December 2021

  • Bulgaria
    • COVID-19 Pandemic: Bulgaria Extends The Application of The 9% Reduced VAT Rate

      During 2020, Bulgaria extended the scope of application of the reduced 9% VAT rate for various goods and services until 31 December 2021 as a COVID-19 pandemic related measure. On 23 December 2021, the Bulgarian parliament voted at first and second (final) reading, amendments to the VAT Act extending the period for application of the lower rate until the end of the COVID-19 pandemic. The goods and services for which the reduced 9% VAT rate will continue to apply are the following:

      • restaurant and catering services;
      • tour operator services, including the organization of excursions by tour operators and travel agents with occasional transportation;
      • books and some other publications;
      • services related to use of sports facilities; and
      • foods suitable for babies and young children as well as baby nappies and similar baby hygiene products (provided in a list included in Annex 4 to the VAT Act).

      Accommodation services in hotels and other similar establishments are also subject to 9% VAT rate in Bulgaria, but this rate is applied permanently, i.e. not as a temporary measure in relation to COVID-19 pandemic.

      The full text, issued on 23 December 2021, is available here (in Bulgarian only).

    • Bulgaria will Support the Business with 1.5 Billion BGN due to Expensive Electricity

      New measures due to high electricity prices will be introduced in our country. This was announced by Energy Minister Alexander Nikolov at a briefing.

      According to him, all proposals are to be discussed both in the Council of Ministers and in additional formats.

      "The period for compensation is extended from December to the end of the first quarter of 2022. The goal is to cover the most difficult period ahead, with the highest consumption of energy resources," said Nikolov.

      He stressed that the compensation from December onwards will be calculated according to the real stock exchange price from "day ahead" for July.

      "That means BGN 185.59 per megawatt-hour. This is the base from which to start," Nikolov said.

      Users with contracts below this price will not be compensated. Under this measure, the state's expenditures in support of business are expected to exceed BGN 900 million.

      The proposals will also include consumers of natural gas on the regulated market.

      "We will offer a fixed scheme per megawatt-hour for resource costs. This will alleviate the pressure to potentially increase heat prices to end-users. About BGN 200 million have been earmarked for this,” said the Minister of Energy.

      According to Nikolov, within the next 4 months, the resource that will be allocated is expected to exceed BGN 1.5 billion.

      "There is a crisis in electricity prices all over Europe. Bulgaria continues and will become an increasingly sustainable member of the EU, which means that we cannot maintain very low prices in our country," said the Minister of Energy.

      He pointed out that medium-term and long-term measures are being discussed with all counterparties involved, leading to a significantly higher degree of transparency and predictability for both producers and consumers.

      "It is unthinkable for the system regulator, as well as the ERPs, to trade and buy their technological costs the day before. Initiatives will be taken so that these costs are in line with the EWRC and there are long-term contracts that will be transparent," Nikolov added.

      He was adamant that these technological costs would not be under the umbrella of commercial companies.

      The Minister of Energy also announced that from next year we will have a plant for the production of solar panels.

      "The investment will exceed 150 million euros. The goal is to produce panels with a capacity of at least 1 gigawatt in Bulgaria next year, and this will be expanded as soon as possible," he said.

      According to him, opportunities for storage of electricity are being studied, as well as partnerships for rapid implementation of projects related to the so-called "Smart grids".

      Source: Novinite

    • Bulgaria Announces 20% Lower Fines for Administrative Penalties, if Paid Within 14 Days

      The Bulgarian National Revenue Agency announced that persons who have been fined for administrative violations of the tax legislation will be able to pay only 80% of the amount of the imposed fine. This is allowed only when the person pays the fine within 14 days of the imposition of the fine. The measure is aimed at encouraging fast and timely payment of fines and to reduce pressure on tax collectors.

      The newly adopted rule is applicable retroactively as of 23 December 2021. Thus, a person could pay only 80% of the amount of the fine, if the fine is imposed after 22 December 2021, as well as if the fines was imposed before 22 December 2021, if 14 days have not elapsed from day of the imposition of the fine.

      The full text of the announcement, published on 29 December 2021, is available here (in Bulgarian only).

    • Bulgaria: Double-Digit Inflation in 2022

      Bulgaria is facing a serious rise in inflation, which in 2022 could double, depending on how the government reacts - warned financial expert and former MP from "There Is Such a People" Mika Zaykova.

      "Inflation is a bigger threat than a pandemic. It is not a temporary phenomenon. Although some colleagues think that things will calm down in the next few months, unfortunately, it will not happen because the economy of both the EU and the world is energy. Bulgaria has additional problems - the state of district heating and the moratorium on prices. It does not solve problems, it only postpones them," Zaykova told Nova TV.

      According to her, however, Bulgaria is favored because the external supply of energy sources is about 13%. But a green deal is ahead. 60% of energy is nuclear energy, which the EU refuses to accept as clean energy. Furthermore, Bulgaria is the third "coal" country in the EU.

      According to the social expert and former Minister of Social Affairs Ivan Neykov, inflation will be higher in the first three months of the new year, and then we expect a decline.

      "Part of the problem is that we had forgotten just inflation. I do not think it's the worst problem in the social sphere. Already there is a decrease in oil prices because of reduced consumption. I think after the first quarter of the new year inflation will go down. The social sphere does not generate inflation. It must create tools to help people. It is important to decide who and how to help," he explained.

      In January the Value of the Bulgarian Lev will Decrease

      According to him, the big challenge for the new Ministry of Social Affairs is how to adjust the tools that will help the really needy. “Now the mantra continues that if you are retired, you are poor, which is not the case. The cycle of energy support needs to be reconsidered”, Ivan Neykov believes.

      However, Mika Zaykova reminded that there are really poor pensioners in Bulgaria, but there are also working poor - incomes lag behind the cost of living, and this is a very serious challenge. Bulgaria is the only country in the EU whose minimum wage is below 400 euros. Therefore, there must be a balance between income and what is happening in the economy. Zaikova was adamant that the issue of taxation of the minimum wage must be resolved.

      "I don't know how long it will take for us to understand that the minimum wage should be determined not by the will of a minister, but by principles. When you adopt a principle, the rules are determined," Neykov said.

      “The moratorium on the price of electricity may have only one meaning - to gain time to find a solution”, said Neykov. According to the two experts, there is an over-expectation of the government, even though it has been going on for several days.

      Source: Novinite

  • China
    • Guangdong forms China’s largest fuel cell vehicle industry cluster

      South China's Guangdong Province has attracted more than 300 hydrogen energy enterprises with the total value of its hydrogen energy industry surpassing 10 billion yuan (about 1.57 billion U.S. dollars), local authorities said on Wednesday.

      The province is taking the lead in China's burgeoning fuel cell-powered vehicle industry and has formed the country's largest fuel cell vehicle industry cluster, according to data released on Wednesday during the UNDP Hydrogen Industry Conference 2021 in Guangdong's Foshan City.

      The province is a major automobile manufacturing base in China and has strived to develop the eco-friendly fuel cell vehicle industry over the years.

      Guangdong currently has 39 hydrogeneration stations while 10 more are under construction, making the province rank first nationwide in terms of the number of stations.

        Source: XINHUANET
    • China to build 100 national major cold-chain logistics bases by 2025

      China plans to set up about 100 national backbone cold-chain logistics bases during the 14th Five-Year Plan period (2021-2025), the country's top economic planner said on Monday.

      The move aims to enhance service capacity and boost the efficiency of the cold-chain logistics sector, Zhang Jiangbo, an official with the National Development and Reform Commission told a press conference, adding that the first batch of the 17 key bases is under construction.

      To further enhance the cold-chain transportation network, China will establish eight major channels for cold-chain logistics across the board by 2025, linking core areas for farm production and 19 city clusters, according to Zhang.

      Moreover, a national-level logistics platform will also be built by then to enhance cold-chain food logistics tracking and management, he said.

        Source: XINHUANET
    • China’s central bank announces reserve requirement ratio cut

      China's central bank said Monday it has decided to cut the reserve requirement ratio (RRR) for financial institutions to support the development of the real economy and reduce the comprehensive financing cost.

      The ratio will be cut by 0.5 percentage points, effective on Dec. 15, except for those financial institutions that already implement a 5-percent RRR, said the People's Bank of China (PBOC) in a statement.

      After the reduction, the weighted average RRR for Chinese financial institutions will stand at 8.4 percent, the central bank said.

      About 1.2 trillion yuan (about 188.4 billion U.S. dollars) in long-term funds will be released through the cut.

      Taking it as a regular operation of the country's monetary policy, the PBOC said financial institutions will use part of the released funds to repay the maturing medium-term lending facilities while use the rest to replenish long-term funds to better meet the needs of market entities.

      The reduction will also lower the fund costs for financial institutions by around 15 billion yuan per year, according to the PBOC calculation.

      It can guide financial institutions to actively use the funds released to strengthen support for the real economy, especially smaller enterprises, and lower the comprehensive financing cost, said the PBOC.

      The central bank said it will continue to implement a prudent monetary policy, prioritize stability and avoid "flood-like" stimulus.

      It will also make efforts to maintain reasonably ample liquidity, strengthen cross-cyclical adjustments and promote the consistency of macro policies for the year 2021 and 2022.

