Weekly Spotlight Archives - Page 16 of 19

Weekly Spotlight: Saudi Arabia to address loopholes to ensure employees are not dismissed unfairly because of Article 77

14/01/201811/12/2019
by Benjamin Filaferro

This week the spotlight is on employment and banking and finance developments in Saudi Arabia, where Saudi Arabia’s Shoura Council has asked the Labour and Social Development Ministry to review Article 77 of the Implementing Regulations to the Labour Law. The aim is to address loopholes to ensure employees are not dismissed unfairly because of Article 77 of the law. The Council also asked the Ministry to review the Saudi Employment Strategy to increase the number of jobs allocated to women and increase their employment chances.

On the other hand, Saudi Arabia’s stock exchange, Tadawul has announced further reforms designed to increase its appeal to investors. The aim is aid the Kingdom’s modernisation, improve market efficiency, boost investor security and access, and market liquidity in the Kingdom. Amongst other changes, the Independent Custody Model is updated to help ease Qualified Foreign Investor market access by providing increased trading limit flexibility for these clients. New procedures will also be introduced to mitigate credit risk associated with the settlement process for all participants. These changes come into force on 21 January 2018. There are also proposed changes to the methods for determining opening and closing prices.

Weekly Spotlight: Latest VAT developments in the GCC

07/01/201811/12/2019
by Benjamin Filaferro

This week the spotlight is on VAT developments in the GCC. Whilst Saudi Arabia and the UAE’s VAT regimes have come into force and the first knock-on effects have been felt and additional clarifications and exemptions have been issued in both jurisdictions there have been interesting developments elsewhere in the GCC region.

In Bahrain, the First Deputy Chairman of the Kingdom’s Parliament, Ali Alarady has said VAT will be introduced at 5%. However it will not be introduced before June 2018. The draft VAT law will be considered by Parliament once it is referred by the Finance Ministry to discuss the amount, the way to impose it and exempted services and goods. It comes as the Kingdom has started implementing the selective tax on a number of products including fizzy drinks, energy drinks and tobacco.

Meanwhile in Oman, according to local newspaper reports, the authorities have announced VAT will not be introduced in the Sultanate until 2019. It is understood they want to give businesses in the country more time to prepare. However the authorities added selective tax on some goods will be introduced later in the year. The affected goods are fizzy drinks, cigarettes and energy drinks.

Weekly Spotlight: UAE has changed the payment terms of substitute teachers in public schools

24/12/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on education, employment, and immigration developments in the United Arab Emirates, where Ministerial Decision No. 46/2017 has been issued changing the payment terms of substitute teachers in public schools. Nominees with the required specialisations and qualifications will be selected to be a part of a substitute teacher incentives system. Highest priority for this programme will be given to Emirati nominees, followed by children of Emirati women, and then Gulf citizens. The decision has also stated substitute teachers at nurseries will be paid 500 AED per day (for a maximum of five days per week). Substitute teachers will also be paid 100 AED per school periods taught, up to a maximum of 30 periods per week. However, rates will be different for those teaching certain subjects The decision states that the Ministry of Education must include mechanisms for establishing a database of substitute teachers, from which the minister has the right to add, remove or update subjects in this resolution’s third article, in addition to the value of fees paid for specific school activities and subjects. The decision states substitute teachers will be called on to cover for an absent regular teacher, and that human resources procedures set by the Federal Authority for Human Resources must be followed when choosing these teachers.

Elsewhere, a fake story doing the rounds on social media that visas for Pakistani nationals had been suspended has been officially denied by the UAE General Directorate of Residency and Foreigners Affairs. The story was even picked up by TV channels who quoted officials from the Travel Agents Association of Pakistan, who said the visa service has been suspended until further notice, although those who already had a visa would still be able to travel. It was claimed the suspension was temporary and would possibly be changed in the new year.

Weekly Spotlight: the Bahrain FinTech Bay has been launched

17/12/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on regulatory developments in Bahrain where the Kingdom’s Central Bank has announced it has launched the Bahrain FinTech Bay. The Bank and the Bank’s FinTech & Innovation Unit will work with Bahrain FinTech Bay to support and develop the Kingdom’s FinTech framework and encourage more companies to invest in FinTech. It will be the first dedicated FinTech hub and corporate incubator in the Middle East & Africa region. It will be based at the Arcapita building overlooking Bahrain Bay and have 10,000 square feet of facilities. It will be operated by FinTech Consortium who are a global FinTech ecosystem builder and operator.

The Bank has also issued directives for offshore and locally domiciled Exchange-Traded Funds (ETFs). Exchange-Traded Funds are effectively funds which are traded like stocks on a stock exchange and mainly track index, a commodity, bonds or a basket of securities and therefore divide ownership of those assets into shares. These shares can be bought or sold throughout the day on an exchange at a market-determined price. They generally provide price transparency, higher liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. By owning this type of fund, investors get the diversification of an index fund as well as the ability to easily trade the shares on the licensed exchange. They will expand the categories of locally domiciled mutual funds to include Exchange-Traded Funds as another type of Collective Investment Undertaking which may establish in the Kingdom and be listed by banks and other financial institutions on licensed exchanges. The registration of listed offshore Exchange-Traded Funds will also be allowed. Conventional and Sharia-compliant Exchange-Traded Funds are also recognised.

