Newsletter Archives - Page 9 of 57

Newsletter, Singapore

Singapore: Adding Value as a Talent, Technology and Trade Hub Globally and In Southeast Asia

September 13, 2022

The ‘Google for Singapore’ event was celebrated for the first time in Singapore on 23 August, Tuesday marking the 15th anniversary of this company. A large number of industry and government leaders, including Singapore’s Deputy Prime Minister and Minister for Finance Lawrence Wong (DPM Wong), attended this memorable event.

In Google’s 15th anniversary event, the search engine giant deliberated its plan towards empowering Singaporeans to further elevate the city state’s outstanding status as a regional and global technology innovation hub encompassing four principal pillars including investments, online safety, economic opportunities and sustainability.

DPM Wong, attending this event said, “In fact, Singapore will enhance its value as a hub for trade, technology and talent flow even as economic uncertainties prevail amid an increasingly divisive world.”

The Deputy Prime Minister, at this event, also adored Google saying that the tech giant has remained Singapore’s strong and steadfast partner since it set up its footprint in this country 15 years ago.

Drawing particular reference to the Covid 19 pandemic over the last two and half years, DPM Wong noted the praiseworthy work Google has been doing in close association with the Singapore government to help residents bridge the digital gap between studying and working from home and get connected.

DPM Wong forecasted trade and investments 15 years down the line and noted that friendship between nations will dictate and matter more in the present circumstances than in the past trade and investments.

“Increasingly, there is a new logic at work: Let us be friends first before we do business,” he highlighted, narrating the world at a turning point.

“Geo-politics is increasingly driving trade and investments. And if this trend were to continue, and it looks likely, then we are heading to a more bifurcated and decoupled world,” he said.

200 event attendees at Google’s Mapletree Business City II office on Pasir Panjang road were also reminded by DPM Wong that such challenges are not new to the Singaporeans who have dealt with such challenges since the country’s independence in 1965.

He also appraised the event attendees on investment and trade opportunities in Southeast Asia and Singapore, leading this continent in such matters.

“The digital economy in South-east Asia is only just getting started – fuelled by a huge, untapped but fast-growing digital consumer market,” he emphasized.

In light of increasing Asian wealth, a rising number of high net-worth families are consolidating their wealth in the city-state through formal structures and incorporating a Single Family Office in Singapore. This is how enhanced value creation is happening in Singapore as a trade and investment hub and as echoed by DPM Wong.

The Deputy PM also affirmed, “For its part, the Singapore Government will do everything it can to enhance its position as a hub for trade, technology and talent flow.”

Singapore is also striving hard to strike digital economy agreements with other countries to enhance trusted cross-border data flow to bring value through digital trade and innovation.

Singapore has recently entered into a Digital Economy Agreement with the UK. It also has similar pacts with Australia, Chile, New Zealand and South Korea. This new kind of trade agreement to boost digital trade is expected to attract more FDI through company formation in Singapore.

DPM Wong also stressed the importance of digitization in driving industrial growth and adding value as a tech hub. He added, “Of course, to be an effective hub, we also have to work with companies like Google to strengthen our tech ecosystem.”

Google officially launched its 3rd data centre in Singapore on Tuesday, Aug 23 and raised the company’s total investment in data and cloud facilities in the country to USD 850 million equivalent to SGD1.19 billion. Around 2.5 billion South Asian people will be able to access the services of this data centre.

Earlier an Oxford Economics report released by Google revealed that the company’s data centres in Singapore have contributed significantly to the country’s economy and generated around USD 216 million worth of economic activity in 2020.

Google Cloud and the Smart Nation and Digital Government Group (SNDGG) have secured a partnership deal to co-create innovative AI solutions for improving the work and lives of Singaporeans. The National AI Office of SNDGG has, for the first time, plans to enter into a public-private AI partnership with a renowned global technology company.

Google is also in the process of making a partnership with the IMDA and the Media Literacy Council for supporting the Digital for Life movement. This partnership will also ensure that 50,000 parents and children are trained on online safety. Be Internet Awesome (BIA) is a curriculum designed by the American tech giant to train primary school students which in turn will enhance the value of Singapore as a talent hub.

Kuwait, Newsletter, U.A.E

Kuwait and UAE Sign the Double Taxation Treaty

September 6, 2022

On 30^th August 2022, the Kuwait Ministry of Finance announced that the State of Kuwait (Kuwait) and United Arab Emirates (UAE) have signed a long awaited double tax treaty, the first of its kind signed by Kuwait with any Gulf Cooperation Council (GCC) member state.

How will it benefit both the countries?

