Newsletter Archives

Newsletter

Dubai Finalized as the Host for the First Overseas Russian Innovation Hub

November 12, 2018

Dubai Internet City has signed an agreement with the Russian Export Centre for launching the first Russian Centre for Digital Innovations and ICT.

The announcement of the opening of the centre in Dubai Internet City is happening when the UAE and Russia have reported growth of $1.2 billion in 2017 in bilateral trade between the countries.

Dubai Internet City or DIC has recently signed an agreement with the Russian Export Centre (REC) to launch the first ever Russian Centre for Digital Innovations and Information and Communication Technologies located in Dubai.

The centre has been planned in a space of over 20,000 sq ft in DIC and is the first of a total of four global centres that are being planned. It will be the first assurance to investment promotion of this magnitude by Russia outside of its borders.

This centre’s opening is announced at a time when Russia and the UAE reported substantial growth of to $1.2 billion in 2017 in bilateral trade between the countries.

Top leaders of both the countries have pledged to strengthen their trade and industry relationship, after an important two-day visit by Sheikh Mohammed Bin Zayed Al Nahyan, who is the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces to Russia.

Earlier in 2018, leaders of both the nations also reviewed their bilateral relations, spoke about cooperation, and finally signed the dotted line for a new strategic partnership.

Ammar Al Malik, who is the managing director of Dubai Internet City and Dubai Outsource City said that “The UAE and Russia have shared close business ties for decades, and for DIC to be chosen as the first overseas destination by REC is a true testament to Dubai’s key position as a global business destination. The Russian Centre for Digital Innovations and ICT in UAE, along with other innovation centres and labs that DIC is home to, will serve as a catalyst for this vision.”

Marat Korovaev, who is heading the IT Export Support Department, REC was of the view that Dubai’s goal and plans for taking the position of the smartest city in the world are really second to none and the Russian IT industry will definitely add significantly to the triumph of this vision.

Various factors such as the bilateral ties, favoring and simple business processes, and a fostering environment which bolsters new innovation and exchange of best practices, have incited on the selection of Dubai and DIC as the first-ever destination for the total of four planned centers located outside of Russia. It is the right time for company incorporation in Dubai or DMCC company formation. In case you require any professional help regarding this, do get in touch with us at IMC.

Besides opening this centre, the DIC and Russian Export Centre will come together and support UAE-based and Russia’s technology businesses and companies of all sizes, which includes all the start-ups and also entrepreneurs, thus supporting DIC’s pledge to offer a thriving and fostering ecosystem for organizations and businesses to grow.

Newsletter

New Visa Laws in UAE will Now Permit Visitors to Extend their Stay by Up to 60 Days

November 12, 2018

The recent amendments to the UAE visa law would now allow an extension of 30 days to the visitor or tourist visas twice, which makes it a total of 60 days, without leaving the country.

As per the new rules which were announced earlier in 2018, the residency visa particularly for widows and divorced women and their children would now be extended for one year without a sponsor beginning from the date of husband’s death or the date of the divorce.

Residency visas for students who are being sponsored by their parents would also be renewed for one year after completion of their high school or university or when they turn 18. This will again be permitted to be renewed for next 12 months.

Those who violate or delay in applying as per the new rules would be permitted a 10-day grace period, post which they would have to pay a fine of AED 100 per day ($30). Nevertheless, for the next one month or 30 days, the extension would be granted from the date on which the previous entry permit expired.

Before their first extension gets over, the visitors can send a request to get a second extension for 30 days additional days.

There would be a fee of AED 600 (equivalent to $165) for the extension of entry permits, per extension. The fee does not apply to those people who are residing in the GCC and the companions of GCC citizens, and also those who have any special entry permits.

Brigadier Saeed Rakan Al Rashidi, who is the acting director-general of the Foreigners Affairs and Ports Department at the ICS said that the new visa laws would depend on particular conditions and regulations.

He said that “The widow or divorced woman and their children must have had their residency visas sponsored by the deceased or former husband at the time of death or divorce.”

He also mentioned that residency visas should compulsorily be valid during the time of divorce or death and the children’s residency period should not exceed that of the mother.

He also emphasized the point that the woman should have the financial ability to support her family.

