LexisNexis Middle East

ADGM: FSRA Proposes Amendments To Its Digital Asset Regulatory Framework

13/12/202413/12/2024
by Hannah Gutang

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has released Consultation Paper No. 11/2024, outlining proposed changes to its regulatory framework for Authorised Persons engaging in Regulated Activities involving Virtual Assets within ADGM.

The paper aims to gather feedback on these potential modifications.

Key proposed amendments include updates to the acceptance process for Virtual Assets in ADGM, as well as adjustments to capital requirements and associated fees.

The consultation also invites input on various topics, such as staking and other emerging business models related to Virtual Assets.

Additionally, the FSRA seeks opinions on the criteria for accepting non-ADGM issued Fiat-Referenced Tokens within ADGM.

The paper further suggests broadening the range of investments permissible for Venture Capital Funds.

Stakeholders are encouraged to review the consultation materials and submit their feedback by the deadline of 31 January 2025.

The materials are accessible via the provided link.

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News developments

UAE: Announces 15% Domestic Minimum Top-Up Tax for Multinationals in 2025

10/12/202410/12/2024
by Hannah Gutang

Khaleej Times, 9 December 2024: The UAE is set to implement a new tax on multinational companies operating in the Emirates.

Large multinational enterprises (MNEs) must pay a minimum effective tax rate of 15% on their profits.

The Finance Ministry has announced that Domestic Minimum Top-up Tax (DMTT) will be effective for financial years starting on or after 1 January 2025 to establish a fair and transparent tax system aligned with global standards.

The Ministry has added that the DMTT will apply to multinational enterprises operating in the UAE with consolidated global revenues of €750 million (Approx Dh300 billion) or more in at least two out of the four financial years immediately preceding the financial year in which the DMTT applies.

Further details on this legislation will be issued by the Finance Ministry in due course.

The UAE continues to improve its business-friendly environment, reflecting its commitment to national strategic objectives such as strengthening economic competitiveness and improving ease of doing business.

This major update is in line with the country’s commitment to implement the Organisation for

Economic Co-operation and Development’s (OECD) Two-Pillar Solution.

To promote sustainable growth, innovation, and investment, the Finance Ministry is considering the
introduction of the following Corporate Tax Incentives under Federal Decree-Law No. 47/2022.

A research and development (R&D) tax incentive is being considered to encourage research and development (R&D) activities and foster innovation and economic growth within the UAE.

Based on feedback received during public consultations conducted in April 2024, the proposed incentive is expected to take effect for tax periods starting on or after 1 January 2026.

The R&D tax incentive will be expenditure-based, offering a potential 30-50% tax credit and will be refundable depending on the revenue and number of employees of the business in the UAE.

The scope of Qualifying R&D activities will be aligned with the OECD’s Frascati Manual guidelines and must be conducted within the UAE.

Another incentive being considered is a refundable tax credit for high-value employment activities.

This aims to encourage businesses to engage in activities that deliver significant economic benefits, stimulate innovation, and enhance the UAE’s global competitiveness.

This incentive is proposed to take effect on 2 January 2025 and will be granted as a percentage of eligible salary costs for employees engaged in high-value employment activities.

This includes C-suite executives and other senior personnel performing core business functions that add substantial value to the UAE economy.

The final form and implementation of the proposed incentives are subject to legislative approvals.

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News developments

Lexis Middle East Gulf Tax – Winter 2024 Edition

09/12/202409/12/2024
by Hannah Gutang

The latest edition of Lexis Middle East Gulf Tax magazine provides a comprehensive overview of the evolving tax landscape in the GCC region. The magazine delves into the OECD’s Pillar Two or Global Anti Base Erosion Rules, highlighting the challenges multinational enterprises face due to varying approaches by different jurisdictions, particularly in the GCC. Bahrain stands out as the first GCC country to enact a Domestic Minimum Top-Up Tax, with implementation set for January 2025.

The issue also explores the implications of recent changes in VAT treatment for Investment Fund Management Services and provides a round-up of key tax treaty developments and regulatory changes in the region.

Additionally, it discusses potential tax reforms in Oman and Kuwait, and features insights from tax professionals on the rapid pace of legislative changes in the GCC. The magazine concludes with an examination of new details on disputing tax assessments and penalties in the UAE.

FEATURE: PILLAR TWO: WHAT NOW?

Bahrain is the pioneering GCC country to introduce a Domestic Minimum Top-Up Tax. Shashank Chandak of KPMG analyses the current positions of Bahrain and other GCC nations on Pillar Two.

FEATURE: INVESTMENT APPROACHES

With recent changes to the VAT treatment of Investment Fund Management Services, Markus Susilo of Crowe analyses the general differences in tax treatment for Investment Management Services and investment funds.

TAX NEWS ROUND-UP

This round-up highlights the latest significant changes in tax agreements and regulatory updates throughout the region, offering readers a thorough understanding of the current developments.