It aims to strengthen the cooperation frameworks in tax matters and boost cross-border trade and investment between both the countries. It is expected to bring together the financial, economic, and investment partnership between both the countries.

The tax treaty between Kuwait and UAE attempts to take advantage of the growing investment opportunities, uplifting commercial trading and strengthening the development goals in both the regions by way of diversifying the sources of national income and offering complete protection for goods and services.

The double taxation treaty provides a more favourable tax treatment in substitution to each country’s domestic tax legislation in respect of many income taxes (corporate and personal) and withholding tax matters.

How will it impact you?

The tax treaty may reduce the taxation burden of UAE residents in Kuwait and vice versa. This is because the double taxation treaty will override domestic tax legislation. Multinational companies in both the regions will have to revisit their existing tax structures to assess the impact of DTT rules.

What will happen next?

Currently, the tax treaty is signed between Kuwait and UAE. It should be followed by the final ratification and finally be published in the official Gazette. From there, it will be put into force as per the official date declared.

How can IMC Group help?

Our tax expert team at IMC Group is keeping a close eye on the taxation matters in the UAE and Kuwait. We will keep you updated with the latest provisions of the tax treaty. For more information, get in touch with us!

NEWSLETTER, GLOBAL

A Special Thank You To Our 10,000 Followers On LinkedIn!

May 16, 2022

We are delighted to announce that IMC Group has reached an outstanding milestone – 10,000 followers on LinkedIn and we could not be more pleased. A huge thank you goes out to each one of you who follows us, likes our posts, and shares our content. We appreciate your constant support and enjoy engaging with you all. You are helping us grow and we are really grateful for this.

10,000 followers is an exceptional result that we have reached in a short span of time. It reflects our increasing brand awareness within the biggest professional network in the world. We endeavour to bring interesting, insightful and meaningful content that adds VALUE to you.

We sincerely appreciate and thank all of you for your continued support and encouragement. Your engagement with us inspires us to do better with every post that we share with you.

And lastly, if you aren’t already following IMC Group, join us today and be a part of our IMC family. Following us on LinkedIn will allow you to:

#Learn – Be the very first to find out about our latest innovative solutions. Get informed about our new technologies, special ventures and other insights.

#News and Updates – Keep up to date with our latest news, events, key industry insights and trends within the sector.

#Hiring – Learn about our new vacancies and get the opportunity to join our exclusive team.

We hope to count you soon as one of our followers on LinkedIn.

Newsletter

Cost-Effectiveness Drives Adoption of Outsourced Accounting Services Amongst SMEs Across the Globe

March 16, 2022

The recent outbreak of COVID-19 throughout the world has had a tremendous adverse impact on the economy and brought a massive shift in the way companies did business. SMEs and startups have been the hardest hit with insurmountable challenges of declining revenues, layoffs and salary cuts, and shifting workplaces with long-standing implications.

At this unprecedented time, outsourced cloud accounting services have come as a gift as companies strive to adapt to the new normal by lean operations, innovation and cost-cutting. The pandemic has played the role of a catalyst for the wide adoption of cloud-based accounting outsourcing due to cost savings, increased efficiency and remote working. The traditional business structure incorporating production, planning, advertising, marketing, sales, accounting, IT, HR, etc. have started becoming unviable for companies, especially for SMEs due to resource crunch and the dire need for value addition in business, and such companies are increasingly turning to outsourced finance and accounting solutions.

HOW MUCH DOES IN-HOUSE ACCOUNTING REALLY COST?

A team of a minimum of 3 employees is needed by an SME for its financial operations, each with varying roles. The size and business growth of the SME will decide if it needs to employ additional staff including the accounting manager, CFO.

Wages or salaries, plus the cost of benefits and overtime costs add up for computing employee costs. Besides, there can be other benefits that you may need to cash out from time to time. If there is a healthcare and pension plan, then the employee cost becomes higher still.

Apart from the employee cost, you need to take into account the cost of overheads as an in-house accounting department will need resources such as electricity, water, office space, supplies, computers, and other equipment. You will need to incur extra costs in hiring, training, and managing them as well.

For a company based in California City, USA the average yearly employee salary for an in-house accounting facility with 3 staff comes out to be,

Bookkeeper: $48,274

Staff Accountant: $61,715

Financial-Controller: $249,161

Therefore, a total of $359,150, median must be paid towards employee salary expenses.

Bureau of Labor Statistics data reveals that the average yearly cost of benefits per employee is $13k per year as of September 2021.

Most of us often forget to consider the intangible costs while choosing an in-house accounting department. However, every SME must critically analyze the time spent on handling accounting issues vis a vis the value that is generated. Employee turnover and time spent on hiring and training could be better used in increasing your overall productivity.