All the applications should be submitted online and physically at Tas’heel offices and residency departments in various locations of the country.

So if you are looking for the best pro services in Dubai or residence visa services in Dubai, do get in touch with us at IMC and we would be glad to assist you.

Newsletter

Company Formation Process in Sohar Port and Free Zone

November 12, 2018

Situated on Oman’s northern coast, Sohar is a beautiful city reminiscent of a colorful past. This ancient city is steeped in history and is the largest in the northern areas of the nation. Having the fifth highest population in Oman, this town has always acted as a port for the country because of its strategic location. It also serves as a gateway between the east and west and currently, it is home to a deep sea port, allowing it to accommodate some of the largest ships, and thus becoming one of the rapidly growing free zones in the whole world.

Sohar free trade zone is one of the four operational free zones in Oman. Located in the Sultanate of Oman, situated 220 km away from Muscat – its capital, Sohar free Port and the free zone is mainly operating into areas such as Trade and Logistics, Steel Manufacturing and Processing, Petrochemicals, Oil and Gas, Minerals, Aggregate Industry, Ceramics, and Food logistics and processing. Oman’s Sohar free zone also has a one-stop-shop which acts as a window for all the customers to get whatever they need to establish and run their business seamlessly and efficiently.

Benefits of setting up a business or company in Sohar

100% foreign ownership but there should be a minimum of two shareholders;
Exemption from the applicable corporate tax for at least 10 years. This period could be extended to up to 25 years or the duration of the lease in case the company meets specific Omanization targets;
Availability of a ‘one-stop-shop’, which enables to easily get licenses, approvals or, permits they need for their business from a single place rather than running around to various government bodies;
Very low capital requirements and encouragement to business start-ups;
Omanization works as following regarding the corporate tax exemptions. The escalation system is as follows:

The minimum level of Omanization is 15%;
25% Omanization after 10 years;
35% Omanization after 15 years; and
50% Omanization after 20 years and this is up till the final potential tax-free year (year 25);

The port was established in 2002, whereas the free zone came up in 2010.

Various possibilities in Sohar Port and Free Zone

The free zone is situated in Liwa and is on the coast. The location being close to many significant places, the free zone is within an easy reach of about 3 hours of Muscat. It is very near and well-connected to the UAE and Dubai. In addition, there are direct connections to highway which lead to Saudi Arabia, which is another significant economy in the region.

There are various types of licenses that can be obtained in this free zone. The types available are:

Industrial License
Light Manufacturing and Assembly License
General Trade License
Logistics License
Service Provider License

These licenses permit doing these business activities and should be renewed annually. Third-party service providers must obtain a Service Provider license, although the services that are permitted to provide are specified. There’s another big advantage that the registration process for these service providers is not charged or is absolutely free of charge.

Also, there are some other permits which can be obtained, and the process is transparent and very simple. The permits are as follows:

Plot Work Permit: This permit allows the Working Company to carry out the civil works within their plot. All the pertinent regulations on plot development and the required application process to get the Plot Work permit are in the Development Control Regulations;
Common Area Work Permit: This permit allows the Working Company to carry out the works outside of the plot, but inside some of the common areas such as laying a pipeline or cable;
Special Transport Permit: All businesses or companies would need an Environmental Permit. Which type of permit that would require depends on the type, scale of the work, and the complexity of the projects they intent to undertake. The permits are as follows:

No environmental impact– In case there is going to be no environmental impact, there would be no application filling required and approval must be obtained within three working days.
Limited environmental impact– In this case, the business needs to submit an environmental review form and the approval could take up to 30 days.
Environmental Impact– In this case, the business should submit environmental impact assessment and the required approval could take up to 90 days.

The level of environmental impact is provided to the business or company during the assessment period so that the entities are prepared to give the needed review or assessment to make sure that the process is smooth and seamless.

The free zone does have its own rules and regulations known as the Sohar Free Zone Rules and Regulations, which are clearly distinguishable from the mainland laws.

Sohar Port and Free Zone is a very well-developed free zone, which is rapidly developing and growing and has large amounts of fixed investments flowing in. With so many advantages of a world-class deep sea port, proximity to various world-renowned business centers like Saudi Arabia and the UAE and the easy to use free zone facilities such as the one stop shop etc, Sohar Port and free zone offer very unique and promising opportunities for various businesses to set up themselves either on a regional or even on a global scale.

