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Newsletter, U.A.E

Expo 2020 Dubai is likely to Add AED122.6b to UAE Economy Between 2013-2031

May 13, 2019

Expo 2020 Dubai is slated to contribute a whopping AED122.6 billion of gross value added (GVA) to the UAE’s economy between the time period of 2013–31. It is also expected to aid up to 905,200 full-time equivalent (FTE) job-years in the United Aran Emirates in 2013–31, which is equivalent to almost 49,700 FTE jobs every year in the UAE over this period.

Najeeb Mohammed Al-Ali, who is the Executive Director of the Dubai Expo 2020 Bureau, said that Expo 2020 Dubai is a very important long-term investment for the future of the Kingdom, which is going to contribute over 120 billion dirhams into the economy between the period of 2013 and 2031.

This is going to hearten millions around the globe to visit the UAE in the year 2020, while encouraging travel and tourism and aid economic diversification for times to come after the Expo. It will also leave behind a sustainable financial legacy that would help in ensuring that the UAE continues to be a leading hub for business, investment and also leisure.

This expo is projected to draw almost 25 million visitors and participants from over 190 countries from the time-period of October 2020 to April 2021. In this duration, it is estimated that the World Expo would contribute about 1.5% of the UAE’s yearly forecasted gross domestic product (GDP).

Besides that, the small and medium-sized enterprises (SMEs) are predicted to get almost AED 4.7 billion as investments in the pre-Expo phase, aiding about 12,600 job-years, and also helping to fulfil the Expo 2020’s goal to promote innovation and encourage small businesses.

During the Legacy period, that is between the month of May 2021 to December 2031, the Expo site would be redeveloped to District 2020, which is going to comprise tenant firms and an expanded Dubai Exhibition Centre (DEC).

District 2020 is strategically planned to promote the UAE’s future vision by aiding sustainable financial development, thus, going a step closer to an innovation-driven economy and nurturing a business environment to assist major growth industries like logistics and transport, construction and real estate, travel and tourism, and education.

More than 80 percent of the Expo built environment is intended to be preserved for District 2020, and ultimately expanded into a city that covers over four million square meters. District 2020 businesses would be focused on innovation and new technology, comprising a blend of corporations and SMEs. The DEC is also going to be a major facility in the site.

The financial effect of the Legacy period is majorly anticipated to be driven by the expansion activity and operations of District 2020 along with the incremental outcomes of DEC’s expansion.

To conclude, there is going to be a ‘direct’ rise in economic activity, while there would be ‘indirect’ advantages of enhanced supply chain demand and ‘induced’ profits from amplified spending by employees of companies involved in Expo 2020.

Expo 2020 Dubai will be the first World Expo that will take place in the Middle East, Africa and South Asia (MEASA) region in the 168 years of history of the event. Close to over 200 participants, which will include of nations, corporations, firms, educational institutions and multinational organizations, would gather in Dubai between the month of October 2020 to April 2021 to discover the Expo 2020’s theme of ‘Connecting Minds, Creating the Future’.

Newsletter, Singapore

South East Asia Magnetises Ambitious Indian Entrepreneurs to Launch their Ventures

April 16, 2019

South East Asia is a major business hub for Indian entrepreneurs with global ambitions. With every passing year more and more Indians are turning eastward to launch their business. Whether it is for the global expansion of their existing business or to set up a new business, there are several reasons why many Indian are considering to set up in South East Asia. In fact, it is an ideal location for companies all over the world to set up a new business or expand their market.

South East Asia’s start-up ecosystem, highly efficient infrastructure, sizeable collective market, greater ease of doing business, huge consumer demand, stable political environment, attractive tax regime, efficient regulatory systems and many more factors contribute to making it a fantastic gateway for start-ups looking to go global. Moreover, the business-friendly environment and easy access to venture capital also attract many Indians to South East Asia. The region provides the most conducive environment for companies looking to expand in the region.

Industry sources reveal that every 1 out of 7 start-ups in South East Asia is launched by Indians or Indian-origin CEOs. Apart from the above mentioned reasons, another major reason for company formation in Singapore and other South East Asian countries is the government support. The government in South East Asia actively extends help to new entrepreneurs by assisting them in mentorship, quick regulatory clearances, seed funding and a hands-on approach to solve any problems they face. The government promotes these newly launched ventures by offering salary subsidies, growth funding and conducive business environment.