Weekly Spotlight: KSA long-term supply contracts which meet certain conditions will be treated as zero-rated for VAT

10/12/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on VAT developments in Saudi Arabia, where the Kingdom’s General Authority of Zakat and Tax has announced long-term supply contracts which meet certain conditions will be treated as zero-rated for VAT purposes. The aim is to provide companies with a grace period to renegotiate contracts which did not anticipate the introduction of VAT in the Kingdom on 1 January 2018. The grace period applies only to contracts which did not anticipate VAT in advance and not to contracts which include a term on VAT or a mechanism to amend prices to account for the tax. To benefit from the grace period, a contract needs to have been signed before 30 May 2017 and a customer has to be fully entitled to deduct input tax in respect of the supply of goods or services. A customer should also provide a written certification to the supplier that input tax will be deducted or refunded in full. The Authority added the first year of VAT implementation will be considered to be a transitional phase which is why it has announced this grace period. All supply contracts continuing after 31 December 2018 will be subject to VAT at the rate set by the Implementing Regulations.

The Authority has also issued more VAT guidance ahead of its introduction in the Kingdom on 1 January 2018. The Authority has clarified the invoicing obligations in this latest guidance. The Authority confirmed two types of invoices are outlined in the Implementing Regulations to the VAT Law. The first is a simplified tax invoice for the supply of goods or services which total less than 1,000 Riyals. In these types of transactions the invoice must include the issue date, the name and address and VAT identification number of the supplier. It must also contain details of the goods or services supplied, the consideration to be received for the goods or services and a clear statement of the tax payable or indication of the total payment (consideration) includes the tax in respect of the supply of goods or services. A simplified tax invoice may not be issued for an internal supply or exports. The second is for transactions exceeding 1,000 Riyals, which require a more detailed invoice under Article 53 of the Implementing Regulations. This invoice, which must be in Arabic as well as any other language, must include the date of issue of the invoice, the serial number identifying and distinguishing the tax invoice, the supplier’s VAT identification number and the customer’s VAT identification number (if the customer is responsible for the calculation of the import tax and a statement thereof). It must also include the date the supply was signed, the name and address of the supplier and the customer, the amount and nature of the goods supplied and the scope and nature of the services provided. Finally it must contain the amounts subject to tax or specifically exempt, the unit price excluding tax and any discounts or rebates if not included in the unit price, as well as the applicable VAT rate and amount due in Saudi Riyals.

Weekly Spotlight: Cabinet has approved the Implementing Regulations to the Federal VAT Law

03/12/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on VAT developments in the UAE, where the country’s Cabinet has approved the Implementing Regulations to the Federal VAT Law, Federal Decree-Law No. 8/2017. Cabinet Decision No. 52/2017 is yet to be Gazetted but its priority translation has been requested from our Publishing Partners, SADER Legal Publishing.

In a separate but related development, the Director General of the UAE’s Federal Tax Authority, Khaled Al Bustani has said the introduction of VAT in the country will not be delayed, despite calls from prominent organisations like the UAE Banks Federation for it to be to allow them more time to prepare. VAT will be introduced in the UAE on 1 January 2018. Al Bustani added the Authority is seeing a surge in registrations as the registration deadline looms.

Weekly Spotlight: New laws will be issued to stop the unauthorised sale of antibiotics

25/11/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on health and insurance developments in the United Arab Emirates, where the Ministry of Health and Prevention is promising new laws will be issued to stop the unauthorised sale of antibiotics, amidst growing fears that their overuse worldwide could create drug-resistant bacteria. As well as creating a new law, the ministry has stated it will work with local health authorities to more closely supervise and inspect pharmacies across the UAE. There is a particular concern about the estimated 2,400 private pharmacies which operate outside hospital networks, where unauthorised dispensing of prescription drugs is most prevalent. The ministry will also seek to make doctors more aware of the need to prescribe antibiotics only when they needed, and to make sure they give accurate doses and the correct strength.

Elsewhere, the Insurance Authority is preparing a new legal framework to regulate reinsurance activities. Experts in the field have stressed on the importance of intervention by the Authority as a means of setting the necessary standards for the sector. It has been said been said by some that there has been a lack of commitment from some companies to risk management and on the calculation of their percentages.

Weekly Spotlight: ADGM announced that businesses registered with them will also be licenced to operate onshore in Abu Dhabi

19/11/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on legal and regulatory developments in the Abu Dhabi Global Market, where they have announced businesses who register to operate with them will also be licenced to operate onshore in Abu Dhabi. It follows an agreement between the Global Market and Abu Dhabi’s Economic Development Department. Under the agreement, entities established in the Global Market will be able to hold dual licences providing they satisfy and fulfil the requirements of each jurisdiction and operate according to their rules and regulations. Entities with dual licences will not have to be physically present in Abu Dhabi. However financial service firms will still be subject to the relevant regulatory obligations and applicable laws, including any licencing requirements which may be imposed by any Federal financial service regulators.

