Dubai eighth in global financial centre ranking The city jumped four places from number 12 in March 2019

Dubai’s ranking has been spurred by the exceptional development of the Dubai International Financial Centre.

Dubai: Dubai has risen up the ranks of the Global Financial Centres Index (GFCI) to eighth position, representing its highest ever ranking, according to a statement from Government of Dubai’s Media Office.

According to the latest ranking, the city is the only financial centre within Middle East Africa and South Asia (MEASA) region to appear within the top 10 rankings, placing it alongside other pivotal financial hubs such as London, New York, Hong Kong and Singapore.

Dubai was most recently placed number 12 within the Index in March 2019 and has consistently risen within the rankings, since the Index was launched 12 years ago. Dubai has moved up 17 places since first appearing in 25th place in the inaugural report in 2007, and the latest placement represents an increase of seven GFCI rating points compared to March 2019.

“The city’s steady ascent in rankings has been driven by DIFC’s remarkable success in building an ecosystem that fosters financial industry growth. DIFC is one of the key initiatives at the forefront of Dubai’s new phase of growth and its efforts to create a business and investment environment that rivals the world’s best,” said Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of DIFC.

Established in 2007, the GFCI is released twice a year by London-based Z/Yen and the China Development Institute and provides evaluations of competitiveness and rankings for the major global financial centres. More than 114 centres were evaluated as part of the 26th GFCI ranking, using more than 133 instrumental factors.

“Our sights are set firmly on the goal of becoming the No. 1 ranked global financial centre. We will also continue to work closely with the industry to help them deliver value and find new opportunities for growth,” Sheikh Maktoum said.

Dubai’s ranking has been spurred by the exceptional development of the Dubai International Financial Centre, the leading financial hub in MEASA and home to the largest and most developed financial ecosystem in the region.

“The recognition of Dubai as a top ten global financial centre is testament to the commitment we have made to our community, our valued stakeholders and global partners. The DIFC’s continued pursuit of excellence and our focus on innovation is delivering on our blueprint for sustainable growth as we continue our journey towards transforming the future of finance,” said Essa Kazim, Governor of DIFC.

Dubai recognised in all key areas of excellence

Dubai: The new GFCI ranking recognises DIFC’s strengths within all five major areas of the Index including Business Environment, Human Capital, Infrastructure, Financial Sector Development and Reputation, reflecting its emergence as a broad, deep, dynamic and stable financial centre.

The Centre has been at the forefront of developing its business environment, the number one factor influencing global competitiveness for financial centres, and enhancing its legal and regulatory framework to fuel growth opportunities within the MEASA region.

With more than 24,000 professionals working across over 2,200 active registered companies, the DIFC comprises the largest and most diverse pool of industry talent in the region. Investment into developing regional talent development continues to be an important factor impacting growth. Dubai’s connectivity to the MEASA region is another significant factor enabling organisations to seamlessly service business opportunities in the wider region from the Centre.

As the leading global financial centre in the MEASA, DIFC is at the forefront of financial sector advancement. The index highlights the strong presence of international institutions, government backing and diversity of financial sector offerings. DIFC’s Wealth and Asset Management market which was reported to be $424 billion in 2018 is equivalent to approximately 30% of the GCC’s combined GDP.

Dubai was recognised for reputational advantage as the top global financial centre in the region and is seen as a well-established and widely recognised leader, driving finance within the region. Innovative and global competitiveness were seen as key factors driving the ranking.

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UAE’s Federal Tax Authority launches campaign on expansion of Excise Tax Drive aimed to make businesses aware of FTA’s electronic excise tax plan registration

Abu Dhabi: The Federal Tax Authority (FTA) on Monday launched its comprehensive awareness campaign which seeks to introduce the objectives and procedures of the expansion of the Excise Tax, and the requirements for registering in the FTA’s electronic system.

The campaign will consist of a series of workshops for businesses that are not yet registered with the FTA for Excise Tax purposes, with the first one being held in Abu Dhabi.

Further workshops are scheduled on Wednesday in Dubai and next week in Ajman.

In an official press statement, the FTA explained that the campaign is part of the executive procedures to implement Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates, and the Method of Calculating the Excise Price.

Along with participants — including representatives from businesses directly affected by the cabinet decision, as well as tax agents — the FTA experts called on producers, importers, and stockpilers of sweetened drinks, electronic smoking devices, and electronic smoking liquids to register their business for Excise Tax first, and then to register each individual excise good.

