain imported goods also enjoy the VAT- exempt status under Oman VAT law including returned goods, personal luggage, etc.

Excluding the above-mentioned supplies, all other goods and services in Oman attract VAT at the standard rate of 5% and as mentioned in the Oman VAT Law.

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Singapore to work with The UN Member States to Bridge Digital Divide
  • Newsletter, Singapore

Singapore to work with The UN Member States to Bridge Digital Divide

The poorest in our society are the most affected class by covid 19 pandemic with minimum and no access to modern digital technologies including telephone, internet, television, and computers.  

The digital divide refers and reflects this existing gap and inequalities emphasizing the importance of bridging the digital divide by providing digital infrastructures, services, and applications with an all-inclusive approach and empowering unprivileged individuals and societies to effectively utilize the information and communication technologies. It is feared that expanding digital technology can heighten digital inequalities with disinformation, harassment, and abuse, especially to women and children.

For combating the covid pandemic with sustainable growth, the UN President of the General Assembly recently convened a virtual one-day High-level Thematic Debate on Digital Cooperation and Connectivity on Tuesday, 27 April 2021, in the UN’s General Assembly Hall headquartered in the USA. The meeting was headed by the UN general assembly president Volkan Bozkir and aired online with some international speakers delivering speeches.

Singapore Minister of communications and Information, Mr. Iswaran participated in this high-level thematic debate and noted that though covid 19 has speeded up the digital transformation drive through the world, it has also increased the danger of inequalities between “the digital haves and have-nots”.

As per Roland Berger’s Digital Inclusion index 2020, Singapore ranked first among 82 countries across the world and Mr. Iswaran highlighted the need for an “inclusive, innovative, and interoperable,” digital future and expressed Singapore’s willingness to work in unison with other member states of the UN.

The one-day thematic debate stressed the immediate need for political commitment at the highest levels to address the digital divide in the current Covid-19 situation. The debate was held in response to requests made by the member states and was represented by private and civil society sectors including participants from more than 60 countries.

“To ensure that digital transformation efforts are inclusive, countries around the world must recognize the diverse circumstances faced by nations”, Mr. Iswaran deliberated in his speech.

He also emphasized that the measures taken by different countries and the experiences gained can be shared on UN platforms such as Internet Governance Forum for a strong and focused approach on digital inclusion.

“The platform brings together various stakeholders from the private and public sectors to discuss public policy issues relating to the Internet. The UN Roadmap for Digital Cooperation, which was released in June last year, is also a good start,” said Mr. Iswaran.

The UN has come up with a road map for bridging the digital divide that includes achieving universal connectivity by 2030, creating a more equitable world by promoting digital public goods, digital inclusion for all including the most vulnerable sections, strong digital capacity building, protection of human rights, global cooperation on AI, improving digital security, and lastly, a strong and effective architecture for digital cooperation.                 

“Singapore has a Digital Readiness Blueprint that could serve as a useful reference for other countries in fostering digital inclusion”, Mr. Iswaran pointed out.

The Singapore digital readiness blueprint acts as a guide to equip all segments of society including children in lower-income households, senior citizens, micro, small and medium-sized enterprises with digital skills and access.

“Countries must also be innovative in their efforts to end the digital divide”, emphasized Mr. Iswaran.

“The accelerated pace of digital transformation has created opportunities but is also profoundly disruptive to some, and requires complex trade-offs,” Mr. Iswaran narrated.

“In Singapore, the Digital for Life movement that was launched in February will encourage ground-up projects that bridge the digital divide”, he emphasized. As per him, the move shall provide resources to enhance basic computer skills.

Singapore treats the ‘Bridge the Digital Divide’ initiative as corporate social responsibility and advocates a new company set up in Singapore upon the policy of partnerships and collaboration with non-profit organizations and individuals working together for this cause.

The Minister also highlighted the importance of an interoperable digital framework for a brighter global digital environment that would help individuals and businesses gain access to global opportunities.

“In Asian, initiatives like the ASEAN Data Management Framework will help to facilitate the flow of data across borders to unlock new business opportunities, especially for SMEs”, Mr. Iswaran remarked.

He also added that the data management framework shall promote data governance including management and protection of data.

The first ASEAN Digital Ministers’ Meeting held in January approved this initiative led by Singapore.

In an effort towards bridging the digital divide, the Singapore government solicits and encourages mobile, laptop, tablet, and other digital gadgets donations from investors looking for company registration in Singapore.

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