January 2021

  • Bulgaria
    • Finance Minister Expects Bulgaria to Join Eurozone in 2024

      January 12 (BTA) - "We expect Bulgaria to join the eurozone in 2024. The main tasks for the Bulgarian government on the road to achieving this goal are related to the implementation of commitments under the road map after the entry of the Bulgarian lev into ERM II in July 2020," said Tuesday Finance Minster Kiril Ananiev during an annual Central and Eastern European Forum, organized by Euromoney.

      For the first time in its 26-year history the forum is held online. The focus is on the financial and economic challenges to the countries in the region. Participating are representatives of the European Commission, the European Bank for Reconstruction and Development, the European Investment Bank, investment intermediaries, banks, and the finance ministers of Poland and the Republic of North Macedonia. Minister Ananiev said that a national plan for the introduction of the euro is being drawn up to set out the steps which the Bulgarian authorities and business should take in order to introduce successfully the single European currency. He said that the fulfillment of the nominal convergence criteria (Maastricht criteria) and taking steps to address the imbalances, established in the convergence reports of the European Central Bank and the European Commission in 2020, are too an important aspect of the preparations for the euro. "We are working intensively to comply with the time frame and the minimum required stay in ERM II of two years. Currently there are no serious risks of non-implementation of Bulgaria's commitments," he said. Ananiev said: "I would like to underscore that the COVID-19 pandemic is a very serious shock for the world and the European economy, including the Bulgarian economy, with very heavy social and economic effects but I believe that it wonТt be a factor in extending Bulgaria's stay in ERM II." Bulgaria will maintain fiscal sustainability in the mid- and long-term in order to continue to be an international partner and a country which for over 20 years has observed the principles of disciplined and sensible management of public finances, said the Bulgarian Finance Minister. NV/PP http://www.bta.bg/en/c/NW/id/2342015
    • Bulgaria Extends Regional Investment Aid Scheme

      On 19 November 2020, Bulgaria officially received permission from the European Commission (EC) to extend its domestic scheme providing regional investment assistance to companies in the form of a tax relief for the period from 1 January 2021 to 31 December 2021.

      The scheme provides for the right of companies engaged in production activities in regions of Bulgaria that have reported an unemployment rate that is 25% higher than the national average rate, to be exempt from domestic corporate income tax (CIT).

      Until now, the scheme has applied to the districts of Sofia, Blagoevgrad, Pernik and Kyustendil in accordance with Regulation (EC) No 1059/2003 of the European Parliament and the Council of 26 May 2003 establishing a common classification of territorial units for statistical purposes.

      The permit for extension of the term of the scheme was published on the EC's website on 14 January 2021.

      More information on the measures is available here and here.

  • China
    • Hainan Free Trade Port to Ease Market Access Restrictions for Foreign Investors

      The National Development and Reform Commission and the Ministry of Commerce released on December 31, 2020 the Special Administrative Measures (Negative List) for the Access of Foreign Investment in Hainan Free Trade Port (2021 Edition). The negative list will be implemented from February 1, 2021.   Compared to the 2020 edition of negative list, the new list is shortened to 27 items. Specifically, Hainan Free Trade Port will expand openness in the markets of value-added telecommunication services and education training, scrap market access restrictions for foreign investors in online data processing and transaction, lower access threshold in manufacturing and mining sectors, and lift the bans on foreign investment in rare earths, radioactive minerals, mine explorations and selections.
    • Six Authorities Optimize Cross-border RMB Policies

      Six authorities including the People's Bank of China released on January 4, 2021 the Circular about Further Optimizing Cross-border RMB policies to Stabilize Foreign Trade and Foreign Investment. The circular will be implemented from February 4, 2021.

      The circular covers policies in five aspects: simplifying cross-border RMB settlement process, optimizing management of cross-border RMB investment and financing, facilitating cross-border RMB receipt and payment under personal current accounts, and expediting the use of RMB settlement accounts by overseas institutions. The circular stated that foreign institutions can receive RMB funds remitted from their overseas accounts under the same name.

    • PBOC Scraps Special RMB Deposit Account for Foreign Direct Investment in Lingang New Area of Shanghai Free Trade Zone

      Shanghai Head Office of the People's Bank of China released on January 6, 2021 the Circular about Scrapping Special RMB Deposit Account for Foreign Direct Investment at the Lingang New Area of Shanghai Free Trade Zone.

      According to the circular, foreign-funded enterprises registered in the Lingang New Area no longer have to open special RMB capital accounts when they make capital contributions in the Chinese currency. Their settlement bank can directly handle RMB capital account services for enterprises, and the use of funds must comply with relevant documents of the People's Bank of China. After the RMB capital account is canceled, the settlement bank will continue to submit information to the RMB cross-border payment and receipt management information system (RCPMIS).

    • PBOC and SAFE Lowers Macro-prudential Adjustment Parameters for Cross-Border Financing

      The People's Bank of China and the State Administration of Foreign Exchange released on January 7, 2021 a Circular to lower the macro-prudential adjustment parameters for cross-border financing from 1.25 to 1, with immediate effect.

