The European Union’s General Data Protection Regulation (GDPR) was introduced as the new legislation on May 25, 2018, to protect the personal data. Ever since the legislation came into effect, the corporates in Europe have been trying to comply with its various legal requirements. Article 3(1) of the GDPR is applicable to the organizations that have a physical presence inside the EU and are engaged in the processing of personal data of EU data subjects. Article 3(2) extends this territorial scope to include non-EU based organizations that are not physically established in the EU.

Non-EU Based Organizations under the Purview of GDPR

These basically include entities that are either ‘controllers’ or ‘processors’ who are engaged in the processing of the personal data of data subjects in the EU. The processing activities should relate to the following:?

• ‘Offering of goods or services’ to individuals residing in the EU irrespective of whether the payment is required (targeting)
• Instances where the behaviour of European data subjects residing in the EU is monitored (monitoring).

GDPR application by way of targeting

There is no clear guidance as to what constitutes an ‘offering of goods or services’. Each case would have to be analysed separately on a standalone basis. Normally, for GDPR to be applicable it is required that there should be some active direction of activities towards data subjects within the EU. The mere availability of website or online advertising would not attract GDPR compliance. Additional aspects to be considered for targeting of data subjects would need to include:

• Contact details in the EU
• Availability of a website in more than one European language
• High probability of making payments in the Euro currency
• Usage of any EU domain name
• References to or from EU clients

GDPR application by way of monitoring

With respect to monitoring of behaviours of EU subjects, in order for GDPR to be applicable, the following factors should be considered:

• Gathering location data
• Allowing EU data subjects to use a social network account
• Tracking the online activities of the individuals to know more about their behaviour, personal preferences, and attitudes. A perfect example of this can be the usage of website cookies or social media plug-ins that monitor the online presence of an individual.

GDPR indirect application to non-EU businesses

The provisions of GDPR will also be applicable to non-EU businesses (processor) carrying out processing activities on behalf of an EU business (controller). The Data Processing Agreements between such controller and processor should account for the following matters such that the processor:

• Acts on the documented instructions of the controller and only then processes the personal data of the subject
• Ensures complete confidentiality by the authorized person responsible for processing the personal data
• Unless required by the GDPR provisions, does not transfer the personal data outside the EU
• Without the prior documented authorisation of the controller, does not engage another processor
• Allows for and contributes to audits, including assisting the controller in inspections carried out by him

Key Takeaways

The GDPR was purposely drafted to make sure that is applied to EU-based as well as businesses based outside of the EU that engage in handling the personal data of the EU subjects. If you have an organization outside the EU but are acting as a controller or a processor, then in all probabilities, you could be covered by the GDPR provisions. Article 3(2) has extended the scope of the territory and GDPR rules could affect your business as well. If so, you must make it as your priority to begin the implementation of a GDPR compliance roadmap.

The UAE’s Ministry of Finance (MoF) has just got into a pact with Saudi Arabia recently to avoid Double Taxation and also prevent any tax dodging in terms of taxes on income and capital. This agreement was signed at Jeddah at the Saudi Ministry of Finance headquarters. This step shows UAE’s eagerness to reinforce collaboration in matters related to tax and thereby further improve economic relations with its neighbour.

During the meeting, the ministers also spoke about various other topics like the application of the two GCC unified agreements related to VAT and selective taxation. To ensure smooth functioning of the laws, a team would be put in place to supervise any problems and execute all the steps.

The Double Taxation Agreement actually demonstrates the efforts made to improve various new opportunities of investment, support and enhance imports and exports, and ensure that there is a free flow of trade and also investment. It will also enhance the capital flow, the exchange of services, and bring in more economic diversification while making the partnership between the UAE and Saudi Arabia stronger. This makes company formation in UAE and also company formation in Saudi Arabia much easier.

He explained that UAE is committed to doing more agreements dealing with avoidance of double taxation, and the imperative point out of this is the information exchange for the purpose of tax and adopting the best-in-class standards in terms of transparency and information exchange. The purpose is to achieve the goal of justice for tax-payers and organizations, protect the country’s economy, and also execute the decisions of Global Forum on Transparency and Exchange of Information for Tax Purposes, which enhances UAE’s spot as one of the top international fiscal and commerce centers.