In addition to employee turnover; miscalculation and errors, fines and penalties due to changing compliance and regulation issues, overtime, embezzlement of funds are also some other hidden costs usually not taken into consideration.

Hiring ‘not so good and experienced’ accounting professionals can be a very bad idea and could be a real threat for any business. As inexperienced accountants are prone to making mistakes you may end up losing more as an opportunity cost.

WHY OUTSOURCED ACCOUNTING IS A COST-EFFECTIVE PROPOSITION?

The rates of accounting services providers vary depending on the business size, industry, and accounting & finance services needed. Professional and reputed finance and accounting services providers, on average, charge around $ 50K to $70K per annum for small and medium-sized businesses and provide huge cost benefits over in-house accounting.

As outsourced accounting services providers are seasoned professionals, they provide the most accurate and timely information to facilitate financial decision making. This helps in eliminating hidden costs associated with any accounting mistake. Secondly, the overhead costs are drastically reduced as there is no need for recruitment and in-house infrastructure. The outsourced accounting services cost is also scalable and gives you the cost advantage during any downturn in your business.

You are also relieved of frustrations from managing your businesses’ finances that keep you up at night and help you focus on more productive use of your time to achieve business growth.

HOW CLOUD ACCOUNTING CAN HELP SAVE MORE MONEY?

How does cloud accounting work is a frequently asked question and the answer is plain and simple. Cloud accounting is software and essentially works the same way as other cloud-based software. Files are stored online instead of hard drives and are always accessible. You can simply log into a service and perform accounting tasks on any computer from any corner of the world. As a business owner, you can take care of your business finances even from a smartphone anytime you desire or in case of emergencies.

If you ask why cloud accounting is good for business, the following points will throw light on its superiority as a system that can open up multiple avenues to realize higher cost benefits. Irrespective of being an SME or a global conglomerate, transitioning to cloud-based accounting software will increase the operating efficiency of your business with real-time visibility into financial performance.

Software is always up to date and you don’t need to spend money upgrading your software.
Minimum administration helps you save money as there is no need for backups and new software installations.
The automated platform gives you the advantage of posting transactions to the proper ledger, producing recurring invoices, automatic calculation of taxes and discounts etc. and saves time and money.
Ease of compliance helps you avoid overpaying taxes and avoiding fines.
Scalability and flexibility help you save money on IT infrastructure as your business expands against desktop-based systems.
High Accuracy helps match received invoices to payments and shipments, internal transactions to bank records and save you huge by flagging mistakes.
Customization pays as you can personalize your dashboards for making the most accurate financial information.

BEYOND COST SAVINGS, WHAT ARE THE OTHER BENEFITS OF OUTSOURCED ACCOUNTING?

Besides cost savings, outsourced accounting also provides other benefits as described below.

No burden of hiring and training of employees
Getting rid of complex yet repetitive tasks
No wasted work hours and no paying of unproductive employees
Improved data security with minimal risks of fraud
24/7 accessibility and availability
Possibilities of integrating other modules across the entire business, using the same database
Easier collaboration

GLOBAL FINANCE AND ACCOUNTING OUTSOURCING SERVICES MARKET TREND

Rising demand for transparency and increased regulations are forcing companies to put their finance and accounting in order by way of standardization and adoption of best practices in financial management. The global economic crisis is also compelling many companies to opt for cost-cutting and business remodeling by outsourcing non-core business functions. All these recent developments are driving finance and accounting business process outsourcing (F&A BPO) services across the globe. Moreover, as many F&A BPO are switching to advanced technologies including artificial intelligence, accounting tasks are speeded up and productivity improved.

Report Linker, a France based professional search engine and an excellent resource for research information, in its recent report, said that the global finance and accounting outsourcing services market will touch $ 53.4 billion by the year 2026 growing at a CAGR of 5.9%.

Newsletter, Singapore

Singapore Budget 2022 – IMC Group Highlights Key Changes

March 2, 2022

On Friday, 18 February 2022, Minister for Finance, Mr. Lawrence Wong announced the Budget Statement for the Financial Year 2022. In his speech, he stressed upon the importance of a fair and progressive tax rate in the country. The major tax changes and increased social spending in Budget 2022 also highlight that the Government is investing in strengthening Singapore’s social compact.

IMC Group has deeply analysed the budget 2022 and brings to you key changes that can impact the tax structure in Singapore.

One of the biggest announcements from the budget is the increase in GST rate which will happen in two stages.

Year	GST Rate
1 January 2023	7% to 8%.
1 January 2024	8% to 9%

Furthermore, a committee will be set up to ensure that businesses in Singapore do not try to profit from this increase by raising the prices of their products and services in the name of GST increase. The Ministry of Finance has also announced an additional top-up of $640 million to Singaporeans to cushion the impact of the GST increase making the Assurance Package to $6.6 billion.