PRACTICAL FOCUS: TAX REFORM IN OMAN AND KUWAIT

Rami Alhadhrami, a Tax Partner at BDO Kuwait, and Asrujit Mandal, a Tax Advisor in Oman, discuss the potential tax system reforms in Oman and Kuwait, focusing on changes to income and profit taxation.

TAX PROFESSIONAL PROFILE

According to Asrujit Mandal, Tax Partner at BDO LLC for Oman and Bahrain, the rapid pace of change in tax legislation poses the greatest challenge for businesses in the GCC.

ANY QUESTIONS?

Tina Hsieh of Baker McKenzie delves into the recent updates from the FTA concerning the procedures for challenging tax assessments and administrative penalties in the UAE.

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Lexis Middle East Gulf Tax_Winter 2024

Have you read the Lexis® Middle East Gulf Tax – Past editions? Click the links below to access them.

Lexis Middle East Gulf Tax | Autumn 2024

Lexis Middle East Gulf Tax | Summer 2024

Lexis Middle East Gulf Tax | Winter 2023

Lexis Middle East Gulf Tax | Autumn 2023

Lexis Middle East Gulf Tax | Spring 2023

News developments

Kuwait: Moves Toward Strengthening Digital Commerce with New Law

06/12/202406/12/2024
by Hannah Gutang

Arab Times, 4 December 2024: The Ministry of Commerce and Industry is set to unveil a draft Digital Commerce Law aimed at creating a robust regulatory framework for the digital commerce sector in Kuwait.

This initiative marks a pivotal move towards regulating digital commerce, striking a balance between facilitating commercial activities and safeguarding consumer rights, while nurturing the growth of the digital economy.

The proposed law seeks to enhance transparency, protect consumer rights, and regulate interactions between merchants, consumers, and government bodies.
It takes into account technological advancements and anticipates future challenges.

The draft will be presented at a press conference, after which legal experts, business owners, and company representatives will have until early January to provide feedback before it is reviewed and approved by the Council of Ministers.

Key aspects of the law include definitions of terms such as e-commerce, merchant, practitioner, consumer, and sensitive data.

It applies to all commercial activities conducted electronically or digitally for the purpose of offering products and services.

The law also outlines procedures for registering businesses in commercial and practitioners’ registers, promoting transparency.

Merchants must register their online stores in the commercial register, while a separate register will be established for practitioners not listed in the commercial register.

The Digital Commerce Law also regulates various professions and specifies approved workplaces, ensuring legal clarity and compliance.

A significant focus is on consumer rights protection, requiring service providers to disclose their identity, terms and conditions, and accurate product or service information.

Consumers will have the right to withdraw from contracts within 14 days, with exceptions for non-returnable items.

The law mandates transparent mechanisms for handling consumer complaints and ensures compensation for delayed deliveries or contract breaches.

Guidelines for electronic advertising are set to regulate promotional offers and prevent misleading advertisements or unauthorised use of logos and trademarks.

Promotional offers are allowed without prior approval if clear conditions are met, but discount campaigns will need prior approval from the Ministry to ensure consumer protection.

The law addresses digital documentation and signatures, setting standards for secure document storage and requiring service providers to obtain licences for digital signatures to ensure authenticity and prevent tampering.

It establishes clear responsibilities in cases of misuse.

Providers will be required to offer electronic payment options compatible with local banking systems, ensuring secure transactions.

The use of advanced technologies, such as distributed ledger systems and smart contracts, is permitted to enhance consumer experience, provided they are transparent and subject to oversight.

In terms of intellectual property, the law prohibits unauthorised use of protected content, holding providers accountable for violations.

Mechanisms will be established to address complaints, including fines and blocking infringing stores.

Cybersecurity provisions require service providers to implement stringent data protection measures, such as encryption and regular system updates, and to report security breaches within 72 hours.

Providers will be liable for any resulting damages.

The Ministry will oversee e-commerce activities and issue necessary regulations.

Two committees will be formed: the Violations Control Committee and the Dispute Settlement Committee, with the authority to issue warnings, impose fines, and temporarily close non-compliant stores.

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News developments

UAE: New Federal Traffic Law Introduces Stricter Regulations and Safety Measures

05/12/202405/12/2024
by Hannah Gutang

Khaleej Times, 3 December 2024: On 29 March 2025, a significant federal decree on traffic regulations will be implemented, introducing several key changes aimed at enhancing road safety.

The minimum driving age will be reduced to 17 years, allowing younger individuals to obtain a driver’s license.

In a bid to reduce noise pollution, the decree bans the operation of excessively noisy vehicles and restricts the use of car horns within city limits, except in situations where they are necessary to prevent danger or accidents.

The new regulations also prioritise pedestrian safety by prohibiting road crossings where speed limits exceed 80 km/h.

Authorities have emphasised that non-compliance will result in civil or criminal liability.

To deter serious traffic violations that could lead to fatal accidents, the law outlines “deterrent penalties” for offences such as driving under the influence of alcohol or narcotics, hit-and-run incidents, jaywalking, and driving in flood-prone areas during adverse weather conditions.