FTA director general Khalid Al Bustani asserted that the awareness workshop is part of the authority’s plans to raise awareness about the tax system among businesses, and to maintain constant communication with all economic sectors, and to keep them informed with the latest updates on tax regulations and procedures in the UAE.

For more information regarding your Business Set-up/Tax/Audit/Accounting or other services please visit our website www.a-h-g.net or drop us an email on info@a-h-g.net. 

We are one of the leading Audit company present in 4 countries. Approved TAX Agent by the Federal Tax Authority and one of the very few Tax Agents who operates with Excise Tax and have a deep understanding for its needs which helps our clients comply with law requirements and Latest FTA Announcements.

New accounting rules provide no luxury of time Tougher norms require banks to immediately make it known in their books

The International Financial Reporting Standards (IFRS) issued by the IFRS Foundation and International Accounting Standards Board (IASB) create a global framework for the preparation of financial statements of corporate entities.

IFRS 9 has drastically altered how entities treat their assets, liabilities and profit and loss items. Banks and therefore borrowers will be affected, to an extent that has not been understood by the business community. This column discusses its broad implications and how borrowers will be touched by it.

The most significant difference between the old IAS 39 standards and IFRS 9 is that the latter is forward-looking as opposed to being “past based”. What is at the core of IFRS 9 that will affect borrowers?

Fact vs. forecast

What is germane is that banks will now use a concept called “expected credit loss” (ECL), for every account, using numerous parameters, including qualitative judgements. And will make provisions (for doubtful loans) on a forward-looking, ECL-basis, rather than when loans actually go bad.

It is incontestable that a forward-looking model is fraught with uncertainty as plenty of judgement is required. The historic one is based on fact.

IFRS 9 calls for three stages of the performance of any credit. Banks will need to take increasing provisions on their loans, over these. Movement from Stage 1 (ECL from an account over the next 12 months from evaluation or origination point) to Stages 2 and 3 (3 means a loan is “credit impaired”) reflects progressive deterioration in credit quality.

The ECL is determined by a formula, an essential component of which is the “probability of default” (“PD”, determined by historical data etc.). The complexity of this is not relevant.

No time cushion

Suffice it to say that PD will sharply rise with a default, causing ECL to disproportionately surge. Therefore, when even a small default occurs (e.g., a 30-day delay of a small repayment) the bank has to take a provision on the account. Under the old regime, banks could live with delays and latitude in sweeping defaults under the carpet.

No longer. Provisions balloon in stage 2 and are a disaster in stage 3.

There are additional complications. There are a few characteristics of a transaction or credit facility that significantly increase ECL and therefore provision requirements.

First is the transaction structure, comprising several elements. One is the transaction duration — the longer it is, the bigger the impact on ECL in the event of a default. The ECL (therefore provisions) is far higher in case of a two-year loan than a 90-day one.

Second and tied to this is the frequency of repayments of a loan — the higher the frequency, the lower the ECL implication and vice versa. Another is the importance of the sector being lent to. Banks now have to discriminate between sectors and risk-rate each, based on how durable and predictable each is.

Will banks view sectors differently?

The second characteristic is collateral against each credit. Banks now have to be more discerning about various types of collateral and have to rate its quality as well, based on several parameters. Therefore, the scramble for real estate security over the past 3 years is likely to hit a wall, if it hasn’t already.

Third, banks now have to calculate ECL on undrawn but committed credit lines as well, where banks are obligated to keep lines open for a specified time; and not merely on amounts already borrowed. The average borrower need not worry — almost all lines here are uncommitted.

And now, for the icing on the cake.

The UAE Central Bank has set out its own regulations, overlaying IFRS 9, like other regulators elsewhere, resulting in more stringency, and therefore higher provisions (even on current portfolios) for banks. Some examples are: from now on the account classification (at the central bank) of a borrower decided by one lender will affect other lenders.

A downgrade will force others to rework their ECLs. Reports of the Etihad Credit Bureau will now be taken cognisance of.

Multiple boxes to tick

The net widens to include unavailability or inadequacy of financial statements of borrowers; qualified accounts; significant contingent liabilities (most auditors do not even report these!); pending, potentially damaging litigation; key staff leaving the borrower; non-cooperation of a customer in providing information etc, — any of these can spike the ECL.

The canvas is clear, and stark. Lenders will now tightly structure transactions, keep borrowers on tight leashes, monitor all aspects of businesses and use a dizzying array of judgemental tools to evaluate potential risk.