The increase is complemented by the permanent enhancement of GST Voucher scheme in the following 3 ways:

Every adult Singaporean aged 21 and above will get cash payouts ranging from $700 to $1,600 over the next 5 years;
Eligible Singaporean households will get additional GST Voucher U-Save rebates ranging from $330 to $570 over the next 4 years to offset the cost of utilities;
Eligible lower-income seniors will get GST Voucher cash payout ranging from $600 to $900 over the next 3 years.
All Singaporean children aged 20 and below and seniors aged 55 and above will get a total of $450 in MediSave top-ups over the next 3 years
All Singaporean households will get another two rounds of Community Development Council (CDC) vouchers worth $400 over 2023 and 2024. These vouchers can be used at heartland stores as well as major supermarkets.

The above move will support retiree households to combat the impact of the total increase in GST that they have to pay. For lower-income households, without seniors in their family, these vouchers will offset about half their total GST expenses every year.

Over and above this, for vulnerable households who may need additional support, the Citizens’ Consultative Committees ComCare Fund will get a $5 million top-up over the period of five years, while the four self-help groups will get a total of $12 million over the period of four years. The personal income tax rate for individuals in the top marginal tax bracket in Singapore will increase from the year of assessment 2024. Those earning between $500,000 and $1 million will see an increase in personal income tax rate from 22% to 23%. While those earning in excess of $1 million will see an increase in personal income tax rate from 22% to 24%.

Note: Those earning between $320,000 and $500,000 will not see any change in their income tax rate in this budget. They will still be taxed at 22% without any change. For small and medium sized enterprises various support packages are announced to provide temporary relief for businesses and workers.

H4 Skills Future Enterprise Credit
This grant aims to support businesses to upskill their employees by waiving Skills Development Levy contribution requirements on them. As a part of the initiative, up to $10,000 credit can be used to offset up to 90% of expenses for transformation initiatives.
Productivity Solutions Grant
Around $40 million will also be set aside for businesses to apply for subsidised accounting and point of sale solutions to combat the impact of GST increase and raise productivity.
Small Business Recovery Grant
Small and medium sized enterprises in the eligible sectors will receive $1,000 per local employee they hire, up to $10,000 per firm.
Sole-proprietor, partnerships and stallholders including SFA-licensed hawkers, market and coffeeshop stallholders in eligible sectors that do not hire local employees will be given a $1,000 one-off grant.
Jobs Growth Incentive
The said grant will be extended to September 2022 to support the hiring of mature and vulnerable workers.
Advanced Digital Solutions
Starting from 1 April 2022, SMEs offering advanced digital solutions will receive up to 70% funding support for qualifying costs on digital solutions.
Grow Digital
Starting from 1 April 2022, SMEs will receive 70% co-funding to onboard cross-border digital platforms.

Another important tax rate hike was seen for those who own a non-owner-occupied residential property in Singapore which includes investment properties. At present they are taxed at 10% to 20% but following the budget, the property tax rate for such properties will be raised to

Year	Tax Rate
2023	11% to 27%
2024	12% to 36%

The excess amount to pay will depend on the annual value of the home. The said tax rate increase will apply to all non-owner-occupied property in all annual value tiers.

The property tax rate for owner-occupied homes with an annual value above $30,000 will also be raised. At present they are taxed at 4% to 16% but following the budget, the property tax rate for such properties will be raised to 6% to 32%. The tax rate change will only affect families who stay in a private property with an annual value above $30,000.

The hike in tax rate signals that the government is taking initiatives to resolve rising wealth inequality in a country. The move is set to increase the government’s property tax revenue by approximately S$380 million annually i.e. around 12% of the existing property tax collection of $3.1 billion. The government has announced an increase in carbon tax rate from the present

Year	Tax Rate
2024 and 2025	$5 per tonne to $25 per tonne
2026 and 2027	$45 per tonne
2030	$50 to $80 (Goal of reaching)

The current tax of $5 per tonne remains unchanged until 2023.

No additional carbon tax will be imposed on petrol and diesel.

Going forward from 2024, large emitters in Singapore will be able to buy international carbon credits to reduce the carbon tax they pay. The minimum qualifying salary for Employment Pass will be increased from $4,500 to $5,000. For the financial services sector, the minimum qualifying salary for Employment Pass will be increased from $5,000 to $5,500. The above-mentioned changes will be applicable from September 1, 2022, for new Employment Pass applications and September 1, 2023, for renewal applications.