      Enterprises whose risk-weighted balance of cross-border financing exceeds the new upper limit may hold the cross-border financing contract concluded earlier to its maturity. Other matters related to the macro-prudential management of cross-border financing are still subject to the Notice of the People's Bank of China on Matters Concerning the Macro-Prudent Management of Full-caliber Cross-border Financing.

    • China largest FDI recipient in 2020 amidst global plunge — UNCTAD report

      Global foreign direct investment (FDI) plunged by 42 percent in 2020, a new report by the United Nations Conference on Trade and Development (UNCTAD) showed on Sunday, while China bucked the trend becoming the world's top recipient of investment flows.

      In its latest Investment Trends Monitor, the Geneva-based UN trade and development body said that FDI fell sharply to an estimated 859 billion U.S. dollars last year, from 1.5 trillion U.S. dollars in 2019, and warned of further weakness this year, putting a sustainable recovery from the COVID-19 pandemic at risk.

      "FDI finished 2020 more than 30 percent below the trough after the global financial crisis in 2009 and back at a level last seen in the 1990s," the report wrote.

      The data showed that the decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated 229 billion U.S. dollars, the lowest level in 25 years.

      The decline in developing economies was relatively measured at 12 percent to an estimated 616 billion U.S. dollars, the report showed, while China topped the ranking of the largest FDI recipients.

      FDI flows to China rose by 4 percent to 163 billion U.S. dollars, making the country the world's largest recipient in 2020, followed by the United States.

      "A return to positive gross domestic product (GDP) growth and the government's targeted investment facilitation program helped stabilize investment after the early (coronavirus) lockdown," James Zhan, UNCTAD's director of investment and enterprise, said in a virtual press conference.

      "The global dependence on the supply chains of multinational enterprises in China during the pandemic also sustained the FDI growth in China," he added.

      China saw its GDP increase 2.3 percent year on year last year and is expected to be the only major economy to post growth in the pandemic-ravaged year, according to the National Bureau of Statistics (NBS).

    • China, EU conclude talks on investment deal

      The investment treaty between China and the European Union is a comprehensive, balanced and advanced agreement that is based on high-level international economic and trade rules, and focuses on institutional openness, the Ministry of Commerce said late Wednesday.

      The ministry made the remarks after China and the EU concluded the negotiations of the bilateral investment deal in principle, after more than seven years of talks. The progress was announced during the China-EU leaders' meeting via video conference on Wednesday.

      The treaty covers areas far beyond traditional bilateral investment agreements, and the result of the negotiations covers four areas: market access commitments, fair competition rules, sustainable development and dispute settlement, said Li Yongjie, director-general of department of treaty and law at the commerce ministry.

      The official said that the aspect of balance is mainly reflected in that both sides have come up with high-level and mutually beneficial market access commitments, and all rules apply in both directions.

      Both sides have made open commitments while at the same time paying great attention to retaining the necessary regulatory powers. They have not only focused on promoting bilateral investment cooperation, but also emphasized that investment needs to be conducive to sustainable development, she said.

      The high level standard of this treaty can also be reflected in the joint commitment of both parties to promote investment liberalization and facilitation, create a level playing field for companies, and reach high-level negotiation results in market access and fair competition rules, said Li, adding the pact will benefit Chinese and European companies, as well as global companies.

    • Paid-in investment up 6.2% in 2020, hitting record high

      In 2020, China made major achievements in responding to the severe impact of COVID-19 and accomplished the tasks in stabilizing foreign trade. As global cross-border direct investment plummeted, China's paid-in foreign direct investment (FDI) bucked the trend and registered increase in size, growth margin, and global share. Four characteristics can be summarized:

      First, the size of FDI hit a record high. In 2020, paid-in FDI reached a record 999.98 billion yuan, up 6.2% year-on-year (US$144.37 billion, up 4.5% year-on-year in US dollar terms; excluding the banking, securities, and insurance sectors, unless otherwise indicated).

      Second, the investment mix further improved. Paid-in investment in the services sector was 776.77 billion yuan, up 13.9% and accounting for 77.7% of the total amount. Paid-in investment in high-tech industries grew by 11.4%, where high-tech services saw a surge of 28.5%; specifically, paid-in investment in research and development services, science and technology application services, e-commerce services, and information services increased by 78.8%, 52.7%, 15.1%, and 11.6% respectively.

      Third, main investment sources remained stable. The 15 largest sources of investment, accounting for 98% of China's total FDI, expanded their investment in China by 6.4%. Investment from the Netherlands and the UK rose by 47.6% and 30.7%. ASEAN's investment in China grew by a margin of 0.7%.

      Fourth, regional champions played a significant role. FDI attracted by eastern China grew by 8.9%, coming to 88.4% of the national total. Specifically, Jiangsu, Guangdong, Shanghai, Shandong, and Zhejiang, which were major investment attractors, saw an increase of 5.1%, 6.5%, 6.6%, 20.3%, and 18.3% respectively. Northeast, central, and western China also made a huge leap, with investment in Liaoning, Hunan and Hebei jumping by 13.7%, 28.2%, and 35.5% respectively.