      Source: XINHUANET

    • Fujian Extends Application of Preferential Tax Rate in the Pingtan Zone for Five Years

      The Management Committee of the Pingtan Comprehensive Experimental Zone in Fujian recently released the Circular on Continuing the Policy of Applying Preferential Corporate Income Tax Rate in the Pingtan Comprehensive Experimental Zone to extend the application of the reduced tax rate for five years from January 1, 2021 to December 31, 2025.

      According to the Circular, companies set up in the Zone would be levied the corporate income tax at a reduced rate of 15% if they are qualified by meeting the requirements of having its main business in the industry as set forth in the Catalogue of the Industries Eligible for the Preferential Corporate Income Tax in the Pingtan Comprehensive Experimental Zone (2021 Edition), with their income from the main business representing more than 60% of its total income. The total income should be subject to the provisions of the 6th article of the Law on the Corporate Income Tax. The 2021 edition of the Catalogue has added four industries including electronic information, modern logistics, technology and business service, and information service for 12 items on the basis of the 2017 edition.

    • State Council Decides to Weight Tax and Fee Cut Policy toward Manufacturing

      Premier Li Keqiang chaired an executive meeting of the State Council on December 15, 2021, stressing that a market-oriented approach would be further applied to increase financial support to micro, small, and medium enterprises and policy support for the manufacturing industry would be enhanced.

      It is decided at the meeting that support would be increased to help manufacturing firms to overcome difficulties and grow, the tax and fee cut policies would be weighted toward the manufacturing industry, the policies of granting an extra tax deduction on enterprises' R&D costs and refunding and rebating the VAT would be further implemented to support enterprises to conduct innovation in science and technology and transform and update traditional industries. It is also decided to change the policy of allowing micro and small enterprises to defer principal and interest repayments on inclusive-finance loans to the policy of supporting them with inclusive-finance loans. From 2022 to the end of June, 2023, the central bank will provide the funds at 1% of the incremental balance for the inclusive-finance loans granted by local corporate banks to small and micro enterprises and self-employed individuals.

      We foresee more tax benefits that will be announced in 2022.

    • China’s FDI inflow expected to top 1 trillion yuan in 2021

      Foreign direct investment (FDI) into the Chinese mainland, in actual use, is expected to surpass 1 trillion yuan, or 157.49 billion U.S. dollars, in 2021, an official with the Ministry of Commerce (MOC) said Thursday.

      During the past two decades since China's accession to the World Trade Organization, the country has achieved marked progress in the use of foreign investment, Gao Feng, an MOC spokesperson, told a virtual press conference.

      The FDI inflow totaled 999.98 billion yuan in 2020, skyrocketing 157.7 percent from 338 billion yuan registered in 2001, said Gao.

      China will further shorten the negative list on foreign investment, facilitate services for foreign-funded enterprises and projects, and foster a law-based, international, and convenient business environment to share its market opportunities globally, said Gao.

        Source: XINHUANET
    • Shanghai, Guangdong and Inner Mongolia Conduct E-invoicing Pilot Program among Selected Taxpayers

      The tax authorities from Shanghai, Guangdong and Inner Mongolia released on November 30, 2021 their respective announcements, saying a comprehensive pilot program of pursuing e-invoicing among selected taxpayers in Shanghai, Guangzhou, Foshan, Guangdong-Macao Intensive Cooperation Zone and Hohhot would be implemented from December 1, 2021.

      Taxpayers and drawees selected for the pilot program are specified in the announcements, and taxpayers who do not use or have the Internet are temporarily excluded. E-invoices have the same legal effect and usage as existing paper invoices but have no sheets. They have 17 items of content including dynamic QR code and invoice number. Taxpayers covered in the pilot program would be free from the requirements for the use of special VAT control device, check and verification of invoice types, and application of e-invoices after undergoing real-name verification. They can make out an invoice via the e-invoicing service platform, which can also be used for bookkeeping.

    • China Announces 2022 Tariff Adjustment Plan

      The Customs Tariff Commission of the State Council released on December 15, 2021 the 2022 Tariff Adjustment Plan to adjust the import and export tariffs of selected goods from January 1, 2022.

      From the date, China will apply interim import tariff rates lower than the Most-favored Nation (MFN) rates for 954 items of goods, including imposing zero tariff for a new type of anticancer drug named radium chloride injection, and reducing the import tariffs of selected consumer goods. The country will also increase the import and export tariffs of some commodities. For the goods including lead-acid battery parts and pork, the interim import tax rates would be removed, with the MFN tariff rates resumed. From July 1, 2022, China will implement the seventh-stage reduction of the MFN rates for 62 IT products. After the adjustment, China's overall tariff level will remain at 7.4%. In 2022, the country will apply the agreed tax rates on selected goods originating in 29 countries or regions.

  • Focus Africa
    • Africa in Review by the Numbers (December 2021)

      $12 million
      Value of deals closed via opportunities on our Digital Engagement platform. AfricInvest Private Credit and TDB both signed debt deals originated via their DealRooms, validating the efficacy of digital deal-making. Momentum continues to grow on the platform as we head into 2022.  
      Companies profiled for Asoko clients though our Bespoke Research service. Africa-focused businesses, investors and multilateral used our corporate data and insights to support their market entry plans, map participants along their supply chains, long-list investment targets and facilitate bilateral trade and investment opportunities.  
      Proportion of submissions to the Digital Engagement platform acted on by partners. The average comprises deal opportunities fed into investor pipelines as well as companies accessing visibility opportunities, KYC and business development support. Within the investment arena, our digitally enabled origination has a higher success rate than that achieved offline.  
      $210 million
      Loan offered to Nigeria by AfDB to co-finance the first phase of the country’s Special Agro-Industrial Processing Zone Programme. This initiative will unlock unrealised potential in Nigeria’s Agricultural sector and promote industrialisation. (This Day)  
      Confidence in the governance of East African firms by PE investors and DFIs working in the region, according to a survey carried out by I&M Burbridge. Sentiment among investors increased in Q3 on all four indicators assessed, with each rising by between 9% and 11% from Q2. Governance achieved the highest level of confidence, with asset quality and quantity lowest at 51.5%. (Business Daily)  
      2.5 million tonnes
      Capacity Morocco’s citrus production is expected to reach between 2021 and 2022,  a 12% increase from the previous period. Favourable weather conditions and expansion in harvest area have contributed to the rise in production. (Food Business Africa)  
      $570 million
      Funding from the World Bank to boost the resilience of food systems in West Africa. The countries benefiting from this programme will be expected to increase agricultural productivity through climate-smart agriculture, promote interregional value chains and trade and build regional capacity to manage agricultural risk. (Food Business Africa)  
      83 MW
      Generation capacity of KenGen’s nearly completed power plant in Olkaria, expected to come on-line in early 2022. The geothermal plant supports Kenya's target to supply all electricity from renewable sources by 2030 and is expected to drive down energy costs by displacing thermal power. (CEO Business Africa)  
      Target of daily clients added to the books at South Africa's Discovery Bank to reach its break-even point of 700,000 customers by 2024. The digital bank, launched in 2019, currently has over 400,000 account holders with deposits of $565 million. (IOL)
      $42.1 billion
      Was generated in trade and trade-related investment deals during the second Intra- African trade (IAFT 2021).This record was the outcome of more than 500 business deals concluded during the 7-day programme of business. (The Herald)  
      843 Megawatts
      Is the capacity that Transnational Corporation of Nigeria Plc is seeking to increase the combined available capacity at Transcorp Power Limited and Trans Afam Power Limited with the ongoing upgrade and repairs in both power plants. (Vanguard)  
      Dividends pay has been offered to investors by Centum Investment Company as the firm moves to make itself attractive to investors. The company plans to maintain zero-long term debt balance to reduce finance costs while reinvesting shareholder capital into portfolio companies to increase value. (Business Daily)   Review by Kili Partners . Powered by Asoko Insight
    • Morocco Undertakes Comprehensive Tax Reform

      The comprehensive Moroccan Framework Law No. 69-19 has been gazetted. It provides detailed tax reform objectives and mechanisms for its implementation in accordance with the Moroccan Constitution. The main priorities and objectives of the tax reform are summarized as follows:

      • encouraging productive investment, effective redistribution and reduction of inequalities, territorial development, strengthening the effectiveness and efficiency of the tax administration and strengthening confidence with taxpayers;
      • strengthening contribution of the state and territorial collectivities in the financing of economic and social development policies;
      • reducing the tax burden on taxpayers where the tax base is broadened;
      • progressive implementation of the principle of taxation of global income for individuals;
      • integrating the informal sector into the structured economy; and
      • strengthening measures to combat tax fraud and tax evasion.

      The Framework Law provides priority measures which aim to be implemented within 5 years from the date of the publication of the Law (July 2021), as follows:

      • consolidating tax neutrality in VAT by broadening the scope of application, reducing the number of rates and generalizing the VAT refund. The VAT exemption of basic products will be maintained;
      • converging gradually towards a unified corporate tax rate;
      • improving the corporate tax contribution of public institutions and enterprises and companies engaged in regulated, monopoly or oligopoly activities;
      • lowering the minimum tax contribution rates gradually;
      • encouraging the development of innovative companies (e.g. start-ups, support structures (incubators and accelerators) and auto-entrepreneurs' aggregators);
      • reviewing the progressive scale of individual income tax rates and broadening the tax base;
      • adapting and improving the single professional contribution regime (contribution professionnelle unique) to accelerate the integration of the informal sector;
      • simplifying the taxation of territorial collectivities; and
      • aligning the Moroccan tax system with the rules of good governance provided in international tax matters.