Additionally, transporting hazardous materials or unusual loads will now require a special permit from the relevant authorities, ensuring safer transportation practices across the country.

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News developments

Sharjah: Reduces Property Transaction Fees

05/12/202405/12/2024
by Hannah Gutang

Arabian Business, 27 November 2024: Sharjah moves to reduce fees for the sale and purchase of property transactions, a move seen to enhance the attraction of the emirate’s real estate sector to international investors.

The decision on the fee reduction, approved by the Sharjah Executive Council (SEC), was conveyed to the organisers of the forthcoming real estate exhibition ACRES.

SEC’s decision includes a 0.5% reduction in selling fees for developers and discounts on purchase fees; one percent for UAE and GCC citizens and 2 percent for other nationalities.

The Organising Committee of the Sharjah Real Estate Exhibition said the decision to reduce property transaction fees will significantly enhance the emirate’s real estate sector.

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News developments

Saudi Arabia: GACA Introduces Annual Permits for Private Non-Commercial Aircraft

05/12/202405/12/2024
by Hannah Gutang

The General Authority of Civil Aviation (GACA) has approved the issuance of annual permits for private non-commercial aircraft operated by foreign companies, subject to conditions.

This new move ensures private aircraft owners can travel to and within the Kingdom without requiring individual permits for each trip.

This step aligns with GACA’s strategic objectives to enhance collaboration with strategic partners and entities while building sustainable and efficient transportation systems in Saudi Arabia.

It supports the implementation of the Kingdom’s Public Aviation Roadmap and contributes to the Vision 2030 goal of fostering a safe, seamless, and high-quality aviation experience in the country.

The initiative underscores GACA’s commitment to adopting robust regulatory frameworks that guarantee security, efficiency, and operational excellence.

It aims to facilitate the operation of centralised private flights in Saudi Arabia, providing maximum convenience to travellers.

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News developments

Qatar: Central Bank Issues Digital Banks Regulatory Framework

05/12/202405/12/2024
by Hannah Gutang

The Peninsula, 3 December 2024: Qatar Central Bank has issued the Regulatory Framework for Digital Banks to regulate digital bank activities in the country.

Qatar Central Bank emphasises the importance of this Regulatory Framework as it is an integral part of its efforts to enhance digital innovations and technological initiatives in the financial sector, supporting the country’s journey towards a digital economy.

Digital banks represent an important step toward enhancing financial inclusion, offering innovative banking services that meet the needs of individuals and businesses with ease and efficiency.

These banks stand out by providing comprehensive services through online platforms and mobile applications at all times, enabling customers to carry out their financial transactions anytime and anywhere.

With advanced technology, digital banks offer speed and security in financial operations, in addition to reducing operational costs, allowing for more cost-effective and efficient services.

The Regulatory Framework for Digital Banks further enhances these advantages, benefiting customers and contributing to sustainable development.

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News developments

Oman: Issues New Ship and Port Security Regulations

05/12/202405/12/2024
by Hannah Gutang

The Arabian Stories, 3 December 2024: The Transport, Communications, and Information Technology Ministry has introduced new regulations for ship and port security, aiming to enhance maritime safety and security in Oman.

Oman Ministerial Decision No. 423/2024 outlines a comprehensive framework based on International Maritime Law and international agreements.

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News developments

Kuwait: Leads the Way in Disability Rights Legislation and Empowerment Initiatives

05/12/202405/12/2024
by Hannah Gutang

Arab Times, 3 December 2024: Kuwait has emerged as a pioneer in enacting legislation to protect the rights of individuals with disabilities.

The country has established specialised schools and provides comprehensive care, acknowledging both the rights and potential of this community.

During a recent regional consultative session for the Middle East and North Africa, organised under the theme “Women and Disability,” the importance of local, regional, and international collaboration was emphasised to support individuals with disabilities.

The session has highlighted Kuwait’s welcoming environment, which has facilitated discussions among experts from various countries on disability-related issues.

The role of civil society in raising awareness and addressing barriers to implementing legal frameworks was also underscored.

Kuwait’s initiatives to integrate people with disabilities into society aim to ensure they can lead fulfilling lives and access their rights without discrimination.

The United Nations Special Rapporteur on the Rights of Persons with Disabilities commended Kuwait for its leadership on the international stage.

The session served as a platform for governments, civil society, and regional organisations to discuss challenges, share best practices, and collaborate on solutions.

It focused on raising awareness about the Convention on the Rights of Persons with Disabilities and addressing barriers to full inclusion in the MENA region.

The need for enhanced regional cooperation among governments, civil society, and international stakeholders was emphasised, along with a call for NGOs and human rights defenders to advocate for the rights of women with disabilities.

A field study presented during the session examined the impact of Kuwaiti legislation in empowering women with disabilities, highlighting the country’s commitment to gender equality and justice as enshrined in its constitution and international agreements.

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