  • Focus Africa
    • Africa Commences Trading under Africa Continental Free Trade Area Agreement

      On 1 January 2021, Africa commenced trading under the preferences and rules that were negotiated and agreed upon under the African Continental Free Trade Area Agreement (AfCFTA). The commencement of trade had earlier been postponed due to the COVID-19 pandemic with the priority being given to fighting the pandemic by the Secretariat of the AfCFTA (the Secretariat).

      The AfCFTA which entered into force on 30 May 2019 has been signed by 54 countries while 34 countries have deposited their instruments of ratification to date.

      The AfCFTA comprises of four legal instruments, which are:

      • the Agreement establishing the AfCFTA;
      • the Protocols on Trade in Goods and Trade in Services;
      • the Protocol on Rules and Procedures for Settlement of Disputes; and
      • the Protocol on E-Commerce. This protocol was included later on in the AfCFTA through a decision of the African Union Heads of State and Government Assembly (Heads of State) in February 2020 to integrate it through a third phase of negotiations.

      The principle objective of the Protocol on Trade in Goods is to create a liberalized market for trade in goods between partner states, while the specific objective is to boost intra-African trade in goods through:

      • progressive elimination of tariffs;
      • progressive elimination of non-tariff barriers;
      • enhanced efficiency of customs procedures, trade facilitation and transit;
      • enhanced cooperation in the areas of technical barriers to trade and sanitary and phytosanitary measures;
      • development and promotion of regional and continental value chains; and
      • enhanced socio-economic development, diversification and industrialization across Africa.

      Some countries like Ghana, Egypt, South Africa and Rwanda have already started trade through the AfCFTA, however, many other African countries still need to build their administrative capacity and put in place the infrastructure/tools necessary to facilitate trade. The Secretary General of the AfCFTA (the Secretary-General) said that the partner states are to put in place a re-imbursement system where a country that does not yet have the infrastructure necessary to facilitate preferential trade from 1 January 2021 will later refund money paid by traders for non-preferential duties suffered after the commencement of trade.

      This development has not come without criticism from various critics with a view that the Secretariat has rushed the launch without ensuring first that all the infrastructure needed to facilitate trade is in place in all partner states. The Secretary-General said, however, that market integration is a process and the Secretariat is committed to ensuring that the positive projections of the AfCFTA are attained.

      The official AfCFTA start of trading ceremony was held virtually on 1 January 2021 via Zoom. But prior to the launch, the Heads of State held a meeting on the 5 December 2020 where they adopted the decision of the secretariat to start trading through the AfCFTA.

    • New African Development Bank-Global Center on Adaptation (GCA) initiative will galvanize $25 billion to scale up African climate adaptation

      African Development Bank (www.AfDB.org) President Akinwuma A. Adesina announced the launch on Monday of the Africa Adaptation Acceleration Program (AAAP) to mobilize $25 billion to scale up and accelerate climate change adaptation actions across Africa. The announcement came during the Climate Adaptation Summit (CAS) 2021, hosted by the government of the Netherlands and the Global Center on Adaptation.

      The AAAP, a joint initiative between the African Development Bank and the Global Center on Adaptation, is expected to scale up innovative and transformative actions on climate adaptation across Africa, Adesina said during the inaugural Ministerial Dialogue on Adaptation Action, held as part of the summit.

       “Our ambition is bold: to galvanize climate resilience actions; support countries to accelerate and scale up climate adaptation and resilience; and mobilize financing at scale for climate adaptation in Africa,” the Bank chief said.

      Adesina was joined in addressing the summit by Netherlands Prime Minister Mark Rutte, 8th UN Secretary General Ban Ki Moon, current UN Secretary General Antonio Guterres (https://bit.ly/3qQ5jCY), UK Prime Minister Boris Johnson, Germany Chancellor Angela Merkel, Canada Prime Minister Justin Trudeau and India’s Prime Minister Narendra Modi. World Bank president David Malpass and IMF Managing Director Kristalina Georgieva also spoke.

      The ongoing COVID-19 crisis formed a backdrop to the meeting, a fact Prime Minister Rutte acknowledged in his opening statement. The Netherlands has taken a lead role globally in harnessing the energy and entrepreneurship of the youth and developing nature-based solutions.

       “I hope that 2021 will be a year of heightened international ambition and action on climate change, after a difficult 2020, and this conference will help achieve that goal,” Rutte said.

      Acknowledging the “huge gaps” remaining in financing for adaptation in developing countries, the UN Secretary General called for 50% of all climate finance provided by developed countries and multilateral development Banks to be allocated to adaptation and resilience in developing countries, noting,  “the African Development Bank set the bar in 2019 by allocating over half of its climate financing to adaptation.”

      A number of speakers acknowledged Africa’s vulnerability to climate change, as well as Africans’ innovative responses to challenges.

      Ghanaian president Nana Addo Dankwa Akufo-Addo said the country was working with the private sector with the assistance of the Green Climate Fund, “to establish a multimillion-dollar green fund to support our climate adaptation interventions and our efforts to transition to renewable energy.”