Setting up a business in South East Asia is very easy and straightforward. It welcomes with open arms investors, entrepreneurs and professionals who can complement its economy. Moreover, Singaporean authorities are extremely fast and efficient. Company registration in Singapore takes just a few hours, right from getting the registration number to signed MoUs, everything is quick and efficiently handled.

The attractive tax rate in South East Asia is also a major reason to draw Indians as it is almost half of that in India. This helps the Indian entrepreneurs retain their earning and price their products more competitively. South East Asia also gives the advantage of huge customer demand. If you look at Singapore alone, the population base is around 5.6 million, which is quite good to serve.

Bottom Line

South East Asia enjoys one of the top-most positions in the global economy and continues to be every entrepreneur’s dream destination. The above mentioned factors make South East Asia the world’s top region when it comes to doing business.

Seeing an opportunity, we, at IMC Group have set up our own office in the region to cater to the growing needs of businesses. We offer a range of company registration services in Singapore right from conducting an initial market survey to acquiring various business licenses, getting government approvals, conducting company incorporation formalities, preparing necessary documentation, assisting with payroll, accounting and finance and much more. We offer one-stop business solution to entrepreneurs looking to set up their business in Singapore.

Get in touch with us for more information on how we can help you!

Source URL: https://economictimes.indiatimes.com/nri/nris-in-news/why-many-indians-are-moving-to-se-asia-to-launch-their-ventures/articleshow/68878843.cms

Newsletter, Singapore

Latest Updates to the Singapore Employment Act

April 15, 2019

There have been some major changes which have come into effect on 1 April 2019, and thus, various businesses in Singapore should act accordingly and update their HR policies and processes.

Singapore’s Ministry of Manpower (MOM) announced some key changes to the Employment Act (EA) last in November 2018. There are four main areas that are impacted by these changes, which have come into effect from 1 April 2019. All the professionals, managers, executives and technicians (PMETs) will account for more than half of Singapore’s workforce, which is continuing to expand. The EA changes intend to keep the systems and procedures relevant and up-to-date as per the workforce trends.

Extension of some fundamental provisions for protecting more employees

Till now, the main provisions of the EA did not cover managers and executives (M&Es). However, with PMETs accounting for over half of the workforce now, which is forecasted to go up to two-thirds by 2030, it was obvious that the EA was not able to keep up with the changes in the workforce demographic. Thus, the key provisions are being stretched to include M&Es.

For facilitating this, the earlier S$4,500 per month salary cap has been removed starting 1 April, getting additional 430,000 M&Es within the protection area of the key provisions of the EA. This comprises a minimum of seven to 14 days of annual leave, plus paid public holidays, sick leave, on-time salary pay-outs and protection against any wrongful dismissal. However, public servants, seafarers and domestic staff will not be included under the EA main provisions because they are covered under separate laws owing to the characteristically diverse pattern and nature of work.

Extension of part IV

EA’s Part IV is being amended to profit from an additional 100,000 workers by enhancing the monthly salary cap from S$2,500 to S$2,600, and by further enhancing the monthly basic salary cap which is used to calculate the per hour overtime rate from S$2,250 to S$2,600. This is basically a recognition of the rise in the median wage level prevalent in Singapore, which will mainly get the employees whose salaries have gone up beyond the cap, back under this EA provision. This amendment applies only to non-workmen (white-collar employees who are not in M&E positions). The earlier monthly salary cap applicable for workmen (blue-collar employees who are involved in manual labour) still remains at S$4,500.

Improvement of the employment dispute resolution framework

For centralising all the employment dispute resolution, the settlement of wrongful dismissal claims would be now moved from MOM to the ECT or Employment Claims Tribunal. In addition, the length of service needed for M&Es to be eligible for protection from any wrongful dismissal will be reduced from the current 12 months to half, which is six months. Very shortly, the new tripartite guidelines would be issued by MOM to explain what could be defined as wrongful dismissal.

Improved flexibility for the employers

There will be two key amendments which will enhance the flexibility that firms have in operating their businesses.

First, there would be enhanced flexibility in terms of compensating employees who work during public holidays. All the employees who are earning up to S$4,500 every month and the non-workmen who are getting up to S$2,600 every month could be remunerated either by compensation of an extra day’s salary or by getting one extra day off. In case of M&Es and for workmen earning over the cap of S$4,500 and non-workmen earning more than S$2,600, the business could offer the salary of extra day, a one-day off or time off which is less than a full day.