      The official translation into French of the Framework Law No. 69-19 on tax reform (Loi-cadre n° 69-19 portant réforme fiscale) has been published in the Official Gazette No. 7010.

  • Hong Kong
    • Fashion Back in Vogue: The 2021 CENTRESTAGE Survey

      The resurgence of global economic activity gave the fashion industry worldwide a bounce as early as the second half of 2020. Following the further reopening of major fashion markets in the West, the global trade in clothing is estimated to have grown by 12% and 54% in the first and second quarter of 2021, respectively [1]. Nevertheless, logistic bottlenecks and skyrocketing shipping costs will remain as obstacles on the path to normality.

      Against this backdrop, HKTDC conducted a survey at CENTRESTAGE 2021, the Asian fashion industry’s premier annual event and the first fashion event staged in Hong Kong since the pandemic began. More than 290 industry practitioners were interviewed between 10 and 12 September to take the pulse of the clothing industry and discover its business outlook for the coming year. Overall, the survey revealed that industry players have high hopes of seeing fashion back in vogue as the world economy picks up and people are out and about again spending money.

      The Covid-19 Shock

      The global coronavirus pandemic has taken a heavy toll on the fashion industry, disrupting domestic and cross-border production and logistics, as well as wreaking havoc on consumer demand. According to the survey, buyers have borne the brunt of the pain. One of the major consequences of the pandemic was a plunge in sales, according to 70% of buyers, while only 57% of the exhibitors felt the same. Buyers also have greater exposure to the rising cost of logistics – the primary cost concern among traders – with one-third highlighting this pandemic-led impact on their businesses, compared to 19% of exhibitors.

      The more devastating impacts on buyers’ financials are reflected in their different coping strategies. While both buyers and exhibitors have undertaken cost reduction measures such as shutting down brick-and-mortar shops (26% of buyers and exhibitors) and scaling businesses down (20% of buyers and 15% of exhibitors), buyers have been less able to increase revenue by measures such as expanding e-commerce activities (14% of buyers and 24% of exhibitors), developing new markets (4% of buyers and 14% of exhibitors), offering personalised services (3% of buyers and 9% of exhibitors) or launching crossover collections (2% of buyers and 10% of exhibitors).

        A Firmer Recovery As major markets reopened, the fashion industry started to revive as early as the second half of 2020. This encouraging trend continued in 2021, with the global trade in clothing seeing year-on-year growth of 12% and 54% in the first and second quarter [2]. Clothing exports from Hong Kong and mainland China increased in line with this. The mainland’s clothing exports performed well above the world average during the pandemic. Despite a 20% year-on-year slide in the first half of 2020, the world’s largest clothing exporter managed to close last year with just a 7% decline in clothing exports. In the first eight months of 2021, the mainland’s clothing exports exceeded those for the same period of 2019. Meanwhile, Hong Kong also registered a 4% year-on-year growth in January-August 2021. In sync with the export trade performance, fashion traders have become more optimistic about the industry outlook over the next 12 months. A net 30% (=48%-18%) of buyers and 53% (=60%-7%) of exhibitors expect sales to grow next year on the back of three top business opportunities, namely recovering purchasing power (38% of buyers and 41% of exhibitors), the rise of e-tailing (34% of buyers and 37% of exhibitors) and new promise from emerging markets (25% of buyers and 26% of exhibitors).  
        Production Costs, Sourcing Budgets and Retail Prices As in other industries, fashion traders see unprecedented risks looming in the global supply chains, including fluctuations in the global economy (44% of buyers and 39% of exhibitors), pandemic-triggered production/supply bottlenecks (42% of buyers and exhibitors), rising operating costs (32% of buyers and 39% of exhibitors) and restrictions on business trips (33% of buyers and 38% of exhibitors).  
      To steer the recovery past these imminent threats, buyers plan to take a more prudent approach towards their 2022 sourcing budget, with only a net 20% (=32%-12%) of buyers planning for an increase, significantly less than the 42% (47%-5%) in the 2019 survey. The weighted average growth of the sourcing budget for 2022 is 3.2%, mainly driven by the price factor.  
      The survey also sheds light on how buyers and exhibitors are planning to handle the rising pressure on costs as supply chain disruptions continue. In anticipation of a 9.7% (weighted average) increase in production costs next year, exhibitors are willing to absorb about half of the increase, charging their buyers a 5.2% (weighted average) higher FOB price. Buyers are also ready to shoulder some of the rising costs by paying a 5.9% (weighted average) higher sourcing price, while expecting only a 1.6% increase in retail price.  
        Asia’s Sales Promise How fashion traders see future sales potential in different markets and product segments is also addressed by the survey, giving an indication of their sales plans for the coming years. The mainland (3.51), is seen as the most promising market for the next two years, and is also one of the few markets where exhibitors see higher business potential than they did in 2019. Other Asian markets among the top five markets include South Korea (3.33), Hong Kong (3.33) and Japan (3.20). The findings are in line with the HKTDC export index 3Q21 which indicated that the best export market prospects will lie within Asia.  

      HKTDC Export Index – by Market

      HKTDC Export Index by Market




      Mainland China


























      Source: HKTDC Research
      Product-wise, casual wear and city wear (45%) will remain the most popular fashion categories in 2022, despite greater interest in fashion accessories (24%) and sportswear (14%). This largely aligns with the belief that the growing popularity of sportswear and activewear such as gym and yoga clothes is likely to continue through the next year and beyond.  
      Fashion traders differ when it comes to product development. This year, crossover or joint promotion with other fashion brands has become the most popular product development strategy (30% of respondents). It is followed by sustainable fashion (21%) and celebrity or key opinion leader‑endorsed fashion collections (20%), largely in response to the rise of green consumerism and social media marketing.  
        E-tailing Thrives In response to the impacts of Covid-19, exhibitors have leapt to adopt e-commerce sales channels, with almost three-quarters of them having an established online presence this year, compared to just 44% in the 2019 survey. Buyers, on the contrary, had a lower e-tailing adoption rate of 42% this year, compared to 55% in 2019.  
      More than 40% of those who are not yet engaged in e-commerce have plans to start up in the next two years, a far greater intention than was evident in the 2019 survey.  
      When it comes to the major fashion categories, women’s wear (48% of respondents) remains at the top of the e-tailers’ list, while men’s wear (24% of respondents) came third, after fashion jewellery – an increasingly popular product category among fashion traders (32% of respondents), moving up from fifth place in the 2019 survey.  
      Profile of Respondents
      • 171 buyers – major markets in Europe (43%), Hong Kong (42%), North America (26%), mainland China (25%) and Asia excluding Hong Kong and mainland China (35%).
      • 125 exhibitors – major markets in Hong Kong (79%), mainland China (35%), Asia excluding Hong Kong and mainland China (29%), Europe (25%) and North America (15%).
      CENTRESTAGE 2021 took place from 10-12 September 2021 at the Hong Kong Convention and Exhibition Centre, which brought together more than 200 fashion brands from 24 countries and regions, with 30 fashion events taking place.
        Source: HKTDC , authored by Louis Chan, Charlotte Man

      [1] Global trade rebound beats expectations but marked by regional divergencesWorld Trade Organization (WTO), 4 October 2021

      [2] Global trade rebound beats expectations but marked by regional divergencesWorld Trade Organization (WTO), 4 October 2021

    • EU’s New VAT E-Commerce Rules for Low Value Imports

      The EU has introduced new VAT e-commerce rules for imports in order to enhance fair competition for EU businesses and reduce VAT losses which had previously been incurred. This was due to importation of goods with a value not exceeding €22 from third countries or territories, such as Hong Kong and mainland China. EU businesses did not benefit from such VAT exemption when selling goods in the single market, which was deemed to be unfair, and has therefore been abolished after June 2021.

      The new VAT e-commerce rules introduce new obligations for marketplaces and platforms facilitating goods supply online regarding distance sales imported from third countries or territories in consignments of an intrinsic value not exceeding €150 (low value goods as defined in the Duty Relief Regulation (Regulation (EC) No 1186/2009)). The intrinsic value, for commercial goods, is the price of the goods themselves when sold for export to the EU customs territory, excluding transport and insurance costs, unless they are included in the price and not separately indicated on the invoice, and any other taxes and charges as ascertainable by customs authorities from any relevant document(s).