      Adesina thanked Ban Ki Moon for his role in the establishment of GCA’s regional office for Africa in Abidjan last year, which is hosted by the Bank. The African Development Bank head participated in three sessions and outlined a number of Bank initiatives, including the $20 billion Desert to Power project to create a solar zone in the Sahel, the largest in the world.

      “Our Youth Adaptation flagship will unlock $3 billion for the youth, support 10,000 youth-led SMEs in climate resilience, and build capacity for one million youth on climate adaptation,” Adesina said.

      The Bank’s TAAT initiative has leveraged $450 million and provided 19 million farmers in 27 countries with climate resilient agricultural technologies, raising average yields by 60%.

      Adesina also acknowledged that the presence of John Kerry, U.S. special envoy for climate, provided a boost to global climate efforts. “With you in charge, and the strong and palpable leadership of President Biden, we are reenergized on the global agenda on climate change,” Adesina said.

      The Climate Adaptation Summit, held annually, aims to answer Secretary-General Guterres call for more concrete plans and more ambition from more countries and more businesses to make the world more climate resilient.

      The Global center on Adaptation is a solutions broker to accelerate action and support for adaptation solutions around the world.

    • Africa records highest project finance deal value in 2020

      In 2020, Africa recorded its highest level of project financing in a decade in terms of investment value with 28 deals, totalling $30.07bn, reaching financial close, according to Linklaters.


      In 2020, Africa recorded its highest level of project financing in a decade in terms of investment value with 28 deals, totalling $30.07bn, reaching financial close, according to Linklaters.

      Despite there being a similar number of projects, 2020 saw double the value of deals in comparison to 2019, which recorded $12.65bn.

      Andrew Jones, Head of Linklaters’ Africa group, said: “Like all countries, the major economies in Africa were impacted by the Covid-19 pandemic. Its therefore interesting that the continent recorded its highest level of project financing in a decade last year. This is indicative of the resilience and sound fundamentals of the continent and how the region continues to present exciting opportunities for long-term investors.”

      Mozambique recorded the highest deal value in 2020 at $22.6bn, thanks to the Area 1 Mozambique LNG project, the country’s first onshore LNG development.

      Morocco, Nigeria, Guinea, Uganda and Cote d’Ivoire were the only countries to record multiple project finance transactions this year at 6, 4, 2, 2 and 2, respectively.

      Mozambique has recorded the highest deal value at $48.02bn in 12 projects in the past decade, with South Africa recording the highest level of activity, with 103 projects totalling $20.43bn.

      According to Linklaters’s research, in the past decade, French sponsors have been the biggest investors in Africa, sponsoring 53 projects totalling $46.57bn followed by Japan (10, $31.6bn), the US (47, $26.95bn) and India (11, $25.85bn).

      In 2020, Renewables sector recorded the highest volume of deals, with 13 totalling $1.592bn, whereas Oil and Gas sector, although low by number of transactions, clocked the highest value of deals at $26.14bn.

      Oil & Gas sector also witnessed the highest value of deals in the past 10 years at $85.73bn, while Renewables have witnessed the highest volume (177).

       “Economic expansion plans, favourable demographics and natural resources, and the need to generate large scale employment and infrastructure development will ensure continued growth for the sectors. This also means that strong growth will continue in energy, transportation and mining,” Jones said.

    • China Merchants signs deal for $3bn expansion of Djibouti City port

      China’s biggest port operator, China Merchants Group, has agreed a deal with Djibouti to turn its port into a regional hub.

      The agreement was reached with state-owned investment company Great Horn. According to its terms China Merchants will carry out a $3bn expansion of the East African micro-state’s century-old port.

      Aboubaker Omar Hadi, chairman of the Djibouti Ports and Free Zones Authority (DPFZA), said on Twitter that the project would “profoundly transform our capital and create numerous economic  opportunities in the years to come”.

      As well as an expansion of the port, the project will create the “East Africa International Special Business Zone”.

      The $513m first phase of the project, which involves the construction of an exhibition centre and a four-star hotel for the zone, began on 8 October.

      China Merchants, which already owns a 23.5% stake in the port, said in a filing to the Hong Kong stock exchange that Djibouti had “a stable geopolitical environment and the largest deep water port in East Africa”.

      China’s involvement in Djibouti has been growing in recent years. The country hosts China’s only overseas military base, opened in 2017, and it is the terminus for Chinese-built, $3.4bn railway from Ethiopia, China’s closest ally in the region.

      The South China Morning Post lists other notable projects, including Huawei Marine’s project to build an undersea fibre-optic cable between Djibouti and Pakistan, and China Merchants’ previous involvement in the building of the $590m Doraleh Multipurpose Port, to the west of Djibouti City. This is presently the subject of a legal dispute with Dubai port operator DP World (see further reading).

      The paper quoted John Calabrese, an academic at the Middle East Institute in Washington, who said Djibouti was the “linchpin of China’s efforts to gain a strategic foothold in the Horn of Africa and as part of its broader engagement on the continent as a whole”.