As of now, firms can only make any salary deductions for reasons like absence from work or causing a damage to goods delegated to the employee or for some loss. But from 1 April 2019, this has been changed and companies are now permitted to make some other deductions if the employee agrees to the deduction in writing and the owner or employer permits such deductions to be annulled at any juncture by the employee without having to apply any penalties.

What should employers do now?

These EA amendments need immediate action by businesses and they should update their HR policies, processes and practices. All the employee handbooks, any employment agreements and other organization policies would have to be reviewed and updated, and then published.

India, Newsletter

India Decides to Sign BEPS Multilateral Instrument which will Curb Tax Avoidance

April 15, 2019

The Indian Union Cabinet has recently approved India’s signing of the multilateral instrument (MLI) for implementing the tax treaty procedures in the OECD/G20 base erosion profit shifting (BEPS) action plan. A ceremony for signing this deal is going to be held in Paris in June this year.

The Cabinet’s decision and further action was anticipated because of India’s active contribution in the BEPs project and in the MLI drafting.

Though India has recently done some amendments in the tax treaties that were a concern to the government, like those with Singapore, Mauritius and Cyprus, and applied domestic general anti-avoidance rules (GAAR), the MLI is still important to India as an instrument to avoid any tax treaty abuse, including any instances of artificial avoidance of the permanent establishment status. The Indian government’s confirmation of their plan to sign again goes to prove India’s viewpoint towards restraining the base erosion globally.

The OECD has developed the BEPS Action Plan to deal with the use of aggressive strategies of tax planning used by multinational firms that falsely transfer the profits to low tax jurisdictions which have limited or no economic activities. BEPS Action Plan 15 envisions MLI’s development for implementing the measures related to tax treaty under the BEPS Action Plan.

The MLI is definitely a milestone development as it strives to modify more than 3000 bilateral tax treaties. When comparing with the protocols, which directly modifies the text of the treaties, the MLI is envisioned to be applicable along with the current tax treaties, amending their application to the required extent for implementing the measures related to BEPS.

An important aspect of the MLI is that it functions on the reciprocity principle. This means that any provision under the MLI is applicable to a bilateral tax agreement that happens between any two nations or jurisdictions, only in case both the parties agree to it. To bring this reciprocity into effect, the MLI allows for reservations against specific MLI provisions (except the ones related to application of BEPS minimum standards). Typically, if any one of the parties make a reservation against any MLI provision, then it is applicable symmetrically between the reserving party and all other concerned parties.

For the MLI to be brought into force, global law related to multilateral treaties should be complied with. Generally, the first step is signature, then ratification or acceptance and approval from each involved party, as per their respective law requirements applicable in that country.

Therefore, signature is only the initial step towards stating consent to be bound by the MLI.

Newsletter, Oman, Saudi Arabia, U.A.E

GCC Immigration and Employment Law Update 2019

April 15, 2019

United Arab Emirates (UAE)

Some major developments in the UAE include:

Various new immigration and employment reforms that were proposed last year would now come into force in 2019. These include the representation of an updated version of the DIFC Employment Law. Effective from 3 February 2019, the new enhanced visa classifications and provisions for the investors, any exceptionally bright students and special talents has come into force and marks a welcome move to the earlier static immigration regime.
The Ministry of Human Resources and Emiratisation has announced a new occupational classification scheme which is applicable to businesses registered in the UAE mainland jurisdiction; this reduces the list of job titles that the employers can opt for while recruiting employees.
Effective from 20 January 2019, any international physicians, dentists and alternative medicine practitioners (termed as the “Healthcare Professionals” collectively) are allowed to work for a maximum of three clinics in the Dubai Healthcare City free zone operating under a special license and visa. As per these new amendments, the Healthcare Professionals are allowed to apply for the licence overseas depending on when they procure a suitable placement in a medical facility in the DHCC; then the DHCC would act as the “sponsor” for these Healthcare Professionals’ visa. The Healthcare Professionals would also be allowed to work for almost two years and sponsor any dependants living with them in the UAE as per this new visa arrangement.
The General Directorate of Residency and Foreigners’ Affairs (the “GDRFA”) in Abu Dhabi now requires the foreign nationals in Abu Dhabi to first get their Emirates ID card made before they get their employment residence permit (the “ERP”) attached in their passport. The applicants who are renewing their ERP in Abu Dhabi will be still able to get their ERP stamp done before they get their Emirates ID card.