      Two New Schemes The new VAT rules introduce two new schemes particularly relevant to customs clearance for B2C internet or distance sales from third countries or territories to EU consumers:
      • The rules have abolished the VAT exemption for imported goods below €22 as of 1 July 2021. Thus, all commercial goods imported into the EU from a third country or territory is now subject to VAT, irrespective of value; and
      • The rules provide two new methods to collect VAT on goods in consignments of a value not exceeding €150. These are the Import One Stop Shop (IOSS) and “special arrangements [1]”. It should be noted that these two schemes cannot be applied for excise goods, namely, alcohol/alcoholic drinks; energy products and electricity; and tobacco products. Furthermore, in order to ensure that VAT is collected at import, from 1 July 2021, an import declaration is required for all goods entering the EU, regardless of value.
      The IOSS The first scheme is an Import One Stop Shop (IOSS) system whereby the supplier can fulfil all VAT obligations (reporting and payment) in one EU member state, either directly or via an intermediary appointed for this purpose. The VAT paid by the consumer to the supplier at the time of sale is declared and paid through a single IOSS VAT return on a monthly basis directly by the supplier or an intermediary. As a result, the actual import of goods into the EU is exempt from VAT. The IOSS is available to sellers making direct imported sales to EU consumers from their own website, or available to marketplaces/platforms which facilitate those supplies. The use of the IOSS is not mandatory. Member states are required to compile a monthly listing of the total value of imports per IOSS VAT identification number in their territory for which a valid IOSS VAT identification number has been provided upon importation. The European Commission’s Surveillance system will be used for this purpose. Therefore, customs authorities must regularly send all relevant data from customs declarations to the Surveillance system to allow for the production of the monthly reports that the VAT legislation requires. The tax authorities of member states will get access to the monthly IOSS reports directly from Surveillance. They will use such information for control purposes, by matching the value provided here with the that declared in the VAT return submitted by the holder of the IOSS VAT identification number. Thus, the IOSS is a monthly filing submitted to a tax authority in one nominated EU member state for declaration of import VAT due in all EU countries. As the new e-commerce VAT rules introduce new obligations for marketplaces and platforms that facilitate online goods supply from third countries to EU consumers, Hong Kong sellers may like to know that sales via online marketplaces – such as Amazon,eBay,Kaufland, Media Markt and Otto – would be affected. For a non EU-based company, which does not have a warehouse in any EU member state, online marketplaces would now be responsible for calculating, collecting and remitting VAT on the sale of their low-value B2C imports into the EU from 1 July 2021 (in the event that the online marketplaces opt to use the IOSS, keeping in mind that use of the IOSS is not mandatory). This is the case where the goods are ordered through any online marketplace, and where goods are delivered from inventory stored outside the EU in a consignment with an intrinsic value of up to €150 (therefore under the IOSS scheme). For the relevant imports, the marketplace essentially charges the buyer VAT at the rate applicable in the destination country at the point-of-sale and declares and remits it to the relevant tax authority instead of the seller.
      Special Arrangements The second scheme is intended primarily for economic operators who present goods to customs authorities and declare the low-value goods (on behalf of the consumer), such as postal operators, express carriers and customs agents, when the IOSS is not used. Under such scheme, the VAT becomes due on import in the destination member state only if it was effectively collected from the importer (i.e., the consignee of the goods), in order to avoid burdensome refund procedures. These economic operators pay the VAT amounts collected from the individual consignees for all imports during a given month. This global payment must be done by the deadline applicable to the payment of import duty in accordance with the Union Customs Code to the competent tax/customs authorities. It should be noted that a new form of customs declaration has been introduced for free circulation of goods in consignments not exceeding €150 (so-called super-reduced dataset). This customs declaration only requires a minimum number of data elements (about one-third of a standard customs declaration full dataset). It will only apply to low value duty-free goods and private-to-private consignments up to €45 that are not subject to prohibitions or restrictions. It is hoped that the smaller number of data elements will also facilitate and speed up the process of dealing with a high volume of parcels. This customs declaration is available to any person – consumers, businesses, postal or express operators. Both customs administrations and economic operators (particularly postal operators and couriers) have to adapt their IT systems to allow for the declaration of low value consignments. The European Commission has produced a “Guidance for Member States and Trade” on the VAT e-commerce package. Hong Kong sellers are advised to examine this document carefully to learn more about the abovementioned concepts and the relevant changes from the old VAT rules for low-value distance sold goods (via the internet) to EU consumers.
        Source: HKTDC Research, authored by Louis Chen  

      [1] Please refer to pp.49-54 of “Importation and Exportation of Low Value Consignments – VAT E-Commerce Package” for more details.

  • India
    • India’s Sustainable Start-ups

      Inventions by Indian start-ups are proof of technological advancement and optimistic influence generated from maintaining an environmentally cognizant approach to business. Global climate, government backing, and private investments have developed a beneficial ecosystem for start-ups to test and design solutions fitted for India. The nation’s demands are taking leaps and bounds towards being more environmentally affable. Being environment friendly is about enduring the required actions and taking deliberate measures to challenge lifestyles and economise resources. The endeavour to go green has been regarded by numerous industries, as businesses are starting to acknowledge how their operations affect the environment. India's companies and start-ups seem to put in universal effort to save the planet and contain climate change by employing recycled or renewable resources to lower energy consumption and waste.

      Massive climate change catastrophes over the last decade have attracted the attention of prospective eco-entrepreneurs and CEOs. They contribute to India's sustainability affirmation by recognising the indicative trends and making critical transformations in their respective sectors. Given the scale of industries in India, the country has incredible prospects to play a vital role in sustainable industrial development (ISID).

      India's SMEs have become a critical force in propelling the economy over the years. According to the Confederation of Indian Industry (CII), the country's 42.5 million SMEs employ about 40 per cent of India's workforce and contribute about 30 per cent of the country's GDP. Consequently, to fulfill India's SDG commitments, the government puts its stake in MSMEs. Different government initiatives such as Zero Defect, Zero Effect (ZED) are building a robust ecosystem of sustainability drivers.

      The contemporary line of young eco-entrepreneurs is carrying the sustainability narrative onwards, innovating their company prototypes and presenting a sustainability first philosophy recognised in a new era of environmentally cognizant products and services. They are being supported by the vibrant multiple sustainability-driven ecosystems, strengthening its stimulus.

      Indian Start-ups Making India Sustainable:

      Waste Ventures India: A Telangana-based for-profit social firm is raising the value to stakeholders across the value chain by transforming paradigms in solid waste management. The start-up claims to reduce waste of a particular gated society or office by up to 90 per cent and leaves a green footprint in return. Its R&D team has designed a scientific, free-from-infested flies and odourless procedure to consolidate organic waste. In the process of ground waste collection, it is spreading awareness about waste management among the local community, which is enabling the people to understand recycling better, composting, and other green initiatives. It is one of the first start-ups which provided a digital doorstep recyclable pickup service in Hyderabad. The company has prevented over 3000 tons of waste from Indian dumpsites since late 2013.

      Nexus Power: The start-up creates biodegradable electric vehicle batteries from crop residue by leveraging nanotechnology. The business utilises one of the significant sources of air pollution, unburnt crops, in manufacturing rechargeable energy-storing cells using a distinctive extraction and filtration technique. Such cells are later installed in electric vehicles as they are used to make the IoT and AI-based sensor-enabled battery pack.

      Zunroof: ZunRoof is a home tech start-up and a residential solar rooftop company. It is a Gurugram established start-up founded in 2016 that delivers solar energy and IoT smart energy solutions for creating next-generation energy technology. It claims over 10,000 solar rooftop installations and 30,000 system designs across India. The five-year-old start-up is currently in over 75 cities across 12 states and claims to have preserved electricity bills worth INR 50 crore. The start-up is supported by the family office of alliance Godrej, Intellicap Investment Network, and alumni of IIT Kharagpur.

      Phool.Co: Phool. co is a flower recycling technology start-up. It concentrates on the circular economy, remaking floral waste into charcoal available luxury fragrance products. They accumulate the floral waste from the temples and mosques in Uttar Pradesh, averting 7600 kgs of waste flowers and 97 kgs toxic chemicals from reaching into the river every day. Rustic women self-help groups handcraft the waste into patented organic fertiliser and scent sticks through flower cycling. While these startups are playing their part in making the nation sustainable, covering these startups also plays a larger part in encouraging more young and bright minds of India to not just create businesses but make them future-ready in the sense that they are the future themselves.

      This article has been co-authored by Karishma Sharma and Bhakti Jain. 

      Source: Invest India

    • Inside India’s Production Linked Incentive Schemes: Specialty Steel

      Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi, approved the Production Linked Incentive (PLI) Scheme for specialty steel. The duration of the scheme will be five  years,  from 2023-24 to 2027-28.With a budgetary outlay of  INR 6322 crores, the scheme is expected to bring in investment of approximately INR 40,000 crores and capacity addition of 25 MT for speciality steel. The scheme will give employment to about 5,25,000 people of which 68,000 will be direct employment.

      Speciality steel has been chosen as the target segment because out of the production of 102 million tonnes steel in India in 2020-21, only 18 million tonnes value added steel/speciality steel was produced in the country. Apart from this out of 6.7 million tonnes of imports in the same year, approx. 4 million tonnes import was of specialty steel alone resulting in FOREX outgo of Approx. INR 30,000 crores. By becoming Aatmanirbhar in producing speciality steel, India will move up the steel value chain and come at par with advanced steel making countries like Korea and Japan.

      It is expected that the speciality steel production will become 42 million tonnes by the end of 2026-27. This will ensure that approximately 2.5 lakh crores worth of speciality steel will be produced and consumed in the country which would otherwise have been imported.   Similarly, the export of specialty steel will become around 5.5 million tonnes as against the current 1.7 million tonnes of specialty steel getting FOREX of INR 33,000 crore.

      This report has been authored by Mishika Nayyar, Devika Chawla, Azaad Sandhu, Chitra Negi Jain and Rumana Rehman.

      Source: Invest India

  • Switzerland
    • Switzerland continues to be top magnet for talent

      Switzerland has topped the IMD World Talent Ranking in Lausanne for the sixth consecutive year for 2021, earning top marks for its support of the domestic workforce. It is also highly attractive to international talent.

      Switzerland is once again the country with the greatest ability to develop both homegrown talent and to attract talent from abroad, according to the IMD World Talent Ranking 2021 published by the International Institute for Management Development (IMD) in Lausanne. Switzerland has come in first place for the sixth consecutive year in the annual ranking. And this year again, the gap between Switzerland and the other countries is noticeable. While the IMD analysts gave Switzerland a full 100 points, second-placed Sweden received 90.611 points, and Luxemburg received 88.344 points in third place.