      China Merchants signs deal for $3bn expansion of Djibouti City port - News - GCR (globalconstructionreview.com)

  • Hong Kong
    • Design Industry in Hong Kong


      • Hong Kong is a regional design centre providing a rich source of innovative products and design talents.
      • Hong Kong is a window to the world of the trends and styles of Asia, making it an excellent location for a well-established design community.
      • Hong Kong is at the crossroads of Asia, and is a key gateway to mainland China. Hong Kong's design industry is increasingly export-oriented.
      • The Business of Design Week (BODW) held in Hong Kong is Asia’s annual flagship event on design, innovation and brands. Its latest edition was held as a hybrid event from 30 November to 5 December 2020, connecting global creative visionaries with international participants from around the world in over 50 simulcast live sessions. A concurrent event is the DesignInspire organised by HKTDC since 2018 with an aim to promote state-of-the-art innovation and designs from around the world.

      Industry Data

      Design Industry


      Number of establishments


      Employment (excluding those in civil service)


      Source: Quarterly Report of Employment and Vacancies Statistics, Census and Statistics Department

      Range of Services

      The design industry in Hong Kong encompasses a broad range of disciplines: product design, multimedia, visual and graphic design, interior and furniture design, fashion and accessories design, jewellery design and industrial design. In recent years, design management has been taking shape as a new discipline in Hong Kong. Design management deals with the management of projects with a high content of design. Design management can be widely applied to projects related to fashion, product, graphics and interior design, though more applications are found in interior and product design whereby designers oversee the entire process from conceptualisation to production. In addition to their core services, some Hong Kong design firms also provide other design services including shop front design, advertising and promotion design.

      Service Providers

      In terms of the number of establishments, interior and furniture design and multimedia, visual and graphic design were in 2019 the two largest sub-sectors of the industry, each with 36% of the total. They were followed by the industrial design sector (13%). The number of people employed in design services reached 18,580 in 2019, up 5.6% on the previous year. The design industry contributed a value added of more than HK$4.5 billion to the cultural and creative industry sector in 2018.

      Hong Kong's design practitioners are organised into various professional associations, including the Chartered Society of Designers (CSD), the Hong Kong Designers Association (HKDA), the Hong Kong Federation of Design Associations (FHKDA), the Hong Kong Interior Design Association (IDA), the Hong Kong Fashion Designers Association (HKFDA) and the Industrial Designers Society of Hong Kong (IDSHK). In addition, Hong Kong Design Centre (HKDC), jointly established by HKDACSDFHKDAIDA and HKFDA, aims to promote design as a value-adding activity, and to raise Hong Kong's image as an innovation and creative hub. As a major contributor to the development of the InnoCentre, HKDC organises an annual event called Business of Design Week (BODW) in Hong Kong. The week-long event is a flagship design event in Asia and one of the world’s leading design events. In its first hybrid live edition, BODW 2020 saw more than 100 influential design and business leaders share their views on themes relevant to the post-pandemic era. A concurrent event is the DesignInspire organised by HKTDC since 2018 with an aim to promote state-of-the-art innovation and designs from around the world.


      According to the Census and Statistics Department, the total exports of selected cultural and creative goods amounted to HK$618 billion in 2018, accounting for 15% of Hong Kong’s total exports of goods. The largest component was audiovisual and interactive media goods (HK$442 billion), followed by performing arts and celebration goods (HK$82 billion) and visual arts and design goods (HK$72 billion).

      Many Hong Kong designers export their services. Export content varies among different design industries, and mainland China is one of the biggest export markets for Hong Kong's design services. Hong Kong designers have been paying increasing attention to the mainland market.

      With many mainland enterprises expanding, some are looking to Hong Kong design firms to help them re-design their brands. The aim is to appeal more to the international market, while at the same time maintaining their competitiveness in the domestic market. With their deep knowledge of both Chinese culture and international market practices, Hong Kong design firms are able to bring in comprehensive branding strategies and product design services for mainland enterprises.

      Industry Development and Market Outlook

      The demand for Hong Kong's high-end design services is rising because of the flourishing China market. Many international companies, large and small, rely on Hong Kong designers to tailor their products for mainland China and Asian markets. Hong Kong designers are able to satisfy the demand for quality-assured creative services which match international standards and, at the same time, take into consideration Chinese tradition and design.

      Many of Hong Kong's light industrial products, such as toys, electronics and garments, are highly favoured in the international market. Hong Kong designers have been part of these industries for a long time and they maintain close working relationship with overseas companies. They fully understand the demands of overseas markets and can capitalise on their international vision when designing products and helping Hong Kong companies move from being Original Equipment Manufacturers (OEM) to Original Design Manufacturers (ODM) or Original Brand Manufacturers (OBM).

      With the affluent China market growing more sophisticated, increasing numbers of mainland enterprises are keen to stay ahead of the game in the local market while making inroads into the world market. Renowned as a stylish cosmopolitan and design hub in Asia, Hong Kong has always been a place which mainland enterprises look to for excellence in design, branding and marketing.