Provisioning will rise and therefore the cost of credit. Credit will be even more judiciously granted, pricing will rise.

For corporates, this is going to be a whole new world, requiring less accounting jugglery, more honesty and transparency, discipline etc. As such, the ECL, not relationships, will drive relationships!

Borrowers will need to rework banking and financing strategies and transform, quickly. The new reality is here. A word of advice to owners and management — wake up and change. If you don’t know how, seek help, you will need it.

AHG is here to help. For more information regarding your Business Set-up/Tax/Audit/Accounting or other services please visit our website www.a-h-g.net or drop us an email on info@a-h-g.net. 

We are one of the leading Audit company present in 4 countries. Approved TAX Agent by the Federal Tax Authority and one of the very few Tax Agents who operates with Excise Tax and have a deep understanding for its needs which helps our clients comply with law requirements and Latest FTA Announcements.

UAE Federal Tax Authority in Digital Tax Stamp inspections. New UAE campaign to raise awareness about Marking Tobacco and Tobacco Products Scheme

Abu Dhabi: The UAE Federal Tax Authority (FTA) has conducted two simultaneous awareness and inspection campaigns — to verify compliance with the Marking Tobacco and Tobacco Products Scheme.

The move has come during the first month since the ban on selling cigarettes not bearing the Digital Tax Stamps in local markets went into effect.

The stamps, placed on cigarette packages, allow for tracking of the products from the manufacturing facility until they reach the end consumer.

The objective is to protect consumers from low-quality products, combat tax evasion, and ensure all excise taxes due on tobacco products have been paid, officials said, in keeping with Cabinet Decision No. (42) for 2018 on Marking Tobacco and Tobacco Products, and FTA Decision No. (3) of 2018 on the same subject.

In a press statement issued today, the authority explained that several violations were detected in August 2019 in a campaign that included 20 inspection trips conducted in collaboration with departments of economic development in all seven emirates and covering 530 retail outlets.

Furthermore, the FTA asserted that all necessary procedures were taken to ensure that violators comply with regulations in the future.

The FTA noted that as of May 1, 2019, a ban was enforced on importing cigarettes into the UAE if they did not carry the Digital Tax Stamps.

Then on August 1, the sale and possession of unmarked cigarette packets was prohibited in local markets, in keeping with the implementation timeline that began on January 1, 2019.

The Authority saod two types of Digital Tax Stamps were approved, the first of which is red and designated to be placed on cigarette packs authorised for distribution in UAE markets and at duty-free for arriving travellers, while the second is green and designed for sales of cigarette packs at duty-free in departure lounges.

FTA director-general Khalid Ali Al Bustani said the new campaign seeks to establish direct communication with dealers and consumers in local markets, and raise their awareness about the importance of full compliance with the “Marking Tobacco and Tobacco Products Scheme”.

He reiterated the Authority’s commitment to enhancing collaboration and coordination with local and federal government entities to ensure compliance with tax regulations, as well as the stability and regularity of local markets.

“The Federal Tax Authority seeks, first and foremost, to raise awareness among Taxable Persons and consumers about their tax rights and obligations,” Al Bustani added. “We are intensifying our efforts to support businesses and help them comply with tax systems and procedures. They are our strategic partners, and our objective is to enable them to successfully manoeuvre the tax system and self-comply with tax regulations.”

“The campaign is part of the FTA’s efforts to tighten control on local markets, protect consumers and combat tax evasion,” he explained. “Teams of experts from the authority and departments of economic development in all seven emirates are conducting daily inspection trips to raise awareness of the tax system in general, and the “Marking Tobacco and Tobacco Products Scheme”, in particular, as well as to outline the administrative penalties that would be imposed in the event of non-compliance.”

“The joint expert teams undertake awareness campaigns in shopping malls and retail outlets, urging consumers to check for the Digital Tax Stamps on the cigarettes they purchase, which help verify that they are not counterfeit or low-quality products, and indicate that the dealer has complied with excise tax regulations, thus avoiding any administrative penalties,” the FTA Director General concluded.

As per the Cabinet Decision on violations of procedures to mark Designated Excise Goods, penalties shall be imposed if the Digital Tax Stamps were not fixed on the packaging of tobacco products before supplying them in local markets. The decision specifies a penalty of Dh50,000 plus 50 percent of the amount of excise tax due, to be collected from any Person possessing or supplying unmarked Designated Excise Goods in the UAE. Meanwhile, any Person that knowingly allows their facilities in the UAE to be used for the sale of unmarked Designated Excise Goods incurs a penalty of Dh25,000 for a first violation and Dh50,000 in case of repeated breaches.