      Switzerland is a talent incubator

      Switzerland is a top performer both in terms of total investment in the education system and talent development, as well as in the quality of talent itself. It has the best apprenticeship training in the world and is the global number two in terms of public expenditure per student. The international experience of its managers is top-notch, and the education of its students and managers meets the needs of companies like no other country in the world.

      International talent attracted to Switzerland

      Switzerland is also highly appealing to international talent, and highly skilled professionals are attracted to it like to no other country. Specialists in Switzerland benefit from a high purchasing power in addition to the world’s best healthcare system. Although the cost of living is comparatively high, Switzerland offers the second-highest quality of life overall.

      This year, 64 countries were represented in the ranking. Among Switzerland’s neighbors, Austria made it to seventh place, Germany to tenth place, France came in 25th, and Italy in 35th. The analysts at the IMD World Competitiveness Center and their colleagues from partnering institutes surveyed thousands of managerial staff to compile the ranking.

      Source: Switzerland - Global Enterprise

    • GZA wins Financial Times Strategy Prize

      fDi Intelligence has awarded Greater Zurich Area AG a prize for the promotion of advanced manufacturing technologies. The jury saw signs that an attractive center for high-tech manufacturing was emerging in the form of the region’s clusters for robotics and intelligent systems.

      Greater Zurich Area AG (GZA) was awarded the specialist prize for advanced manufacturing at the fDi Strategy Awards 2021. Strategy prizes are awarded to global business and location promotion agencies that have distinguished themselves in certain areas during the current year. fDi intelligence is the department for foreign direct investment (FDI) at the Financial Times, the London-based business newspaper.

      For this year’s edition, a four-strong fDi jury reviewed 34 locations and agencies that stood out across various fDi Intelligence rankings in 2021. The main prizes were awarded in the four core categories of Global Cities of the Future, African Tech Ecosystems, American Cities of the Future and Tech Cities of the Future

      The New York City Economic Development Corporation was named as best investment promotion agency (IPA) and also claimed the prize for the highest degree of sustainability. The award for best aftercare services went to Berlin Partner for Business and Technology.

      In addition, the jury awarded prizes for outstanding achievements in specific sectors. It noted that the Greater Zurich Area, as Switzerland's financial metropolis, has a strong concentration of companies that use cutting-edge manufacturing processes. As the jury stated in comments explaining its decision in favor of GZA, this “in combination with the city’s clusters for robotics and intelligent systems” indicates “that the location will be an attractive center for high-tech manufacturing”.

      Source: Switzerland - Global Enterprise

    • Italian Council of Ministers Approves Agreement on Taxation of Frontier Workers and Exchange of Letters Under Tax Treaty with Switzerland

      On 3 December 2021, the Italian Council of Ministers approved a draft law ratifying the agreement on taxation of frontier workers and exchange of letters, both signed on 23 December 2020, under the Italy - Switzerland Income and Capital Tax Treaty (1976), as amended by the 1978 and 2015 protocols. Once in force and effective, the new agreement will replace the agreement on taxation of frontier workers between Italy and Switzerland, signed on 3 October 1974. Further developments will be reported as they occur.

  • United Arab Emirates
    • The UAE Government is to adopt a new working week, effective from 1st January 2022

      The UAE Government has announced that it will transition to a four and a half day working week, with Friday afternoon, Saturday and Sunday forming the new weekend.

      All Federal government departments will move to the new weekend from January 1, 2022, but also majority of the UAE private sector companies plan to shift to the new Monday-Friday working week in response.

      Alongside the move, Friday sermons and prayers across the Emirates will be held from 1.15pm. Government staff will have the flexibility to make arrangements to work from home on Fridays, as well as to arrange their working hours on a flexi-time basis.

      Adopting an agile working system will enable the UAE to rapidly respond to emerging changes and enhance wellbeing in the workplace. From an economic perspective, the new working week will better align the Emirates with global markets, reflecting the country’s strategic status on the global economic map. It will ensure smooth financial, trade and economic transactions with countries that follow a Saturday/Sunday weekend, facilitating stronger international business links and opportunities for thousands of UAE-based and multinational companies.

    • UAE President Issues Federal Decree Law On Regulation Of Labour Relations In Private Sector

      President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued the Federal Decree - Law No.33 of 2021 on the regulation of labour relations in the private sector that will take effect from February 2, 2022.

      The new decree-law seeks to enhance the elasticity, resilience and sustainability of the labour market nationwide, as well as ensure protection of workers' rights. It places worker welfare and wellbeing at its core, and accordingly, a host of measures have been provided therein to ensure a safe, healthy, and business-conducive environment for all employees in the private sector.

      Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said in a media briefing that the new decree law is the biggest update to the laws regulating labour relations. He added that it comes as part of the UAE Government’s efforts to create a flexible and competitive business environment at a time the nation is about to embark on its journey towards the next 50 years.

      "The law comes in response to the rapidly-changing workplace amid technological advancements and the outbreak of Covid-19. It will apply to different work categories including full-time, part-time, temporary and flexy work among other categories. The executive regulations of the law, which the ministry is currently working on, lays out the responsibilities of both parties in each category," he said."

      The minister added that the preparation of the new law has been carried out in consultation with all parties concerned in the federal and local government sectors and the private sector.

      Al Awar elaborated that the new law seeks to ensure efficiency in the labour market and also attracts and retain the best talent and skills for employment, in tandem with providing a stimulating and conducive work environment for employees.

      The law supports the efforts to enhance the competitiveness of Emirati cadres in the labour market, as well as empower women, the minister added.

      "It enhances the flexibility and sustainability of the labour market nationwide, by guaranteeing the protection of the work relationship, its developments and the exceptional circumstances it may face."

      Al Awar added that the new law has developed an advanced mechanism that will ultimately enhance ease-of-doing business, competitiveness and productivity of the labour market.

      The minister noted that the decree-law guarantees the rights of both the employer and the employee in a balanced manner and ensures protection for both the parties so that they can claim these rights as and when necessary.

      He pointed out that the new law ensures the wellbeing of workers in the private sector and emphasizes on international labour obligations agreed upon by the UAE.

      The minister explained that the executive regulations are currently being prepared to regulate implementation of the provisions of the decree-law, noting that the decree gives flexibility to the Cabinet by granting it a set of competencies aligned with current and future developments.

      He added that the Ministry of Human Resources and Emiratisation will work on proposing policies, strategies and legislations to encourage and motivate enterprises to invest in training and empower workers; boost their skills, efficiency and productivity; adopt modern technologies; and attract the best talent according to the requirements of the labour market in the country; as well as train students of public and higher-education institutions endorsed by the state.

      The new law aims to enhance the flexibility and sustainability of the labour market in the country, as well as guarantee protection of workers, the minister stressed.

      In Article 74, the decree-law stipulates that the employer may not use any means that would force the worker or threaten him/her with any penalty or force him/her to work for the employer or force him/her to provide a service against his/her will.

      The law forbids sexual harassment, bullying or any form of verbal, physical or psychological violence against a worker by the employer, his/her superiors at work or colleagues.

      It prohibits all forms of discriminations based on race, colour, sex, religion, national or social origin or disability that would scale down the possibilities of equal opportunity, prejudice equal access to or continuation of employment and enjoyment of rights.

      The amendments stressed that while not violating the prescribed rights of working women stipulated in this decree, all provisions governing the employment of workers without discrimination shall apply to women, with an emphasis on granting women the same wage as men if they are doing the same work or work of equal value, which will be determined by a Cabinet decision.

      Among the key amendments provided by the decree law is the introduction of new types of work to allow employers to meet their labour requirements and benefit from their energies and productivity at the lowest operational cost through part-time work, temporary work and flexy work, as well as allow employers to hire those whose work contracts have expired, but who are still in the country, through easy and flexible procedures.

      Part-time work allows work for an employer for a specified number of hours or days. Temporary work is work whose implementation requires a specified period of time or is focused on work that ends with completion of a specified job. Flexible work is work for which working hours or work days change according to the volume of work and economic and operating variables of the employer.

      The executive regulations of the law determine the conditions and control of work patterns and the obligations arising from each worker and employer, depending upon the type of employment, including what is related to end-of-service gratuity and as required by the interest of the two parties to the work contract.

      The law grants companies the flexibility to pay wages in UAE dirhams or in any other currency, according to the agreement between the two parties in the work contract.

      The decree-law also permits the employer to prohibit the worker from competing with the employer or participate in any competing project in the same business, should the work entrusted to the worker permit him/her to know the employer’s clients or access his or her trade secrets, provided that the condition is specified in terms of time, place and type of work to the extent necessary to protect legitimate business interests and the period of non-competition shall not exceed two years from the date of contract expiry.

      The decree-law specifies a fixed-term contract as one that doesn't exceed three years, and it is permissible, upon agreement by the two parties, to extend or renew this contract for a similar or lesser duration once or more.

      The provisions of the decree-law shall apply to employment contracts of indefinite durations concluded in accordance with the Federal Law No (8) of 1980.

      The law also stipulates that unlimited employment contracts are to be converted into fixed-term employment contracts, in accordance with the conditions, controls and procedures envisaged in this decree by law, within one year of the effective date of the existing contract and may be extended by the Cabinet for further periods as required in public interest.