If you want to consider this promising prospect, do get in touch with the team of our professionals who will help you with new company formation in Oman or with foreign company registration in Oman.

Newsletter

More than One-third of KSA Businesses Hope for Over 10% Growth in 2018

October 15, 2018

The businesses in Saudi Arabia are more positive about the returns and future expansion opportunities as compared to last year. This is because of the Vision 2030 reforms put in place by HRH the Crown Prince Mohammed bin Salman aim to improve private sector participation. A survey data proves that about 33% of middle-market enterprises operating in Saudi Arabia foresee more than 10% growth in 2018, and about 6 out of 10 are aiming a growth of between 6-10%, which is a 24-% point increase as compared to the last year results.

This year, regulation has come up as a new factor in inspiring new innovations and thus pumping up revenue growth. About 35% of Saudi respondents consider regulations as the top-most motivator of innovation, up by almost 28% as compared to last year.

Though the top management is confident about the growth, the only apprehension is regarding the cash flow shortages, giving insufficient cash flow as the top-most obstacle to development this year. About 34% of companies based in Saudi that were surveyed recently said that they depend on bank finance for their funding, but as Saudi is looking at upgrading its stock exchange and opening it to global investors, they are finding funding options through capital markets. About 73% of top executives are thinking of an IPO, which is another proof of rapidly increasing business confidence.

Embracing the adoption of AI
The outlook towards new technologies has drastically changed over the last year. In 2017, approximately 94% of survey respondents said that they would not think of adopting robotic process automation. However, by the year 2020, about 82% are of the view that they would have surely adopted AI and also use or put robotic process automation in the application. Moreover, about 95% of the respondents said that they plan doing so within the coming five years.

Overseas expansion
The business leaders of Saudi Arabia now feel the requirement to step out of their comfort zone and expand their reach beyond their domestic borders if they aim to be the market leaders in their particular space. Overseas expansion is the topmost priority for about 29% of the survey respondents. This will improve the chances of company formation in Saudi Arabia and also foreign company registration in Saudi Arabia. Though about 18% of middle-market enterprises are thinking of expansions domestically and within borders only.

Hiring diverse and skilled talent key to growth ambitions
Motivated by the positive revenue growth targets, the Saudi Arabian corporate leaders have begun a hiring spree, and almost 58% of them are planning to engage more of full-time employees. The only thing they have to keep in mind to have more diversity while recruiting additional staff.

Newsletter

More than Half of MENA Executives have AI or Automation on their Top Priority

October 15, 2018

A recent study shows that about 53% of senior staff or executives who are based in the MENA region have artificial intelligence (AI) or Robotic Process Automation (RPA) on their mind when it comes to top technologies. Especially in the consumer sectors, the top technology focus in MENA is on automation.

The study says that the government services and the retail and financial services are the three main customer-facing areas, which are using AI and the efficiencies by automation drives, thus utilizing the resultant capacity to add new value, enhance the customer experience, and also enable more innovation in the products and services.

Governments are making way for the private sector

GCC Governments have instructed their departments to use more intelligent automation to further bring efficiency and encourage innovations, thereby enhancing the satisfaction levels of the residents and tourists by giving them quick and efficient public services. Dubai now stands as the most advanced city in the GCC, regarding automation of public services delivery.

This not only enhances the customer experience but also gives cost-cutting advantage due to automation. Governments should aim at creating in-house developed data science talent to increase service effectiveness and also promote innovations in the private sector.

Aiming to make the customer interactions smarter in the retail side

If used in the retail sector, RPA can build and strengthen the foundation for better digital customer experience; however, to make the customer interactions much smarter requires better predictive analytics which influence AI.

Financial services are leading the implementation of intelligent automation

The financial services sector is the most advanced when it comes to the application and usage of intelligent automation technologies. Many banks are using up-to-date storage of data to give wing-to-wing services to their customers while giving flawless connectivity between the channels, and partnerships with other service providers to facilitate fast payments and loan processing.

The extent to which intelligent automation is implemented currently could vary between and within various sectors, but the speed of transformation in this region has increased to a large extent this year as various organizations are aiming to find newer technologies and also collaborations, which could assist them in addressing the changes in their customer behavior.