      Supports for the industry

      The Hong Kong government's Create Hong Kong Office (CreateHK) was set up in June 2009 to drive the development of Hong Kong's creative sector. CreateHK administers and manages two funding schemes, the CreateSmart Initiative (CSI) and the Film Development Fund. Launched in 2009, CSI offers funding for initiatives related to design and other creative sectors (except film). In order to promote the industry and help it to adapt to the “new normal” in the wake of the global Covid-19 pandemic, additional funding of HK$1 billion was earmarked for CSI, according to Policy Address 2020. There have been three earlier rounds of funding injection - in 2009, 2013 and 2018.

      CreateHK supports the Design Incubation Programme (DIP), which is administered by HKDC and is designed to nurture start-up companies in various design disciplines, including fashion, jewellery, media and branding. Between its inception in 2005 and September 2020, the DIP nurtured 289 design start-ups. HKDC also administers the Fashion Incubation Programme (FIP), which aims to incubate five fashion brands each year and provide them with attractive programme offerings such as seed funding and mentorship. Since 2017, FIP participants have won eight local awards and eight international awards.

      In recent years, the revitalisation of decommissioned buildings has become a popular means of providing spaces for the development of the design industry. For instance, a decommissioned factory estate in Shek Kip Mei has been turned into the Jockey Club Creative Arts Centre, which has art galleries and other communal facilities hosting themed exhibitions, as well as arts and craft fairs. The Creative Arts Centre provides more than 100 artists and art groups with workspaces where they can practise and showcase their works. The club house of the former Royal Yacht Club in North Point has been converted into a venue called ‘Oi!’. Opened in May 2013, ‘Oi!’ is a platform for art exhibitions, forums and other artistic and creative activities.

      The former Hollywood Road Police Married Quarters in Central has been transformed into a landmark “PMQ”, which was officially launched in June 2014. The PMQ project is aimed at nurturing new designers, branding and business matching for the creative industries. Currently, PMQ is home to more than 100 entrepreneurs in a wide variety of creative and cultural sectors, ranging from design services, fashion, household products, accessories and food and beverage.

      The most recent example is the revitalisation of Nan Fung Textiles. Completed in 2018, the spinning factory has been transformed into a destination for innovation, culture, creativity and community with three pillars. The first pillar, Fabrica, is a business incubator for technology and style (techstyle) startups and strategic partners. It currently houses 13 incubatees. The second pillar, Shopfloor, provides visitors with local artisanal F&B and experiential shopping. The third pillar, the Centre for Heritage, Arts and Textile (CHAT), enables visitors to learn about the history of the Hong Kong textile industry and the arts of textile through its multi-faceted programmes.

      In addition to these revitalisation projects, there is the West Kowloon Cultural District (WKCD) Development Project. It aims to turn the 40-hectare waterfront site at the southern tip of West Kowloon into an integrated art, cultural and entertainment district, and enhance the development of art and culture in Hong Kong. WKCD is expected to become an arts hub which includes a visual arts museum M+, focusing on modern art, design and architecture and offering platforms for designers. Meanwhile, a design and fashion project is planned in Sham Shui Po, which would provide spaces for local up-and-coming designers to use as showrooms and house a design library and the workstations of the HKDC. Completion is expected in 2023-24.

      Across the border, the Hong Kong-Shenzhen Design Innovation Hub (Zetta Bridge, Qianhai Shenzhen) is set to become an exchange platform for designers and entrepreneurs in the Guangdong-Hong Kong-Macao Greater Bay Area. Opened in November 2019, the creative hub is open to all types of creative industry bodies, whether they be freelance, original designer brands, design houses or international design groups. It provides a new window of opportunities for Hong Kong designers and related service providers.

      CEPA Preferences for Hong Kong’s Designed Products and Design Services

      Since January 2006, mainland China has implemented a zero tariff policy on all imported goods of Hong Kong origin under CEPA’s preferential arrangements. Complying with the CEPA origin rules (ROO), Hong Kong manufacturers can apply for zero-tariff treatment on goods they export to mainland China. This policy should boost demand for Hong Kong’s high value-added processes, such as product design.

      Consistent with the general thrust of developing Hong Kong’s creative industries, CEPA’s Supplement VII contains many liberalisation measures concerning the creative industries. In particular, a new sector named “Specialty Design” has been added, with the corresponding CEPA provision stating that Hong Kong Service Supplier (HKSS) can set up wholly owned enterprises on the mainland to provide specialty design services. The service liberalisation came into effect in January 2011.

      Under the United Nations Central Product Classification (CPC), specialty design services refer to interior design as well as the aesthetic design of products and complete design of products which do not require complex engineering (e.g. furniture). China made no specific commitments under its WTO accession protocol to include specialty design services, and the Supplement VII measure is therefore beyond China’s WTO commitments.