Besides Employment Pass salaries, the salary thresholds for S Pass holders will also be raised. The minimum qualifying salary for foreign workers on S Pass will be increased from the current $2,500 to $3,000 for new applicants from September 1, 2022. For the financial services sector, a higher salary threshold of $3,500 will be in effect.

From January 1, 2024, the Dependency Ratio Ceiling (i.e., the proportion of foreign workers a firm can employ) will be reduced from 1.7 to 1.5.

The above write-up summarises the key changes in Budget 2022.

Newsletter, Saudi Arabia

ZATCA Allows Customs Duty Refunds as Saudi Arabia Clarifies GCC Origin of Goods

March 1, 2022

Saudi Arabia Clarifies GCC Origin of Goods
Allows Customs Duty Refunds for Goods Imported from GCC Nations
Launches eService Platform

Saudi Arabia issued Ministerial Decision No. 3852 dated 2nd July 2021 on local rules of origin stipulating national rules of origin for the eligibility of preferential duty treatment of imported goods when imported from the Gulf Cooperation Council (GCC) into Saudi Arabia based on the GCC Unified Economic Agreement.

Goods produced in any of the GCC countries are considered as national products and should receive duty exemptions on import, the Saudi Cabinet decided.

Following the Cabinet Decision, new guidance has been issued by the Zakat, Tax and Customs Authority (ZATCA) specifying conditions that must be fulfilled before submitting any request for customs duty refund enabling verification of the Rules of Origin (RoO) for goods imported from GCC countries.

The requirements and conditions for the request of customs duty refund on goods of GCC origin are as under:

The importer needs to make a provision for a bank or cash guarantee amounting to customs duties and other taxes subject to the preferential treatment
The bank guarantee must be from a bank subject to the supervision and control of the Saudi Central Bank (SAMA)

Request for refund of customs duties must be filed by the importer within 90 days from the date of clearance of the goods of GCC origin on the condition that the request includes the following requirements:

Certificate of Origin (CoO)
Copy of the customs declaration eg. from Bayan, under Saudi Central Bank supervision
National certificate issued by the competent authority in the country of GCC origin
Valuation certificate for goods from the country of origin
Proof of payment for the value of the goods
Bill of lading
International Bank Account Number (IBAN)
Copy of invoices
Copy of Bank Guarantee

Besides the above-mentioned requirements, the value-added percentage following national laws of the country of origin must be certified by a Public Accountant from the country of origin, with a licensed and certified branch operating in Saudi Arabia.

Furthermore, all documents must be verified by ZATCA and other appropriate Saudi authorities by conducting visits to the GCC manufacturing facilities. The process of verification may also be delegated to a competent third party.

In the event of any objections on customs duty refund, the same needs to be done per Common Custom Law of the GCC nations.

Before applying for a customs duty refund, the importers must ensure that they comply with all the rules of the soil including ZATCA rules and regulations. Penalties may be levied if goods declared to originate from the GCC do not meet the requirements specified.

ZATCA has launched an eService platform for Customs Duty Refund on their website permitting an importer in Saudi Arabia to file a request for Customs duties or insurance fee refund. To make a valid claim for the refund, all importers need to provide a completed customs declaration along with all relevant documents for becoming beneficiaries of this service.

The Process of filing an online claim for a refund involves the following steps.

Logging on to the ZATCA website
Filling in the refund request information
Approving the acknowledgement, undertaking and application submission
Receiving notification by text message
Approval or Rejection of application

The customs declaration must be on or after the 3rd of July, 2021 and goods of GCC origin must be contained in the declaration. The refund shall be made in Saudi Riyal, SAR.

Newsletter, U.A.E

UAE Tax Registrants to Benefit from a 70% Discount on Tax Penalties as the Relief Period Extends

March 1, 2022

New Cabinet Decision Issued On 30.12.2021
One Year Extension of Grace Period Granted
Taxpayers to Benefit from 70% Discount on Penalties

Following a new Cabinet Decision No 108/2021, article 3 dated 30.12.2001, on Administrative Penalties for Violation of Tax Laws; the UAE Federal Tax Authority (FTA) has clarified to the taxpayers to benefit from the extended one year grace period for re-determination of administrative penalties on violation of tax laws until 31.12.2022. The earlier deadline as per Cabinet Decision No 49/2021 was 28.06.2021 and this new decision would make the amount of the total unpaid penalties outstanding until 28th June 2021 equal to 30% of such unsettled penalties, subject to fulfilling the conditions set by the Cabinet Decision.

In effect, the new Cabinet Decision should be seen as a replacement of the third Article of Cabinet Decision No. 49/2021 to provide an extended grace period for registrants to settle the outstanding payable taxes along with the 30% of administrative penalties up until 31 December 2022 and a 70% discount on tax penalties.