Oman

Some major developments in Oman include:

The Ministry of Manpower (the “MoM”) has published a new decree that prohibits the employment of non-Omani residents into particular and designated roles in private higher education and training institutions. The prohibition is currently restricted to the director of admissions and registration department, director of quality assurance, director of student affairs, and also director of the career guidance department. The employment permits that are issued to non-Omani residents for the above-mentioned categories of employees would be applicable until expiry. Post that, no renewal permit would be granted.
Enhanced Omanisation initiatives are probable to continue throughout this year. The six-month ban that applied to the 87 sector-specific professions (including, but not limited to, administration and human resources, accounting and finance, media, IT and engineering) and enforced in January 2018, which was extended in July 2018, is likely to be extended by another six months.
In February, the National Centre for Employment has opened only to Omani residents and serves them as a one-stop hub for job-seekers, while also unifying employment efforts, thus acting as a means of regulating the demand and supply of employment opportunities.
Effective from January this year, the Royal Oman Police have also relaxed some of the residency rules, especially for the children and siblings of global investors in the nation. The goal of this initiative is to enhance the inflow of foreign investments and offer social stability to the investors. According to a general immigration rule in Oman, children and siblings of expats who are aged 21 years or more and 18 years or more have to leave the country unless they obtain an employment visa to carry on residing in Oman beyond the fixed age limit; however, there is an exception in special cases under some humanitarian grounds in case the Director-General might waive this age requirement. But, under the new initiative, expat children or siblings of global investors coming into Oman would be exempted from this particular age requirement, that is, a global investor will now be able to get his children or siblings along, irrespective of their age, bringing them under his sponsorship and responsibility. This new relaxed residency program would be applicable to global investors only if they go on investing or having an investment in Oman.

Kingdom of Saudi Arabia (“KSA”)

Some major developments in the KSA include:

In the year 2017, the Ministry of Labour and Social Development (“MLSD”) had cut down the validity of the Block Visas from two to one year. There was an exemption for domestic workers and any foreign staff at government agencies. The MLSD has again launched an initiative in January 2019 for extending the new Block Visa’s validity from one to two years and without any extra government fee. As per this new initiative by the MLSD, businesses in KSA will be allowed to cancel their current Block Visas permitting them to hire global workforce and issue new extended visas applicable for two years depending if the visa requirements are being met. This extension of Block Visa’s validity in the KSA would facilitate all the private sector businesses in terms of time and effort, cost and other administrative work.
The MLSD has also implemented a new and instant calculation for Saudi and global employees as part of its existing Nitaqat System, which is effective from 2 February 2019.

Conclusion

Amendments to the immigration and the employment laws in the GCC countries are expected to continue in short and long-term. We would be monitoring these changes and will keep you updated with any developments.

Newsletter, U.A.E

This Year has been a Positive Start for UAE businesses

April 15, 2019

With an upsurge of the expansion rates in terms of output and even new orders in the middle of reports of a bigger market demand in 2019, all the non-oil businesses operating in the UAE felt that this year had a very positive start.

Mostly, the businesses remained confident about further progress in new orders resulting in growth of business activity in this year. Though some companies said that offering price discounts had enabled them to get bigger volumes in terms of new work, the output prices went down for the fourth consecutive month along with competitive pressures and comparatively feeble cost inflation.

As per surveys, the business activity expanded at the strongest rate since August, 2018. The rate of growth has also been faster than the series average. Where the output augmented, it was associated to higher number of new orders and also because of marketing and promotional activities.

The survey’s results are in tandem with IMF’s observation that non-oil development in the UAE would go up further this year and in 2020 because of fiscal stimulus and also due to fast-track arrangements for the upcoming Expo 2020 Dubai.

The global financial institution has forecasted that UAE’s non-oil sector is all set to expand faster this year as compared to the oil sector in spite of some recovery in the crude prices and new company formation in Dubai is a good idea at this point of time.

The expansion in business activity was because of promotions partially and also because of huge price discounting done by various companies. The output price index continued to be below the neutral 50-level in January, 2019, indicating lower average selling prices in the country, although the percentage of price discounts in January was lesser. Selling prices have gone down for last eight out of nine months. However, the input costs went up modestly in the month of January.

Because of higher activity requirements, most of the firms had to hire extra staff during January. With companies acting as per higher order growth and bigger output, the purchasing activity was very strong in January. But the stock of pre-production inventories went down for the consecutive second month, proving that businesses are managing their inventories in a better manner and not building up stocks in expectation of the prospective demand.