      All private sector workers are entitled to a paid, weekly rest day, with the possibility of increasing the weekly rest day at the discretion of the employer, in addition to providing vacations for the workers, including compassionate leave ranging from three to five days, according to the degree of the employee’s relationship with the deceased. In addition, paternity leave of five days shall be granted to private sector workers. Any other leave shall be decided by Cabinet.

      The law also assigns the employer the responsibility to pay for the fees and costs of recruitment and not to collect the same from the worker either directly or indirectly.

      The law stipulates the prohibition of withholding of official documents, such as passports, belonging to the workers and forcing him or her to leave the country at the end of an employment contract. This has been done to allow the worker to move to another establishment in the labour market. The worker shall also have the right to obtain his or her wages on the due date in accordance with the regulations approved by the ministry and according to the conditions and procedures as specified by the Executive Regulations of this decree-law.

      The decree-law permits the worker, in the event of expiration of the work contract, to move to another employer. A probationary period for the worker may not exceed six months, in accordance with the law's executive regulations The amendments include a provision, according to which, a worker is entitled to an end-of-service gratuity, in accordance with the legislation regulating pensions and social security in the country.

      As per the law, a foreign worker who has worked full-time and who has completed one year or more of continuous service with an establishment, shall be paid end-of-service benefits calculated according to the basic wage, with a wage of 21 days for each of the first five years of service and 30 days for each subsequent year.

      The decree-law waives judicial fees in all stages of litigation in all stages of litigation, execution and requests made by workers or their heirs, the value of which does not exceed AED100,000.

      It regulates the obligations of the employer, the most prominent of which is the establishment of labour regulations, the obligation to provide adequate accommodation, protection and prevention, as well as train workers and help them develop their skills.

      In the meantime, the law regulates the workers’ obligations based on the terms of the employment contract and in accordance with duties, notably performing work during the specified times; abiding by work ethics and good conduct; keeping work secrets; developing job skills; committing not to work for another competing employer; vacating the labour accommodation within one month of expiry of employment contract and other obligations.

      The decree-law regulates the controls and conditions for terminating work contracts in a way that guarantees the rights of both parties. The amendments also strengthen the controls for the employment of juveniles, as well as with regards to the entitlements of the deceased worker, the requirements for occupational safety and other controls that guarantee the rights of both parties in a balanced manner.

      Source: MOHRE

    • UAE ranks first regionally,11th globally in Global Knowledge Index

      Under the patronage of H.H. Sheikha Latifa bint Mohammed bin Rashid Al Maktoum, Chairperson of the Dubai Culture & Arts Authority (Dubai Culture), the United Nations Development Programme (UNDP) and the Mohammed bin Rashid Al Maktoum Knowledge Foundation (MBRF) today unveiled the Global Knowledge Index leaders for 2021, in its fifth edition in a row, which aims to measure knowledge globally as a comprehensive closely connected with sustainable development and with different dimensions of modern human life.

      In this year’s edition, the knowledge index included 155 variables, selected by more than 40 international sources and databases.

      The results of global knowledge index for the year 2021 unveiled that Switzerland came in the first place globally for the fifth year in a row, followed by Sweden, the US, Finland and the Netherlands. While the UAE was ranked 11th globally and first in the Arab World at GKI 2021.

      Switzerland has retained its top ranking for the fifth consecutive time this year.

      "The world is not completely out of the grip of COVID-19, but without doubt what stands out as we negotiated these trying times, is the relentless quest for knowledge that led us to develop vaccines as well as remedial and precautionary measures against the virus. Obviously, this continuing focus on knowledge and its triumph is what has led us to bring back careful normalcy in our daily life, and what has enabled this face-to-face meeting today," said Jamal bin Huwaireb, CEO, MBRF.

      He said this year there has seen an extended participation in GKI endeavor, globally as well regionally, signifying the increased commitment towards reinforcing knowledge as a key driver for economic and social growth. The Arabic countries which debuted this year included Iraq and Palestine, joining the portfolio of 16 regional countries in the index.

      Globally, the country level participation at GKI 2021 was at 154, compared to 138 last year.

      Oher countries in the GKI global leader list up to the 100th position included Qatar at the 38th place, Kingdom of Saudi Arabia at 40, Kuwait (48), Oman (52), Egypt (53), Bahrain (55), Tunisia (83) and Lebanon (92). Morocco was at 101 globally, followed by Jordan (103), Algeria (111), Iraq (137), Sudan (145), Mauritania (147) and Yemen (150).

      "When the word stands at these challenging cross roads, the increased global participation at GKI is a robust indicator of how knowledge is the single most factor that will help world nations prosper and lead in front for the benefit of posterity with sustainable focus. In this context, the GKI series has developed into an accepted and prudent benchmark in assessing knowledge-based societies and their growth," said Dena Assaf of the UN.

      "It is encouraging to see that in certain key branch indexes that drive knowledge, innovation and education, Arab countries have been faring well and is firmly on the road to progress. Significantly, it shows the positive impact of the awareness that the new world is largely shaped and led by countries that have an edge in knowledge," said Khaled Abdel-Shafi, Regional Hub Manager, UNDP Regional Bureau for Arab States (RBAS).

      The launch ceremony was also immediately followed by a ministerial panel on `Rethinking Policymaking in the Age of Knowledge,’ with the participation of Hussain Al Hammadi - Minister of Education, Dr. Tarek Shawki - Minister of Education, Egypt, Ahmed Hanandeh, Minister of Digital Economy and Entrepreneurship, Jordan, Dr. Fadia Kiwan - Director General, Arab Women Organization, and moderated by Dr. Hany Torky - Manager, Knowledge Project, UNDP RBAS.

      The average global performance rate at GKI 2021 stood at 48.4 per cent, while for the seven branch indexes of the index, the best performance was for pre-university education at 60.8 per cent, followed by enabling environment (55.3), economy (52.9), technical learning and professional training (51.2), higher education (46.1), ICT (43.3) and research and development and innovation (31.4).

      GKI is produced annually since 2017 by the Knowledge Project, a partnership between UNDP-RBAS and MBRF. The index includes 155 variables, selected from over 40 sources and international data bases including the UNESCO, World Bank, ITU, International Monetary Fund (IMF), Organisation for Economic Cooperation and Development (OECD), International Labour Organisation (ILO) etc.

      "Over the years the Knowledge Project and GKI have been able to facilitate a strategic and forward looking policy push among countries and decision makers to give more weightage to knowledge-centric development. This shift in developmental vision is imperative in times when sustainability has also become a core issue that needs to be addressed with alacrity, and the institution of GKI has added immense value to this context," said Dr. Hany Torky, Manager, Knowledge Project, UNDP RBAS.

        Source: WAM
    • Tourism growth in Dubai gathers pace with 4.88 million visitors between January – October 2021