      After 10 annual Supplements to keep widening and broadening the liberalisation measures in favour of HKSS, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in service trade in Guangdong (the Guangdong Agreement). This was followed in December 2015 by the Agreement on Trade in Services (ATIS) which extended the coverage of the 2014 agreement from Guangdong to the rest of the mainland. Unlike the Supplements which adopted a positive-list approach to introducing liberalisation measures, the two latest CEPA agreements adopt a hybrid approach to granting preferential access to Hong Kong using both positive and negative lists.

      The ATIS, which covers and consolidates commitments relating to liberalisation of trade in services provided in CEPA and its Supplements and the Guangdong Agreement, was implemented in June 2016. National treatment is given to HKSS in the sector of specialty design, and the only reserved restriction for HKSS under the negative list concerns not engaging in seal engraving services on the mainland.

      Details of the preferential access concerning the specialty design services sector can be found at this website.

    • Hong Kong Considers Tax Concessions for Carried Interest

      The government has proposed tax concessions for carried interest distributed by eligible private equity funds operating in Hong Kong, including exemption from profits tax and salaries tax.

      In this regard, the government published the Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021 in the Gazette of 29 January 2021.

      Carried interest refers broadly to a return linked to the performance of an investment of a private equity fund, typically upon the disposal of the investment after it has been held for a period of time. The Bill exempts eligible carried interest from profits tax, while 100% of eligible carried interest will be excluded from employment income for the calculation of salaries tax. In addition, the Bill also proposes to expand the classes of assets that may be held and administered by a special purpose entity on behalf of a fund for the purpose of a profits tax exemption regime for funds, with a view to facilitating the operation of funds in Hong Kong.

      The Bill will be introduced into the Legislative Council for first reading on 3 February 2021.

  • India
    • India: Union Budget 2021 – Highlights

      On 1 February 2021, the Finance Minister presented the Union Budget 2021/22 before Parliament. The key highlights of the amendments introduced in the Finance Bill 2021 are summarized below.

      Corporate tax

      • There will be no change in the corporate tax rate.
      • Late deposit of employees' contribution to the provident fund by employers shall not be allowed as a deductible expenditure in the hands of the Company.
      • Goodwill (other than acquisition of goodwill by purchase) of a business or profession shall not be considered as an asset and therefore not be eligible for depreciation.

      Personal tax

      • There will be no change in the slab rates for individuals.
      • Additional annual deduction of INR 150,000 for interest on a loan taken for first time purchase of affordable housing property will be available up to 31 March 2022.
      • New rules were proposed for the removal of double taxation for non-resident Indians (NRIs).

      Incentives for financial services

      • Dividend payments to real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) shall be exempt from tax deducted at source (TDS).
      • Advance tax liability on dividend income shall arise only after declaration or payment of dividend.
      • For foreign portfolio investors, treaty rates can be availed for withholding tax on dividend income.
      • To further incentivize operations of units in the International Financial Services Centre (IFSC) in GIFT City, the Finance Minister proposed to allow an exemption on capital gains for aircraft leasing companies, a tax exemption for aircraft lease rentals paid to foreign lessors, a tax incentive for relocating foreign funds in the IFSC and to allow a tax exemption for the investment division of foreign banks located in the IFSC.
      • To incentivize investment in eligible start-ups, the eligibility for claiming a tax holiday for start-ups is extended by 1 more year – until 31 March 2022. Further, in order to incentivize funding of start-ups, the capital gains exemption for investment in start-ups is also extended by one more year - until 31 March 2022.

      Tax administration and other measures

      • Relief measures will be granted to senior citizens by removing the need to file income tax returns for those aged 75 years and above, having only pension and interest income. Paying banks will be required to deduct the necessary tax on their income.
      • Details of capital gains, dividend income, income from listed securities and interest income from bank deposits will also be pre-filled in the income tax return form.
      • The following amendments on tax audit, assessment and appellate proceedings were proposed:
        • The tax audit limit will be increased from INR 50 million to INR 100 million for persons carrying out 95% of their transactions digitally.
        • The time limit for re-opening income tax assessment cases will be reduced from 6 years to 3 years. Only in serious tax evasion cases, where there is evidence of concealment of income of INR 5 million or more in a year, can reassessment be opened for up to 10 years.
        • A National Faceless Income Tax Assessment Tribunal (ITAT) Centre will be set up. All communication between the ITAT and the appellant shall be electronic. Where personal hearing is needed, it shall be done through videoconferencing.
        • A dispute resolution committee will be created for small taxpayers with taxable income up to INR 5 million and disputed income up to INR 1 million.
      • The definition of the term "slump sale" will be amended so that all types of "transfers" as defined in section 2(47) of the Income Tax Act are included within its scope.
      • NRIs will be allowed to operate one person companies in India.

      Further details will be reported as they develop.

    • India Launches E-Portal for Reporting Tax Evasion-Related Issues

      To promote e-governance and encourage the public to participate in curbing tax evasion, the Central Board of Direct Taxes has launched a dedicated e-portal to receive complaints for tax evasion, undisclosed foreign assets and income and benami transactions (i.e. transactions where property is transferred to one person for a consideration paid or provided by another person).