Risks associated with digital transformations

As various organizations adopt fast-growing and emerging predictive technologies, they also need to evaluate and tackle information security, data privacy, and ethics.

Companies, be it public or private sector, will have to build their new models of data governance and create ethical guidelines regarding how the customer data is utilized to deal with reputational risk.

Newsletter

India: Buyouts Top the Investments in August this Year with More than Double of What was Received in August Last Year

October 15, 2018

Data shows that there were investments worth US$1.6 billion in August 2018 across 50 deals, in which the buyout deals recorded a little over a double jump in the value as compared to August last year. Year-to-date, PE/VC investments done till August 2018, has shot up to US$18.7 billion, which is about 9% more when compared to the same month in 2017. August 2018 had US$830 million across 18 exits with over two US$200 million deals. While exits in 2018 (counted between January to August 2018) were at US$6.7 billion, with just the Walmart-Flipkart deal of US$16 billion, exits in this year are predicted to shoot up to two times of the total value of exits recorded in last year.

Investments

In August 2018, the deal value stood at US$1.6 billion, which was at par with the investments that were recorded one month earlier; however, it was almost a 71% decrease as compared to August 2017. The huge difference here is because of the two mega deals in August 2017 – first one of Softbank’s US$2.5 billion investment in Flipkart and the second one of GIC’s US$1.4 billion investment in DLF Cyber City. When we talk of deal volume, the investment activity in August 2018 was almost equal to the deals recorded in August 2017.

In August this year, there were four deals which valued more than US$100 million (and were cumulatively totaling up to US$1.1 billion), and accounted for almost 72% of the entire investments as against US$4.7 billion, which was recorded across six deals around the same time last year, which included a couple of the biggest PE deals (mentioned above) that happened in the Indian Market. The biggest deal in August 2018 was KKR’s buyout of 60% stake worth US$530 million in Ramky Enviro Engineers Limited.

When talking about the investment stages, buyouts topped the charts in terms of investment value, with four deals worth US$683 million, which is over two times the investments received in August last year. Expansion or growth deals, which mostly lead the way when it comes to investment value, totaled up to US$467 million in investments as compared to US$4.5 billion in August 2017. Start-ups were at the top when we talk about the number of deals (29 deals).

Power and utilities were at the top from a sector point-of-view, with US$532 million investments recorded just by two deals. The next in line was real estate which had US$360 million invested in two deals. Financial services recorded about US$42 million of investments with six deals. When talking about the number of deals, Technology was at the top with seven deals.

Exits

In August 2018, 18 exits were recorded with US$830 million, which was twice the value when compared to July 2018. But when compared to August 2017, exits have gone down by about 61% in terms of value, majorly because of some large exits that were recorded in August 2017 such as Tiger Global’s exit from Flipkart, which was worth US$800 million, IFC’s exit from Tikona Digital which was worth US$246 million and Bain Capital and GIC’s part exit from Genpact worth US$294 million.

The biggest exit in August this year valued at US$225 million, which was a part exit from Ola –a cab aggregator, by Helion Ventures, Accel India, Bessemer and others when a secondary sale was done to Temasek. Another huge exit in August 2018 was when Warburg Pincus sold 8.3% stake in AU Small Finance Bank Limited for a value of US$223 million in the open market. Then the lucrative conclusion of the US$16 billion Walmart-Flipkart deal, which happened in early September will be topping the lists of exits so far in the Indian PE/VC industry and also overshadow the dollar value of the exits that happened last year.

Open market exits were at the top with deals around US$480 million across eight exits, which was followed by three secondary exits which were valued at US$248 million. A PE backed IPO that came out in August 2018, saw Micro Ventures give up its stake in the Credit Access Grameen Limited for a value of US$71 million.

Financial services led from a sector perspective, as it recorded six deals worth US$381 million.

Fund raise

In July 2018, there were nine fund raises which were worth US$2 billion. In addition, fund raise plan was announced for about US$3 billion in August 2018. The hugest fund raise totaling US$695 million was done by Sequoia with an aim on investments during the early and growth stage especially in the sectors such as technology, healthcare, and consumer sectors.