Over 68 percent of the companies expected their output to be higher within a year’s span. None of the companies that were surveyed predicted the output to be lower within a year’s time and optimism about the business in terms of future output stayed high in the month of January.

The business sentiment has been very high this year and has been strengthened as compared to that in December last year. The improvements in demand seen lately are expected to further go up, as all the marketing campaigns are forecasted to get positive results in 2019.

Another research shows that the investors in the UAE could be vulnerable to over-estimating the potential for the growth of investments in the near future. When the survey respondents were asked to guess their expected investment return in 2019, almost 24 percent people expected returns over 10 percent and just seven percent of the population expected returns to below two percent or in negative. Thus, this year seems to be a perfect time for business set up in Dubai free zone and if you have that as an agenda, but do not know how to go about it, please get in touch with us, and we would be happy to assist you.

Newsletter, U.A.E

A breakthrough double tax treaty signed between the UAE and the KSA is now published

March 18, 2019

The detailed information about the double tax treaty between the UAE and the KSA (the “DTT”) signed on 23 May 2018, has been finally made available.

The verdict for approving the DTT in KSA was published in the official Saudi Gazette and Umm Al-Qura, recently along with the text of the DTT. This publication of the decision done in the official Gazette brings an end to the ratification process for KSA. Both the countries involved have to inform the other about the completion of the process as per their law so as to bring the DTT into force.

The key features of this treaty are as follows:

Abuse of the treaty: In accordance with the Multilateral Convention to Implement Tax Treaty related procedures to Prevent Base Erosion and Profit Shifting (“MLI”), which both the UAE and the KSA have signed, the DTT says that the treaty access would be denied in case even one of the chief purposes of the arrangement is to get treaty benefits.
Effective date: The DTT would be entering into force on day one of the second month after the above notifications. The DTT would be effective for all the payments that are made on or post 1 January after the date on which the DTT came into force particularly for withholding tax reasons and for tax years which begin on or post 1 January of the same annual year for the purposes of income tax.
Persons covered: The DTT is applicable to the residents of the UAE and the KSA. Please note that the DTT is not restricted only to GCC nationals; thus, non-GCC nationals could also take advantage from the DTT.
Permanent establishment (PE): The DTT applies the general OECD definition of a Permanent Establishment. A PE is a basically a fixed place of a company from where the business is fully or partially carried on. A PE would include a branch, a place of management, an office or a factory; however, it excludes all the activities that are of a preparatory or auxiliary nature.
Income derived from immovable property: This kind of income could be subject to tax in the nation where the property is actually located.
Business profits: Business profits are usually taxable in the nation of residence. However, an exception to this is where the company carries on the business in another country via a PE and in that case, the profits of that PE could be taxed in the other nation.
Dividends: Dividends would be taxed in the source nation but the tax will be limited to a maximum of 5 percent in case the beneficial owner of those dividends is residing in another country.
Interest: Interest income is allowed to be taxed only in the residence country in case the recipient is the beneficial owner and is also a resident of that country.
Royalties: Royalties are to be taxed in the source nation but the tax would be limited to 10 percent in case the recipient is the beneficial owner and is also a resident of the other nation.

Capital gains: Any capital gains would be taxed only in the residence country except if one of the exceptions is applicable to provide the taxing rights to the source country.

The DTT is actually a rare agreement between two GCC countries and is set to improve the economic relations and also the bilateral cooperation between the UAE and the KSA. After it comes to effect, the DTT is surely going to have major tax implications. The conclusion of the DTT might have an impact on the existence of a PE and could reduce the withholding tax rate applicable in the KSA. Companies and persons who do cross-border transactions should ideally evaluate their transactions and also corporate structures immediately so as to ensure their eligibility for treaty advantages. As both the KSA and the UAE have signed the MLI, the provisions of the DTT could be amended by the MLI as per the final MLI positions taken up by the UAE and the KSA. As of now, the KSA is in its provisional MLI positions, and has included the DTT as a covered agreement, though the UAE has still not included it as such.

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Organizational Support

Ongoing Support

Accounts

Financial Insights

Tax Solutions

Corporate Complaince

Blog

Bottom Line

Extension of some fundamental provisions for protecting more employees

Extension of part IV

Improvement of the employment dispute resolution framework

Improved flexibility for the employers

What should employers do now?

Regulatory Alert on Healthcare

Federal Law No.2 of 2019 – How to use IT and Telecommunications in the Healthcare Sector

United Arab Emirates (UAE)

Oman

Kingdom of Saudi Arabia (“KSA”)

Conclusion

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