In the event where a person alters or prints over Digital Tax Stamps placed on Designated Excise Goods, a penalty of Dh50,000 plus 50 percent of the amount of excise tax due is levied. Meanwhile, if a person fails to report a transfer of Designated Excise Goods, a penalty of Dh20,000 is collected for every time the violation was committed. Furthermore, non-compliance with the FTA’s requirements for stockpiling Digital Tax Stamps results in a Dh50,000 penalty for every instance.
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We are one of the leading Audit company present in 4 countries. Approved TAX Agent by the Federal Tax Authority and one of the very few Tax Agents who operates with Excise Tax and have a deep understanding for its needs which helps our clients comply with law requirements and Latest FTA Announcements.

UAE’s Federal Tax Authority launches awareness campaign on expanding excise tax scope The campaign will consist of two categories of workshops

Digital stamps that contain tax-related data will be placed on all tobacco products from the beginning of next year to efficiently collect excise taxes.

ABU DHABI: The Federal Tax Authority, FTA, has launched a comprehensive awareness campaign about the objectives and processes of expanding the excise tax, as well as the procedures for registering in the FTA’s electronic system.

The campaign consists of a series of workshops for non-registered businesses, beginning on September 16 in Dubai and Abu Dhabi, with subsequent sessions on September 18 and 23 in Dubai and Ajman, respectively.

The Authority stated that the campaign is part of the procedures to implement the Cabinet Decision on Excise Goods, Excise Tax Rates, and the Method of Calculating the Excise Price, issued in August 2019, which expanded the scope of excise goods to include electronic smoking devices and liquids, as well as sweetened drinks.

The new products join the list of existing excise goods issued in October 2017, which includes tobacco products, energy drinks, and carbonated drinks.

Workshops

The FTA asked producers, importers, stockpilers and warehouse keepers of sweetened drinks, electronic smoking devices and tools and liquids used in electronic smoking devices and tools to attend the workshops, where registration for the sessions has been made available via the Authority’s website: www.tax.gov.ae/ew

In a press statement issued on Saturday, the Federal Tax Authority said that the campaign will consist of two categories of workshops.

The first, for businesses not registered with the FTA, which will consist of three workshops in Abu Dhabi, Dubai, and Ajman.

At these workshops, attendees will be shown the procedures to register, declare imports, recover excise tax, submit tax returns, and pay taxes, as well as register warehouse keepers and designated areas, among other things.

The second category is for businesses currently registered with the Authority for excise tax purposes, who will be required to register their goods once again, as well as add any new items that have come under the purview of the tax.

This category will be invited to a workshop on September 9 in Dubai.

Team of experts 

A team of FTA experts will conduct interactive workshops for businesses subject to excise tax and introduce them to the registration procedures.

As a first step, the Authority has asked producers, importers, stockpilers and warehouse keepers of sweetened drinks to register as businesses subject to excise tax, and then proceed to register the excise goods they deal with.

Stage two, which will be announced soon, will require producers, importers, stockpilers and warehouse keepers of electronic smoking devices and tools and liquids used in electronic smoking devices and tools to follow suit.

The new Cabinet Decision identifies sweetened drinks as any product to which a source of sugar or sweetener is added and is produced as either a ready-to-drink beverage or as concentrates, gels, powders, extracts, or any other form that can be converted into a sweetened drink.

In that regard, sugar includes any type of sugar determined under Standard 148 of the GCC Standardisation Organisation as “sugar” and sweeteners include any type of sweeteners determined under Standard 995 of the GCC Standardisation Organisation as “sweeteners authorised for use in food products”.

Electronic smoking devices mentioned in the decision include any devices and tools and the like, whether or not they contain nicotine or tobacco, whereas electronic smoking devices include all liquids used in electronic smoking devices and tools and the like, whether or not they contain nicotine or tobacco.

For more information regarding your Business Set-up/Tax/Audit/Accounting or other services please visit our website www.a-h-g.net or drop us an email on info@a-h-g.net. 

We are one of the leading Audit company present in 4 countries. Approved TAX Agent by the Federal Tax Authority and one of the very few Tax Agents who operates with Excise Tax and have a deep understanding for its needs which helps our clients comply with law requirements and Latest FTA Announcements.