Newsletter

AI and similar technologies are set to create about 90 million additional jobs in China rather than displace in the coming two decades

October 15, 2018

The analysts say that AI and similar technologies like robots, drones and other autonomous vehicles will increase opportunities of employment in China by 12% in over the next 20 years, which would be approximately 90 million new job openings.

These technologies are set to not only boost China’s fiscal growth but also generate millions of new job opportunities, more than offsetting displacement of the current jobs. Though these new technologies could actually displace approximately 20% of the present UK jobs by 2037, but would also create an equally big number of new jobs by pumping economic growth.

As compared to the UK estimates, China is predicted to experience a bigger chunk of job displacement (26% vs. 20%) because of the more scope for automation in the manufacturing and agriculture sectors in China. But this is, in fact, more than offset by the huge anticipated boost to GDP in China by using AI and related technologies, which will eventually result into a much larger extent of job creation in the country (38%) as compared to the UK (20%).

The studies also noted that a lot of sectors will be benefiting from using AI and robotics and the major one will be healthcare. It is also important to understand that most of the additional jobs that will be created would have no direct link to AI or robots, but would be a resultant of a more affluent society, which in turn creates more demand of goods and services in general.

This also proves bigger opportunities for business in terms of investments in AI and similar technologies in China, which cover all domains of operations like marketing and product personalization, productive efficiency, R&D, human resource functions and also cybersecurity. However, there is a warning that a big disruption is likely to happen to all the present business models in every sector of the economy, as it is already noticed in media and entertainment and finance and retail.

As China is moving rapidly towards innovation and uniqueness, the industrial employment is expected to move from labour-intensive and low value production to more higher value, such as those used in manufacturing AI-enabled tools for both domestic market and export. Though the studies predict that the long-term consequence of AI on the job market is going to be optimistic for China, the transition phase towards an AI-based economy would cause some commotion to the existing labour markets because millions of workers would have to look for a change of career and maybe also locations. China has a grand Next Generation AI Plan, which aims hefty investments in the area of skill development. Having said that, this will also require some balancing by bringing in more refresher training and recruitment support for the displaced workers.

Therefore, any job which is at a “high risk” of going under automation does not necessarily mean that it’s going to be surely automated. This is because there are many financial, legal and other regulatory, and organizational roadblocks in the road to adopt AI and similar technologies. For China, it is estimated that though about 40% jobs could be considered for automation by 2037, only one-fourth of the current Chinese jobs will be displaced in reality around this period, as against 38% job creation.

Newsletter

International Fintech Investments go up to a Whopping US$57B in First Half of 2018

October 15, 2018

International fintech investments saw a sharp upward trend and set a record with US$57.9B worth of investments across 875 deals just within the first half of 2018. This was a drastic increase from the US$38.1B invested in the year 2017.

This year’s first half saw the successful closure of two gigantic deals: US$14B raised by Ant Financial in Q2’18, which was quite record-setting and second was Vantiv’s acquisition of WorldPay worth US$12.9B in Q1’18.

The volume of the deals was very robust and spiraled up from 834 in H2 in 2017 to 875 deals in H1 in 2018. In addition, worldwide median volume of late-stage venture financings shot up to US$25M during H1in 2018, which was up from the US$14M annual median size recorded in 2017. Early-stage deal size also went up; it was earlier at a median of US$5M in the year 2017 and went up to US$9.2M at the mid of this year.

“Large deals at all stages powered fintech investment in the first half of 2018,” said Ian Pollari, Global Co-Lead, KPMG Fintech. “But just as notable is the breadth of investment. We’re seeing a mix of fintech sub-sectors drawing increasing interest, including data, AI and regtech — these horizontal capabilities have appeal across the full spectrum of the financial services industry.”

“Not only is more investment flowing into emerging technologies like AI and subsectors like regtech, we are also seeing efforts to combine fintech capabilities and embed them within broader digital transformation programs,” added Anton Ruddenklau, Global Co-Lead, KPMG Fintech.

All venture capitalists were positive about the start-ups in the space of funding fintech, but M&A activity also seems to be mounting as more and more established fintechs seek exits. The M&A activity currently has matched the most active M&A periods observed till date.