      - Dubai reinforces its status as one of the world’s safest and fastest growing tourism destinations - Department of Economy and Tourism shares positive industry results at second bi-annual City Briefing event held at Ain Dubai attended by over 1,150 stakeholders and partners - International visitation in Dubai in October alone reaches over one million - 9.4 million room nights sold between January - October 2021 in comparison to 7 million room nights in the same period in 2019 - Expo 2020 raises Dubai’s profile as best city to live, work and visit Dubai’s Department of Economy and Tourism (DET) revealed that the emirate welcomed 4.88 million visitors between January - October 2021 with international visitation during October alone reaching over one million. Reflecting the rising growth momentum and stability of the industry, strong international visitation was complemented by a robust domestic tourism market, further boosting the hospitality sector resulting in 9.4 million room nights sold between January - October 2021 in comparison to 7 million room nights sold in the same period in 2019. The latest tourism figures were released at the second bi-annual City Briefing of 2021 held by the Department of Economy and Tourism to provide stakeholders with key updates on the tourism sector’s positive growth and insights into current and future strategies and global marketing campaigns. As Dubai continues to lead the global tourism rebound and stimulate international business growth, the forum featured a detailed presentation on domestic and global developments, including an overview of increasing visitor numbers, hotel occupancy, and activities in international markets, which have all reinforced Dubai’s profile as a safe, must-visit destination and the world’s best city to live, work and visit. The meeting was presided by His Excellency Helal Saeed Almarri, Director General, Dubai’s Department of Economy and Tourism, and was attended by over 1,150 representatives from leading establishments in the hospitality, travel, and tourism sectors. The forum was part of DET’s regular dialogue with business leaders to encourage collaboration and exchange insights to ensure the industry is seamlessly aligned with tourism growth initiatives and strategies. Held at Ain Dubai, the forum discussed ways to further accelerate growth in the industry, leveraging the latest landmark attractions to open in Dubai. HE Helal Saeed Almarri, Director General, Dubai’s Department of Economy and Tourism, commented: “Inspired by the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE, and Ruler of Dubai and strengthened by the success of Expo 2020 Dubai and the UAE’s Golden Jubilee celebrations, Dubai has been at the vanguard of the world’s tourism and economic rebound, setting the tone for sustained recovery and growth. “Our multi-pronged strategy to combat the pandemic and deployment of wide-ranging initiatives to increase our global competitiveness and attractiveness is a hallmark of Dubai’s highly progressive public-private partnership model, which has been a cornerstone of not only what was achieved in 2021 but what will be achieved in the next critical 12 to 24-month period. Expo 2020 also provides us a unique platform to engage with the global community as all hotels and tourism partners work closely to facilitate visits for their guests to maximise this opportunity. “Through this highly energised and cohesive tourism and economic ecosystem, I am confident that Dubai will deliver on its vision of being the world’s leading global centre for investment, business, talent, visitation and next-generation thinking.” Dubai’s strong reputation for safe travel internationally has resulted in both domestic and international tourism growth, as seen by the improved hotel performance. In a year-to-date study in October 2021, occupancy was at almost 64%, while the length of stay showed a 12% increase from 4.1 nights to 4.6 nights. During this period, there were 24.74 million occupied rooms nights across the emirate at an average daily rate of AED384, in comparison to 15.66 million occupied room nights at an average daily rate of AED335. Room inventory is now 6% higher than 2019. Taking a closer look at the profile of international visitors, research showed that in the first half of 2021, Dubai visitors were balanced across genders with 52% male visitors and 48% female visitors. During this time, the emirate also attracted a higher first-time visitor’s volume, reflecting the attractiveness of the city despite the pandemic, when compared to the first half of the previous year. Issam Kazim, Chief Executive Officer, Dubai Corporation for Tourism and Commerce Marketing commented: “At Dubai’s Department for Economy and Tourism, we are proud to be part of the success Dubai has achieved so far in 2021, which has been built on the vision and leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Over the last five decades Dubai has transformed into a global tourism and business hub and through the effective citywide management of the pandemic, the city has strengthened its position as one of the safest destinations in the world. Dubai’s ability to evolve and adapt, with the support of our stakeholders and partners, has been critical in ensuring that the city continues to retain its position at the forefront of the world’s leading travel and business destinations. With our world-class infrastructure, one of the highest vaccination rates in the world and flexible working visas, Dubai is becoming the preferred business hub for conglomerates and start-ups alike. As part of our strategy, we have consistently used innovative global campaigns to further highlight the city’s multi-faceted touristic appeal and reach our overseas markets, with the latest being Dubai Presents. This synergetic approach to showcasing Dubai’s diverse offering involves the enlistment of celebrities, influencers and community personalities to create a steady stream of ambassadors and advocates to narrate Dubai’s story across gastronomy, retail, tourism, leisure and events to showcase it as the best city to live, visit and work in.” To ensure that Dubai was top-of-mind and seen as the destination of choice for 2021, DET launched an integrated global marketing campaign via ‘Dubai Presents’ that broadcast over 3,500 assets across 25 languages and specifically targeted audiences that were seeking international travel, had engaged with previous campaigns or were searching for Dubai on digital channels. By creating Hollywood inspired trailers with A-list actors Jessica Alba and Zac Efron, DET simultaneously highlighted the emirates’ multiplicity of offerings and reinstated its profile as ‘the happening city’. Dubai’s ability to evolve and adapt, combined with its diversified multi-geographic approach to markets, was key in ensuring that Dubai retained its relevance and competitiveness as a global destination and creative hub. In the last year, the emirate built momentum in business tourism as Dubai gave more flexibility and options for talent to visit and stay by introducing new categories and programmes, which included the Golden Visa, the Property Investor Visa, the Entrepreneur Visa, the Retire in Dubai Visa and the Virtual Working Visa. The focus for DET for the upcoming year is to continue to drive growth across all sectors. Initiatives will be introduced to further catalyse Expo 2020 visitor numbers, strengthen relationships with the travel trade and explore new channels to source visitors. By highlighting Dubai’s versatility, DET plans to demonstrate its position as a thriving global hub for business and tourism, gastronomy, sustainability, weddings, retail and events.

      Source: Media Office

    • Sharjah Ruler approves AED 34.422 billion budget for 2022

      H.H. Dr. Sheikh Sultan bin Muhammad Al Qasimi, Supreme Council Member and Ruler of Sharjah, has approved AED34.4 billion for the 2022 general budget for the Emirate of Sharjah. This is in line with the emirate’s strategic vision regarding promoting economic and social development, enhancing financial sustainability, and stimulating the overall economy.

      The general budget contributes to both services and development and is based on the process of strengthening the emirate’s financial pillars to advance economic, cultural, scientific and tourism leadership and enhance capabilities to meet various economic challenges. The budget has adopted various strategic goals and indicators, including promoting investment in infrastructure and other economic activities to achieve a competitive advantage, and providing various forms of social support to address the needs of citizens.

      The budget aims to use the best means to stimulate the economy, encourage development, and ensure financial sustainability, as well as to support the growing interest in human resources and to enhance the role of citizens.

      H.H. Sheikh Sultan bin Ahmed bin Sultan Al Qasimi, Deputy Ruler of Sharjah, said, “The Sharjah government’s budget for the year 2022 follows the directives and comes with the blessing of His Highness Sheikh Dr. Sultan bin Muhammad Al Qasimi, to complete the emirate’s march in achieving the highest levels of excellence, success and sustainable development in all sectors and fields. It is set to help the emirate continue to build on what has already been achieved, according to His Highness’s insightful vision.”

      He added, “The new year’s budget, which exceeds AED34 billion, and which has increased in quantity and quality over the previous year, calls on each of us to take responsibility and to contribute to the advancement of Sharjah in a fitting manner to ensure a better future for all. Under the wise leadership of H.H. the Ruler of Sharjah, who offers his limitless support and of H.H. Sheikh Sultan bin Muhammad bin Sultan Al Qasimi, Crown Prince, Deputy Ruler of Sharjah and Chairman of the Executive Council, it is our duty to develop all areas and services and to implement projects according to the best standards to maintain social cohesion and achieve prosperity for all.”

      Sheikh Mohammed bin Saud Al Qasimi, Chairman of the Central Finance Department in Sharjah, indicated that the emirate’s new general budget adopts many strategic and financial goals and priorities, which reflects the directives and vision of His Highness the Ruler of Sharjah, as well as that of the Executive Council. It also supports the strategic vision of the Central Finance Department, which works to achieve higher levels of financial sustainability, to efficiently manage government resources, to support government agencies in terms of service provision, to strengthen strategic partnerships with the private sector, and to provide incentives that ensure the continued advancement, growth and development of the emirate.

      His Excellency Waleed Al Sayegh, Director General of the Central Finance Department, stressed that while the world is witnessing instability because of the negative effects of the pandemic, Sharjah has created an ideal balance between development and services, resulting in the continued implementation of capital projects and initiatives. Both Khorfakkan and Kalba, as well as the rest of the emirate’s regions, witnessed an urban renaissance with social, tourist and cultural dimensions.


      The Director General indicated that the general budget has increased by (2%) compared to the 2021 budget, and that the government will continue to support capital projects to ensure continuity in meeting the spending needs on these projects in 2022. The capital projects budget constitutes (30%) of the general budget.

      Salaries and wages constitute (25%) of the budget, an increase of (4%), while operating expenses make up (25%) for the year 2022, an increase of (3%) compared to the budget of 2021. The budget for support and aid accounts for approximately (11%) of the general budget, (3%) more than in 2021, while the balance of loan repayments and interest constitute (7%) of the total, which is an increase of (18%). This will enhance the government’s solvency and ability to meet all its obligations.

      In addition, to enable the government to achieve its strategic and operational goals and initiatives, the Department of Finance wants to enhance the government’s financial stability and sustainability by increasing the level of spending by (2%), thus improving government agencies’ ability to meet development requirements.

      The process of classifying the budget according to economic sector is one of the most important tools reflecting the government’s strategic direction. The infrastructure sector ranked first with (44%) of the total general budget for 2022, which is an increase of (4%). This reflects the government’s interest in developing the emirate’s infrastructure, which is the backbone of the development and sustainability process, and which attracts foreign and local investments across all vital sectors.

      The economic development sector ranked second with an allocation of (27%) of the total general budget for 2022, followed by the social development sector, with (21%). The increase of (3%) will help provide the best services, support and assistance to citizens and residents in the emirate. The government administration, security and safety sector constitutes (8%) of the total general budget for 2022, an increase of (8%) compared to 2021.


      With government revenues being the main source of financing for the general budget, the government has paid special attention to the development of these revenues, particularly in terms of improving collection efficiency and developing smart tools and methods to assist in this regard.

      Government revenues is expected to see an increase of (49%) for the year 2022, compared to the general revenue budget for the year 2021, with operating revenues constituting (53%) of the total revenue budget for the year 2022, an increase of (8%) compared to the operating revenues for 2021. Capital revenues is expected to represent (35%) for the year 2022, showing a significant increase over 2021. Tax revenues will represent approximately (6%), an increase of roughly (20%) compared to last year, while customs revenues will constitute (3%). Oil and gas revenues are expected to be around (3%), a noticeable increase compared to oil and gas revenues for 2021.

      Source: WAM

  • United Kingdom
    • United Kingdom Introduces Plastic Packaging Tax from 1 April 2022

      On 17 December 2021, HM Revenue & Customs (HMRC) published guidance for the new Plastic Packaging Tax (PPT). The new tax will apply from 1 April 2022. According to the new legislation, a business that manufactures or imports ten metric tonnes or more of plastic packaging will need to register for the tax. The tax will be levied at GBP 200 per metric tonne.

      There are two sets of guidance outlined below.

      The first concerns preparing a business for the PPT. This sets out the basic information on how the tax works and to whom it will apply, whereas the second concerns record keeping and accounts for PPT. Some businesses that manufacture or import plastic packaging into the United Kingdom (UK) will need to keep records so that they can determine when they need to register with HMRC.