The Cabinet Decision effective from January 1st 2022, should be seen as an opportunity for businesses to benefit from the reduction of the administrative penalties, highlighted the FTA. The Cabinet Decision would reduce the burdens on business sectors and help improve their contribution to the growth of the economy of the country besides enhancing tax compliance.

Unsettled administrative penalties, not imposed before the effective date, will be reduced to 30% of the total unpaid penalties subject to meeting the below-mentioned conditions.

The unsettled penalty was imposed based on the old Cabinet Decision No. 40 of 2017
The unsettled penalty was imposed, in full, before the effective date of 28th June 2021, and
The tax registrant has met all of the following conditions

Paid the total amounts of the payable tax by 31 December 2021 with no payable tax due to the FTA. The tax authority must have received the amounts by 31 December 2021 irrespective of the tax amount being payable before or after 28 June 2021, and
Paid 30% of the unsettled administrative penalties before 28th June 2021 and no later than 31st December 2021

As per the new Cabinet Decision, FTA is responsible for determining the procedures for implementing the provisions for the re-determination of administrative penalties. FTA confirmed that administrative penalties imposed on the tax registrant will be redetermined within a maximum of 30 business days from the dates specified in the Cabinet Decision.

The review of records of some tax registrants is still underway to identify if there are eligible beneficiaries from the re-determination of administrative penalties scheme, FTA noted. The tax registrants who received notifications from FTA to provide supporting data must submit the required information urgently.

Tax Procedure Public Clarification, TAXP004 has been issued on 26 January 2022 by the FTA on redetermination of administrative penalties levied before the effective date of the Cabinet Decision No. 49 of 2021. With this new clarification, the earlier Public Clarification, TAXP002 stands replaced.

According to the new Public Clarification, FTA will again determine at the end of 2022, if the unsettled part of the administrative penalties which is 70% of the total amount of penalties originally levied, shall no longer need to be paid. The e-Services accounts of the tax registrants will be linked to this redetermination process by the FTA for accessing information.

Newsletter, U.A.E

Oman’s Budget 2022 Highlights Strong Economic Growth Optimism

February 22, 2022

Overview:
The entire global economy went haywire since the outbreak of the Covid 19 pandemic and Oman is no exception. Besides, a steep drop in revenues due to lower oil prices also posed serious fiscal challenges to the Omani government and adversely impacted the national economy. Natural calamities like tropical cyclone Shaheen causing widespread flooding in the country’s northern coast also added to the country’s economic woes.

Regardless, Oman has been on track to realize the country’s 10th Five-year Development Plan (“10th FDP) for deficit reduction objectives and achieve a surplus budget by 2025 as the government implemented a series of economic reforms in policies and measures during 2021. The introduction of VAT is the most notable that would help supply the state exchequer to address fiscal deficit issues, diversify the non-oil economy and enhance the nation’s competitiveness and sovereign rating.

“The policies and measures implemented by the Sultanate of Oman recently have begun to show results,” highlighted Dr Saeed bin Saqri, the Minister of Economy. The government has made huge changes to the business, legal, and tax frameworks in the country for continued economic development through fiscal sustainability & economic diversification.

As per the report of the Ministry of Economy, the country is optimistic about an accelerating economy during 2022 and expects to register 5.8% overall growth. The steadily recovering investment climate in the country also suggests continued economic growth during the years of the 10th FDP.

The Fitch ratings, a global leading provider of credit ratings, commentary and research, recently revised Oman’s economic outlook from negative to stable on the back of the government’s commendable progress with implementation of its medium-term fiscal plan (MTFP) for balanced and surplus budgets and lower debt to GDP ratios leading towards reduced risks of defaults.

Standards and Poor (S&P) also forecasted the country’s economic growth to accelerate during 2022 on the back of higher global oil prices, increased oil and gas production and a growing non-oil economy. It also revised Oman’s economic outlook from stable to positive.

“We expect Oman’s real GDP to grow by 1.7 per cent this year and then accelerate to 3.1 per cent on average in 2022-2023 as oil and gas production ramps up after OPEC production limits are eased,” S&P highlighted in a research update released during last October. The growth in the non-oil economy would be mainly driven by the logistics, fisheries, agriculture, tourism and manufacturing sectors.

As the country witnessed economic normalization due to the lifting and easing of Covid-19 related restrictive protocols and boosting up of vaccination drive with almost 84% population double vaccinated, the non-oil revenue during January to October 2021 grew almost 40% Year on Year (YOY) primarily led by the introduction of VAT in April.