The highlights of H1 2018

International fintech investment (PE, VC and M&A) has gone up to more than double. It stood at US$22B in the H2 of 2017 and it shot up to a record high of US$57.9B in H1 of 2018, pushed by nine US$1B+ mega deals.
The top four fintech deals of Europe were worth US$22.4B in investment and included the UK-based Vantiv’s acquisition of WorldPay, which was worth US$12.9B
In H1 2018, the investment in fintech companies only in Asia stood at US$16.8B with 162 deals, which was a raise from 119 deals in H2 2017.
Fintech VC size has stayed at steady levels since beginning of 2015, going up to 653 deals in H1 2018.
Median late-stage VC deal amount in the fintech sector drastically went up from US$14M in 2017 to US$25M in H1 2018.

US-based fintechs observed rise up in VC funding, crossing US$5B in H1 2018

In H1 2018, US fintech businesses pulled in US$14.2B worth of investments, which included over US$5B in VC investment. VC deal size kept increasing and went up from 276 deals in H2 2017 to about 328 deals in H1 2018, motivated to a large extent by the resurgent angel, seed and early-stage VC deals. Investors quickly invested in start-ups in rising fintech sub-segments, which included investment banking and regtech, and continuously poured in finances in mature, late-stage businesses such as Robinhood – whose US$363M was one of the biggest VC deals in H1 2018.

Biggest four deals in Europe were worth US$22.B

Total investment into fintech businesses in Europe touched US$26B with 198 deals in H1 2018, which was pushed by significant deals by WorldPay, iZettle, Nets, and IRIS software – which alone accounted for US$22.4B of this total. Though the deal value reached a new record high in Europe, the deal volumes came down from 268 in H2 2017 to 198 in H1 this year.

The UK was at the top in fintech investments in Europe with US$16.1B having charted about half of the top 10 deals in this region, though there were concerns regarding Brexit negotiations. Scandinavia’s fintech sector also did well, with the buyouts of iZettle (Sweden), Nets (Denmark) and Nordax Group (Sweden) figuring amongst the top ten deals in H1 of 2018.

The fintech sector of Asia touched US$16.8B because of Ant Financial deal

H2 2017 saw USS$2B which propelled the total fintech investments in Asia to a figure of US$16.8B with 162 deals in H1 2018 pushed by a huge US$14B Series C VC investments by Ant Financial. If we do not count this huge deal, Asia still recorded robust fintech investments in India, Australia, and Singapore which saw a quarter-over-quarter growth in overall fintech sector funding.

Following the footsteps of the worldwide trend, the median fintech VC late-stage deal size in Asia went up drastically in H1 of 2018 – shooting up from US$25M to US$37.7M, making it the highest seen in any region. AI and blockchain remained the main priorities for fintech investors in Asia, along with insurtech and regtech.

The payments and regtech sub-sectors came to the limelight

Payments saw a number of large exits in H1 2018 and emerged as one of the most established sub-sectors of fintech. This included successful IPOs by EVO Payments and GreenSky, Vantiv’s acquisition of WorldPay in the UK and Paypal’s acquisition of iZettle which was worth US$2.2B. Even the regtech sector saw a great start in the first half of this year with US$1.37B investments which have already left the 2017 total behind.

Blockchain has gone past the experimentation stage

Blockchain has been drawing in huge attention from global investors in the first half of this year with funding coming in for experienced companies and consortia planning to get added rounds rather than going to new market entrants. Huge rounds in blockchain companies were observed in H1 2018, which included US$77M to Ledger in France, US$100M+ rounds to R3 and Circle Internet Finance in the US.

Strong stance expected for fintech investments

With a huge chunk of capital still to be deployed, the fintech centers globally growing, more and more companies want to utilize fintech so as to drive further innovations, investments in fintech are surely predicted to stay robust by H2 of 2018.

Newsletter

Bahrain has approved a draft bill for VAT implementation on the New Year’s day in 2019 and announces the draft VAT law in Arabic

October 11, 2018

Some special meetings were organized both in the Bahrain National Assembly’s lower and upper houses on Sunday and Monday, and its Council of Ministers and also the Shura Council have given a go-ahead to the draft bills for the unified GCC VAT Agreement and also the draft VAT law. The law which establishes the Bahrain tax authority, the National Agency for Gulf Taxes, is also now approved. The draft VAT law has already been printed in the Arabic language.