Elsewhere, the Market’s Financial Services Regulatory Authority has launched a consultation on its proposed Remote Membership Framework plus other miscellaneous amendments aimed at boosting its capital market regime. The consultation ends on 2 January 2018. If approved, brokers from outside the Global Market would be able to access the Market’s exchanges and clearing houses. This would expand international investor participation in the Market, facilitates cross-border flows and increase liquidity for the Market’s capital market.

Weekly Spotlight: Bahrain stipulates the requirements for lawyers regarding anti-money laundering and terrorist financing

12/11/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on legal and regulatory developments in Bahrain, where the Kingdom’s Justice, Islamic Affairs and Endowments Minister, Shaikh Khalid bin Ali Al-Khalifa has issued an Edict stipulating the requirements for lawyers and foreign legal firms regarding anti-money laundering and terrorist financing. The Edict has been issued in line with the Middle East and North Africa Financial Action Task Force (MENAFATF) criteria on anti-money laundering and terrorist financing as well as UN conventions, agreements and UN Security Council Resolutions.

Under Bahrain Edict No. 64/2017, lawyers’ offices, foreign legal offices and firms have to comply with Bahrain Law No. 4/2001 regarding the prohibition and combating of money laundering and terrorist financing to ensure their operations are not used for money laundering or terrorist financing. It makes it mandatory to notify the follow-up and monitoring unit at the Interior Ministry’s Financial Investigation Directorate about any suspicious or abnormal activities, when conducting transactions on behalf of their customers. This includes real estate transactions, fund and asset management and all types of banking. Lawyers’ offices, foreign legal offices and firms have to verify the information provided by their customers as well as clients who demand legal opinions regarding the powers of attorney and write down details in special records accredited by the Justice, Islamic Affairs and Endowments Ministry and inform the follow-up unit about any suspicious information.

The Edict defines ‘suspicious’ and ‘abnormal activities’ as ‘operations which are suspected to be linked, directly or indirectly, to the crimes involving money-laundering and terror funding’. Licensed lawyers and foreign firms have to open accounts for professional purposes in a bank accredited by the Central Bank and all payments or funds collected from or on behalf of customers have to be deposited in the bank. Lawyers and foreign firms also have to set up special e-records to register all lawyers’ activities and legal opinions provided to customers. These records have to include the customer’s name and data, the subject of the power of attorney or legal opinion, date of the service provided to customers, the amount of money paid to the firm, the financial transaction serial number, name of the bank and date of the transfer.

Elsewhere, the Chairman of the Kingdom’s Economic and Financial Affairs Committee, Jalal Kathem has announced tobacco and fizzy and energy drinks have been listed on the VAT list. These commodities will be subject to 5% VAT because they are not considered basic commodities. This will see the cost of tobacco packets increase by roughly 60% while energy drinks will increase by 100%.

Weekly Sportlight: Dafza has announced it is going to launch the region’s first e-commerce free zone

05/11/201711/12/2019
by Benjamin Filaferro

This week the spotlight is on legal and regulatory developments in Dubai, where the Chairman of Dubai’s Airport Freezone Authority (Dafza) has announced it is going to launch the region’s first e-commerce free zone. Dubai CommerCity will be a 2.7-billion AED, 2.1-million square feet joint venture between Dafza and Wasl Asset Management Group. It will be located in the Umm Ramool area and will be strategically placed to be near Dubai’s International Airport. This will provide direct access to e-commerce stakeholders in the MENA region and South Asia. The free zone project will be implemented in two phases. 50% of the project will be completed in both phases. The aim is to accelerate the growth of the e-commerce market in the region, which is expected to reach $20 billion in 2020 in the GCC countries. Over the next five years, e-commerce sector is expected to account for 10% of Dubai’s retail sales. These sales are expected to reach 200 billion AED by the end of this year.

Elsewhere the UAE’s Vice President, Prime Minister and Dubai Ruler has issued a Law regulating inheritance, wills and probate for non-Muslims. It comes into force on its issued date and will be published in the Official Gazette. Dubai Law No. 15/2017 will apply to the wills and assets of non-Muslims based in the Emirate including the DIFC. It creates a clear legal framework for non-Muslims to create wills in line with their wishes. It also outlines clear legal procedures to encourage residents to register their wills and manage their assets in Dubai. It will establish a Non-Muslim Wills and Probate Registry in both the DIFC and Dubai Courts. The heads of these Courts will develop its regulations, policies and procedures. It will specify the legal requirements for wills and probate for non-Muslims as well as the liabilities and obligations of the beneficiaries of wills. In addition it will specify the responsibilities and limitations of will executors as well the regulations governing inheritance and the distribution and management of the estate as well as appeal procedures. Disputes will be adjudicated by the Dubai Courts or DIFC Courts, depending on where the wills are registered. Any non-Muslim will registered at the DIFC or Dubai Courts before this Law will remain valid.