Budget 2022
Oman’s 2022 State Budget (RD 1/2022) was approved by His Majesty Sultan Haitham bin Tarik on 1st January 2022 through a Royal Decree and was officially published on 2 January in the State Gazette. The nation’s General Budget was documented based on Oman Vision 2040 and the 10th FDP and in close alignment with the objectives of medium and long-term plans and objectives of fiscal policy measures. The budget deficit projected was the minimum in the last 11 years, OMR 1.5 billion and down 32% YOY.

The revenue growth sharply outpaced the growth in state spending and the government mostly maintained spending on basic services like health, education and social welfare. Any additional revenue accrued from higher oil prices than that very conservatively assumed will be used to lower fiscal deficit and loan repayment, as per the budget highlights.

The Ministry of Finance (MOF) emphasized in its budget report saying, “The State’s General Budget for the financial year 2022 is consistent with the objectives of the Tenth Five Year Development Plan.” It also said, “The 2022 budget aims to achieve a set of economic and social development objectives.”

The budget outlined the economic and social guidance for 2022 and was centred on nine measures including sustainable levels of public spending; improving non-oil revenue contributions; prioritising projects involving the productive sectors; distributing government subsidies to low-income households for demand generation; maintaining spending on basic services; enhancing digital transformation; continuing improved sovereign credit ratings to boost up investor confidence; support training programmes and those linked to job schemes, while boosting job creation; and extending all necessary support for small and medium enterprises for doing business in Oman.

Oman 2022 budget projected total revenue OMR 10.6 billion while the projected expenditure was OMR 12.1 billion with a projected deficit of OMR 1.5 billion. The 32% lower fiscal deficit is primarily due to higher oil and gas receipts.

The MOF said that a cautious approach was taken and the budget was estimated based on an oil price of USD 50 per barrel. The government has considered the ongoing uncertainty of the global oil prices because of the new Covid-19 variants such as Omicron.

International institutions including the International Energy Agency (IEA), the International Monetary Fund (IMF) and credit rating agencies (Fitch, Moody’s, Standard & Poor’s, and other global agencies) however forecasted the average oil price to be hovering between USD 53 and USD 84. The budget estimated an increase in revenue by 23% to OMR 10.6 billion against OMR 8.6 billion in 2021.

The Takeaway
In all likelihood, Oman is set to witness higher economic growth this year in the light of a better and stronger performance of its hydrocarbon sector with improved natural gas production and higher crude oil output. Besides, the continued structural reforms by the government are expected to bolster foreign direct investment through new company formation in Oman.

The second half of FY 2021 witnessed higher growth momentum as increased revenue contributions came in from the non-oil sector due to the easing of Covid-19-related restrictions and VAT and excise tax implementation. The economic stimulus package announced during late November also supported the economic turnaround on the back of improved domestic demand. As revenue generation increased sequentially supporting government coffers, the estimated fiscal deficit narrowed sharply by more than 70% by the end of 2021 as against 2020.

Last but not least, the Omani government’s recent announcements of several projects towards fueling the digital transformation drive, improving fiscal performance management and enhancing SMEs and startups in the private sector will aid in achieving all-around economic prosperity.

Newsletter, U.A.E

RAKEZ Unveils Dual Licensing Structure to Woo Investors

February 8, 2022

In an attempt to uphold its position as one of the most business-friendly and innovative UAE free zones, Ras Al Khaimah free zone (RAKEZ) has rolled out Dual Licensing in January 2022 after introducing a women entrepreneurship package and gaming license programme. The newly announced licensing structure is strategically designed to attract more foreign investment in the country through new company formation in Dubai UAE.

The Group CEO of RAKEZ, Ramy Jallad noted, “We are always keen to provide our clients with the best solutions. We launched the Dual Licence structure for this very reason – to offer them the best of both free zone and mainland benefits, all without the need to incorporate a separate company. This package opens up a new market for their business, and substantially expands their accessibility and reach; all whilst reducing the red-tape requirements of the past.”

Dr Abdulrahman Alshayeb Alnaqbi, Director General of RAK DED, remarked, “We are pleased to collaborate with RAKEZ on yet another great initiative for the benefit of global investors who chose Ras Al Khaimah to base their operations. We will continue to work together to further elevate Ras Al Khaimah’s investment landscape and make it even more welcoming and dynamic than it is today.”

Dual License, launched in collaboration with Ras Al Khaimah Department of Economic Development (RAK DED) will allow investors to operate in both mainland and free zones from one office without requiring an additional mainland facility. This is a cost-effective business solution and will grant investors 100% foreign ownership including bidding rights for government contracts.