Talking about some statistics, the transactions into real estate by Saudi nationals done in the UAE in the year 2016 touched the129.9 billion dirhams mark. While the volume of licenses granted for doing financial activities to Saudis residing in the UAE touched 10,896 in the year 2016. The total investments of the Saudi citizens and the Saudi banks located in the UAE were about 18.66 billion dirhams in 2016, whereas the trade figures between these two nations were plotted at 35.11 billion UAE dirhams. Did you know that Saudi Arabia stands third in the world and tops the charts in the Arab countries when it comes to UAE exports? It accounts for almost 45% of its imports from the GCC and around 28% of UAE’s imports that come from the Arab countries.

MoF had also signed some Agreements on the Avoidance of Double Taxation on income tax earlier with around 115 countries. The Ministry also stated its commitment towards the implementation of high levels of financial transparency and exchange of information for tax-related issues, which is in line with the G20 (Group of 20) decisions and the provisions done for Avoidance of Double Taxation agreements with other countries.

The GCC or Gulf Cooperation Council region has saw a year of inadequate economic performance in the year 2017.However,according to the World Bank’s biannual Gulf Economic Monitor, there is hope and the growth will take an upward turn in 2018 and 2019.

The economies of the GCC region saw a downward trend or a flat growth.The reasons for this were a tighter fiscal policy and lesser oil production, which affected the activity in the so-called non-oil sector. However, the external debt issuance spiked up to finance the huge fiscal deficits.

But the economic growth is now expected to go up gradually. The recent recovery in energy prices, though partial, and the termination of oil production cuts post 2018, and are duction of the fiscal austerity.

The World Bank’s estimate of growth comes to 2.1 percent in the current year, which is expected to rise even more to 2.7 percent in the year 2019. Growth in Saudi Arabia is also projected to bounce back to around 2 percent in 2018-19.

Nadir Mohammed, the World Bank’s country director for the GCC said, “Policy attention is shifting towards deeper structural reforms needed to sever the region’s longer-term fortunes from those of the energy sector.”

“While the recent increase in oil prices provides some breathing space, policy makers should guard against complacency and instead double down on reforms needed to breathe new life into sluggish domestic economies, to create jobs for young people and to diversify the economic base. Any slippage could negatively impact the credibility of the policy framework and dampen investor sentiment.”

Though the fiscal and current account balances have seen growth and improvement, this region is still facing some financing requirements and is still vulnerable to changes in the global risk sentiment and the funding cost.The implementation of the country’s reform plans needs to be robust to hold upall the benefits of better structural reforms and fiscal adjustment, which aim to expand their economies.

Over the long term, the lasting dominance of the hydrocarbon sector in the GCC economies battles for the dynamic implementation of the structural reforms. The structural reforms ideally should be focused on the following: development of the private sector, economic diversification, and labor market and the fiscal reforms. The long-term ambitions of the GCC states are expressed in various countries’ vision statements and their investment plans and aim to develop competitive economies that will utilize all the talents of their people, said the report.The implementation of these structural transformation guidelines or programs needs a continuous political commitment on part of the GCC governments.

Saudi Arabia has already come put with its 12 “vision realization plans” that are associated with its Vision 2030 aspirations. It aims to largely transform their economy in the coming 15 years by aiming to lift the private sector of the economy from current 40 to 65 percent.It also aims to take the small and medium enterprises’ contribution to GDP from the current 20 to 35 percent, said the World Bank report.

Kevin Carey, the practice manager at the World Bank said, “Transforming from an oil-dependent economy to a self-propelled, human capital-oriented one requires some fundamental changes in the mindset; some also call this a new social contract.”

“GCC countries do not need to discard their existing social contracts but rather to upgrade them to reflect new realities of low for long oil prices, increasing global competition and the long-term threats from technological and climate change.”

Some other Arab countries of the GCC states also have other challenges such as equity,sustainability and welfare related to the pension systems. Some of the solutions to improve pension outcomes could be improving the overall efficiency by bringing down the current fragmentation in many of the GCC pension systems.The access and contributions should be simplified and made more systematic by strengthening their ID and IT systems and also the capabilities of the pension administration bodies.The governance of pension institutions should also be strengthened.

If the GCC countries aim to attract all the global talent and think of company formation in GCC, they need to consider possible solutions for expatriates that would help them meet their pension and financial security needs, said the report.