It has been decided that VAT would be imposed in Bahrain at 5%, which is the standard rate and is as per the unified GCC VAT Agreement, which is going to be effective from 1 January 2019, and will place Bahrain at the third spot in GCC country’s after UAE and KSA, to have implemented VAT. As per the draft VAT law, the VAT regulations are going to be printed within 15 days of the effective date of the law (i.e. by 15 January 2019) and would list down the detailed applications of this law.

The Main Features of Bahrain’s New VAT system

Under the draft VAT law, the most important features of the VAT regime in Bahrain are as follows:

VAT Registration – In Bahrain, the compulsory and voluntary registration thresholds depend on the unified GCC VAT Agreement. Organizations that fully make zero-rated supplies could be exempted from the need to register. Every company or individual who is involved in an economic activity inside Bahrain would need to calculate their forecasted yearly revenue beginning from 1 January 2019 to find out if they have to register or not. The registration schedule is going to be based on the value of taxable supplies where the larger taxpayers would have to register first. The detailed schedule or timetable would be shortly announced.

Zero rated supplies – Bahrain is following UAE’s footsteps where a big list of supplies will be zero rated. The export of various goods and services, global transportation of goods and also passengers, the supply of investment-grade valuable metals, the supply of some specific medicine and health equipment had to be necessarily zero rated as per the unified GCC VAT Agreement. Besides this, Bahrain would also zero rate preventive healthcare services, the supply of some precious stones like pearls, construction of latest buildings, educational services, and local transportation services. Unlike the UAE and KSA, Bahrain also plans to zero rate about 94 food items as per the unified GCC VAT Agreement.

Exempt some supplies – Just as the UAE and KSA, Bahrain would also exempt the supply of margin-based fiscal or financial services and the supply of bare land.

Government supplies – The government supplies will also be taxable only until they are in its capacity as a public authority.

VAT Group – Bahrain plans to allow all the businesses or companies in the same group to get registered as a tax group thus allowing a single company to file a VAT return for the complete group.

VAT Returns – The VAT returns need to be filed and submitted within a month after the end of a tax period, which will be at least one month.

Books and Records – All the books and records have to be maintained for at least a three-year period.

What are Bahrain businesses required to do?

Businesses in Bahrain would need at least three to six months to be prepared for VAT. But there is lesser time remaining for the VAT implementation in Bahrain, companies must ideally begin preparing for VAT as soon as possible. The most important areas that the businesses need to concentrate on to implement VAT within their business are as follows:

Create a Project Plan: Develop a detailed budget for the VAT implementation (for example, consultants required, training, resources, IT systems needed), form a VAT steering committee and then allocate various responsibilities
Spread Awareness: Educate and train one’s staff on the impact VAT would have on accounting and reporting processes
Assessment of the VAT Impact: Take the VAT impact assessment and review the transitional provisions and categorize and map the VAT treatment of all business transactions
Evaluate Cash Flow: Gauge the impact on cash flow and accordingly estimate the working capital requirements
IT Systems: Review the capability of the existing accounting systems for VAT reporting and then think of upgrading or getting a new system
Pricing: Review the impact of VAT on factors such as demand and pricing
Contracts: Assess the existing contracts with various suppliers and customers and then include the VAT clauses in the new contracts
Processes: Decide on the amendments needed to the existing AP (accounts payable) processes and documentation like invoices and record-keeping
Customer and Supplier Management: Discuss with the existing suppliers and clients to inform them about the impact of the VAT and enter a negotiation with the new suppliers and customers
Compliance: Decide if it’s required and then accordingly register for VAT on time

We at IMC, have strong expertise and experience of VAT implementation and have been doing it in the UAE and the KSA. We can help you in assessing how VAT would impact your business and accordingly guide you with the VAT requirements in Bahrain.

Outsourcing

Business Admin & Finance

Organizational Support

Ongoing Support

Accounts

Financial Insights

Tax Solutions

Corporate Complaince

Blog

Recent Posts

Get updated by Signupto our Newsletter!

Get Started

About

Locations

Get Started

About

Locations

Get Started

About

Locations

Get updated by Signup
to our Newsletter!