RAK DED is the authorized entity responsible for issuing licenses for Ras Al Khaimah mainland companies. It will issue a trade license to the free zone companies that wish to extend their activities in the mainland and make products and services offerings. A company holding a Dual license will be recognized as a ‘Branch of a free zone company’ with a legal identity as its parent company. The scope of business activities of the mainland branch should be similar to that of its parent entity in the free zone.

UAE mandates all mainland companies to have a physical office for opening bank accounts. A trade license is only issued on submitting the lease agreement to the respective DEDs of each emirate and after banks verify the physical office address for approving bank account opening. A free zone company in RAKEZ holding a Dual license can however start a mainland branch without any physical office space in the mainland and can carry out business activities on the mainland from its office in the free zone.

The Dual license has come as a ‘new year present’ offering considerable benefits to the investors. Once a RAKEZ Dual License is obtained, free zone companies can have wider access to the mainland customers to distribute products and offer services. As per rule, free zone companies are only allowed to conduct business activities within the free zone premises.

The dual license helps companies to avoid additional cost burdens on mainland office rentals and maintenance and provides complete access to the mainland without paying any such fixed costs and overheads. Daily operational costs are also avoided as there is no need for separate administrative and accounting setups.

RAKEZ Dual License however puts some restrictions on the business activities and only allows activities permitted by RAKEZ and RAK DED. Activities falling outside its domain and requiring ministerial approval are not allowed.

With the introduction of the Dual Licensing, the entire landscape of business setup in Dubai free zone and UAE has been completely transformed offering tremendous cost benefits to foreign investors. However, before opting for this license entrepreneurs and investors must carefully consider the restricted activities and seek the advice of corporate service providers based in Dubai UAE.

GCC, Newsletter

Economic Recovery in GCC will Gather Momentum During 2022: Economists Suggest

February 8, 2022

Economists believe that the GCC economies are all set to achieve higher and stronger economic growth in 2022 on the back of higher oil prices and the expansion of their non-oil sector. These two factors will primarily inject increased growth momentum in their economies through higher public financing and improved demand and employment generation.

Fiscal policy changes are playing a pivotal role in faster economic recovery in some countries through fiscal balancing and increased public financing and investments. VAT has been introduced in Saudi Arabia, Oman and Bahrain.

As per IMF forecast, the GCC as a whole will come back to a fiscal balance in 2023, for the first time since 2014. Oman has already reported the lowest budget deficit this year as a result of significant reforms besides higher oil prices.

Most of the sectors besides tourism, hospitality and transportation registered stronger recovery and were seen largely back to pre-covid level and in most of the countries. Saudi Arabia’s non-oil GDP also succeeded in exceeding its pre-pandemic level during last year. The financial services sector boomed across the region due to higher and easy liquidity and reduced risks of defaults due to government intervention.

Many GCC countries have been at the forefront to take rapid and timely mitigation measures against the covid 19 pandemic and UAE, Bahrain and Qatar are among the highest globally in rolling out of vaccines. Stringent government policies on mobility restrictions also supported the GCC nations in their fight against the virus to protect the economy.

Inflation is often a barrier to stronger economic growth prospects and though a major concern globally, does not appear to be too much of a concern for the GCC nations during 2022.

The UAE, Saudi Arabia and other countries in the GCC have also provided economic support through various initiatives and stimulus packages besides implementing strategic structural reforms and reducing budget deficits.

Emirates NBD, one of the leading banks in Dubai and UAE in its report said, “We expect this approach to continue in 2022. Saudi Arabia, the region’s largest economy, has pencilled in a 6 per cent decline in spending in the 2022 budget even as revenue projections were increased.”

“With Brent oil forecast to average just under $70 per barrel in 2022 and GCC oil production expected to rise, we expect Saudi Arabia, the UAE and Qatar to post budget surpluses this year, while Oman and Bahrain are likely to see their budget deficits narrow further,”

As per the Chief Economist of Emirates NBD, the Gulf economies are projected to grow 5.1% on average this year after recovering to 2.3% in 2021 from a 4.9% contraction during the previous year when the pandemic started.

“The recovery in the GCC economies gained momentum in the second half of 2021 as travel restrictions eased, tourism rebounded and domestic demand strengthened,” the report from Emirates NBD highlighted.

Business Admin & Finance

Organizational Support

Ongoing Support

Accounts

Financial Insights

Tax Solutions

Corporate Complaince

Outsourcing

Blog

How will it benefit both the countries?

How will it impact you?

What will happen next?

How can IMC Group help?

Year

GST Rate

Year

Tax Rate

Year

Tax Rate

Recent Posts

Get updated by Signupto our Newsletter!

Get Started

About

Locations

Get updated by Signup
to our Newsletter!