    • COVID-19 Pandemic: United Kingdom Announces GBP 1 Billion in Support for Businesses Impacted By Omicron

      On 21 December 2021, the United Kingdom (UK) Chancellor of the Exchequer, Rishi Sunak, announced that additional financial support will be available for those businesses impacted by the COVID-19 pandemic. The support will total GBP 1 billion and will include the following:

      • one-off grants of up to GBP 6,000 per premise, for businesses in the hospitality and leisure sectors in England (totaling GBP 683 million);
      • the statutory sick pay rebate scheme for COVID-19 related absences for small and medium-sized (SMEs) employers (i.e. fewer than 250 employees) across the UK;
      • GBP 30 million further funding through the culture recovery fund for cultural organizations in England; and
      • a GBP 102 million boost to the additional restrictions grant (ARG) fund for local authorities in England with respect to businesses in the hospitality and leisure sector.

      Around 200,000 businesses will be eligible for business grants, which will be administered by local authorities and will be available in the coming weeks.

      GBP 154 million of the support announced will be allocated to the devolved administrations in Scotland, Wales and Northern Ireland.

      This GBP 1 billion support will reinforce the existing package of COVID-19 related measures, including, among others, the business rates relief, reduced value added tax (VAT) rates, the COVID-19 additional relief fund, protection from eviction, loan repayment flexibility, the time-to-pay arrangement and loan repayment flexibilities.

  • United States
    • Beneficial Owners Will Soon Need to Register with US Treasury Under New Law, Proposed Regulations

      The Financial Crimes Enforcement Network (FinCEN) of the Treasury Department issued a Notice of Proposed Rulemaking for the beneficial ownership information reporting provisions within the Corporate Transparency Act (CTA). The FinCEN also issued a related Press Release and Fact Sheet, both of which are dated 7 December 2021.

      The proposed rule is designed to prevent bad actors from using otherwise legal entities, such as shell companies, to conceal the proceeds of their corrupt and criminal acts.

      The proposed rule would delineate, among other things, who must report beneficial ownership information, what information they must provide, and when they must do so. For instance, reporting companies would be required to identify the following two categories of individuals:

      • the beneficial owners of the entity, including any individuals who:
        • exercise substantial control over a reporting company; or
        • own or control at least 25% of the ownership interests of a reporting company; and
      • individuals who have filed an application to form the company in the United States or register it to do business in the United States.

      The CTA forms a part of the Anti-Money Laundering Act of 2020 and lays out beneficial ownership information reporting requirements for business entities created in or registered to do business in the United States.

    • California Clarifies Sales Tax Regs: Marketplace Sales are Not Drop Shipments

      The California Department of Tax and Fee Administration has amended its sales and use tax regulations on drop shipments to clarify that marketplace sales are generally not considered drop shipment transactions that trigger state sales tax collection and remittance requirements on the drop shipper. Under California law, taxpayers making drop shipments to California consumers on behalf of the "true retailer" are treated as "retailer" and are required to collect and remit sales tax if:

      • the sale is on behalf of an out-of-state retailer; and
      • the out-of-state retailer does not hold a California seller's permit or certificate of registration-use tax.

      The amended regulations clarify that marketplace facilitators are liable for California sales tax collection and remittance requirements triggered by sales from out-of-state marketplace sales that otherwise meet the state's default drop shipment rules. In this instance, the marketplace facilitator, not the drop shipper, is considered the retailer and thus remains liable for tax collection on qualifying marketplace sales.

      The amended regulations also clarify that a person may overcome the presumption of being a drop shipper by:

      • accepting a timely resale certificate in good faith from the customer or person in California to whom the property is delivered, containing all essential elements, including:
        • the customer's valid California seller's permit number; or
        • an explanation as to the reason why the customer is not required to hold a California seller's permit and a statement that the customer is:
          • registered with the Department for a Certificate of Registration – Use Tax, plus the customer's valid Certificate of Registration; and
          • a marketplace seller and purchasing the property pursuant to a sale facilitated by a registered marketplace facilitator that is the retailer for purposes of the sale, plus the marketplace facilitator's name and valid seller's permit number or Certificate of Registration – Use Tax account number;
      • establishing that the person's customer was a:
        • retailer engaged in business in California at the time of the sale; or
        • a marketplace seller and purchased the property through its sale facilitated by a marketplace facilitator-retailer.

      The Department adopted the amended rules on 30 November 2021 and published the same in the California Regulatory Notice Register on 10 December 2021.

    • IRS Provides Guidance on Reinstated Superfund Chemical Taxes

      The US Internal Revenue Service (IRS) has issued Notice 2021-66 providing guidance on the excise taxes imposed on certain chemical substances under sections 4661 and 4671 of the US Internal Revenue Code (IRC) (collectively, the "Superfund chemical taxes").

      The Superfund chemical taxes include the section 4661(a) tax on sales of taxable chemicals and the section 4671(a) tax on sales or uses of imported taxable substances that use one or more taxable chemicals in their manufacture or production.

      Effective 1 July 2022, the Infrastructure Investment and Jobs Act (IIJA) reinstates the Superfund chemical taxes which, as previously in effect, expired on 31 December 1995.

      The IIJA requires the US Treasury Department and IRS to publish an initial list of taxable substances under IRC section 4672(a) no later than 1 January 2022. Notice 2021-66 provides that initial list.

      Notice 2021-66 also discusses the registration requirements under IRC section 4662(b)(10)(C) and (c)(2)(B) for the exemption of certain sales and uses of taxable chemicals from the Superfund chemical taxes.

      Further, Notice 2021-66 provides the procedural rules that taxpayers subject to the Superfund chemical taxes must follow.

      Pending further guidance, Notice 2021-66 suspends Notice 89-61, as modified by Notice 95-39, which set up the previous framework for adding or removing certain substances from the list of taxable substances.

      Finally, Notice 2021-66 requests public comments on whether any issues related to the Superfund chemical taxes require clarification or additional guidance. Comments should be submitted in writing by 28 January 2022.

      Notice 2021-66 will appear in the Internal Revenue Bulletin (IRB) 2021-52, dated 27 December 2021.

      Note: Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), informally referred to as the US federal Superfund law or the Superfund, to create a hazardous substance clean-up programme. For the programme, the CERCLA established the "Hazardous Substance Response Trust Fund," which was funded, in part, by the Superfund chemical taxes.

    • IRS Issues Practice Unit on Base Erosion Anti-Abuse Tax

      The US Internal Revenue Service (IRS) has released a Practice Unit with an overview of the base erosion and anti-abuse tax (BEAT) under section 59A of the Internal Revenue Code (IRC).

      The Practice Unit is entitled "IRC 59A Base Erosion Anti-Abuse Tax Overview" (INT-C-245). The Practice Unit, released on 14 December 2021, indicates a revised date of 9 August 2021.

      IRC section 59A imposes the BEAT, which is a corporate minimum tax imposed on taxpayers who make certain base erosion payments to foreign related parties beginning after 31 December 2017 (see Note 1).

      The Practice Unit discusses various topics related to the BEAT, including:

      • taxpayers subject to the BEAT;
      • base erosion payments;
      • base erosion tax benefits;
      • the steps required for calculating the BEAT amount;
      • certain reporting requirements;
      • aggregate groups;
      • BEAT waiver exceptions;
      • the application of the BEAT to partnerships; and
      • an anti-abuse rule with respect to certain basis step-up transactions.

      Note 1: The BEAT generally applies to corporations that have annual gross receipts for the preceding 3 years of at least USD 500 million and a base erosion percentage of at least 3% for the taxable year (2% for certain taxpayers that include a bank or registered securities dealer in their affiliated group). If the taxpayer has an aggregate group, the determination for both of those figures is made at the aggregate group level.

      Note 2: Practice Units, issued by the Large Business & International (LB&I) division of the IRS, serve as both job aids and training materials on tax issues for IRS staff. Practice Units are not official pronouncements of law or directives and thus may not be used or cited as precedent.

    • IRS Issues Practice Unit on Investigations of Tax Shelters

      The US Internal Revenue Service (IRS) has released a Practice Unit explaining its procedures for investigations into tax shelter promoters.

      The Practice Unit is entitled "Tax Shelter Promoter Investigations Under IRC 6700" (COR-P-022). The Practice Unit, released on 14 December 2021, indicates a revised date of 25 November 2021.

      The Practice Unit states that section 6700 of the US Internal Revenue Code (IRC) permits assertion of penalties against any person who:

      • organizes, or sells any interest in:
        • a partnership or other entity;
        • an investment plan or arrangement; or
        • any other plan or arrangement; and
      • makes, or causes someone else to make, a fraudulent statement about any material matter or gross valuation overstatement.

      The goal of a promoter investigation is to:

      • identify and quickly terminate the abusive promotion or activity;
      • assert promoter penalties where applicable; and
      • identify participants in the abusive transaction.

      The Practice Unit lists the following as the steps of a promoter investigation:

      • determining if a promoter has engaged in conduct that violates the applicable civil penalty statutes;
      • obtaining participant lists;
      • determining if:
        • the promotion is reoccurring or likely to reoccur; and
        • the promoter should be referred for an injunction; and
      • ensuring compliance with the requirements of IRC section 6111 (dealing with the disclosure of tax shelter transactions) and IRC section 6112 (dealing with the requirement for material advisors of tax shelter transactions to keep lists of advisees).

      NotePractice Units, issued by the Large Business & International (LB&I) division of the IRS, serve as both job aids and training materials on tax issues for IRS staff. Practice Units are not official pronouncements of law or directives and thus may not be used or cited as precedent.