      Informers can file complaints regarding violations of the Income Tax Act 1961, Black Money (Undisclosed Foreign Assets and Income) Imposition of Tax Act 1961 and Prevention of Benami Transactions Act. Informers may or may not have an existing Permanent Account Number (PAN) or Aadhar, and they may opt to claim a reward.

      The e-portal can be accessed on the CBDT's e-filing website.

    • Back to Growth: Union Budget 2021-2022 announcement: Retail and E-Commerce

      In another historic Union Budget, one preceded by stimulus packages in the form of Atma Nirbhar packages and the Pradhan Mantri Gareeb Kalyan Yojna in 2020, Hon’ble Smt Nirmala Sitharaman delivered an action-oriented plan to help lift the Indian economy in her speech. As countries across the globe are struggling to cope with the loss of demand and investments, Indian economy is slowly gaining momentum, and as per the Economic Survey, Indian real GDP is slated to rise at a rate of 11% between 2021-22. Resonating with such projections, the budget today featured announcements on various schemes and proposals, many of which were pivoted towards leveraging and enhancing the consumer spending power of India’s 1.3 billion population, thus, giving impetus to the growth of the retail and e-commerce market.

      Among the major announcements made today, a few of the notable ones are mentioned below:

      Encouraging Digital Payments

      ₹1,500 crore earmarked for a proposed scheme to incentivise innovations in digital payment systems.


      India’s m-commerce market is expected to rise to nearly $63 bn by 2023. Innovations in digital payments systems will help secure transactions in the space, and enable offshoots to the e-commerce/m-commerce to grow, thereby, increasing income and generating employment.

      Employment Laws and Regulations Reforms

      1. Social security benefits to be extended to gig and platform workers.
      2. Women to be allowed to work during night shifts with adequate safety provisions.


      As per a report, over 17 million women were left unemployed in India in April 2020. Measures to allow women to work during night shifts will ensure upward mobility of working women by enhancing available economic opportunities. Extending social benefits will act as hedge against economic deprivations induced by the pandemic

      Textiles Reforms

      Scheme for Mega Integrated Textile Regions and Apparel Parks (MITRAs) will be rolled out creating world-class infrastructure with plug-n-play facilities; 7 textile parks over 3 years to be created.


      India is a major retail hub with a consumption expenditure that is expected to rise to nearly $6 tn by 2030. Thus, it is being keenly looked upon as an expansion destination by major international retailers. Developing textile infrastructure in tandem with growing retail market will help companies looking to enter India under formats such as Single Brand Retail Trading (SBRT), as they can then look to locally source products to comply with the FDI rules requirement for the same without incurring heavy expenditure on technical textiles.

      Boost to Infrastructure

      1. National monetisation Pipeline of Warehousing (CWC)
      2. Proposal to increase capital expenditure at INR 5.54 lakh crore, from INR 4.39 lakh crore in 2021. Economic corridors being envisaged with plan to boost road infrastructure.
      3. National Infrastructure Pipeline (NIP) has now expanded to include 7400 projects, in a thrust to monetize public projects.
      4. Project to construct over 13,000 kms length of roads have been awarded under the ₹5.35 lakh crore ‘Bharatmala Pariyojana’


      1. A boost to infrastructure will lead to a commensurate increase in logistics operations, which are important to retail and e-commerce entities. Digital serviceability ensures functioning of an online marketplace, but a robust physical infrastructure will help companies complete the transaction loop by providing the goods and services to the remotest of places within stipulated timelines.
      2. Better infrastructure with a focus on exports will help retailers looking at India as a sourcing destination.

      Production Linked Incentive (PLI) schemes

      Production Linked Incentive (PLI) schemes to create manufacturing hubs across 13 sectors, including textiles, food, electronics and pharmaceuticals, have been announced, with an allocation of ₹1.97 lakh crores over 5 years starting FY 2021-22


      The schemes will help increase local manufacturing output and increase the base of local vendors. Thus, PLI will help make India into a sourcing destination for global players.

      Reforms in Startup Ecosystem

      1. Incorporation of One Person Companies (OPCs)
      2. Focus on allowing OPCs them to grow without restrictions in paid up capital and turnover.
      3. Reducing residency limit from 182 days to 120 days for Indian Citizens setting up OPCs.
      4. Eligibility for claiming tax holidays extended by one year, till 31 March 2022.
      5. Capital gains exemption for investment in start-ups increased by 1 more year, till 31 March 2022.


      Tax holidays and capital gain exemptions to help infuse liquidity into the startup ecosystem; limited residency limits will help more Non-Residential Indians (NRIs) looking at India to establish presence, bringing in much needed technical expertise and capital.

      Change in Customs Duties

      1. Revoking Anti-Dumping Duty (ADD) and Countervailing Duty (CVD) on certain steel products.
      2. Reducing duties on copper scrap from 5% to 2.5%.
      3. Exempting duty on steel scrap for a specified period.
      4. Reduction in duty on Gold and Silver from 12.5% to 7.5%.
      5. Reduction of the BCD rates on nylon fibre and yarn to 5%.


      1. Removal of Anti-Dumping Duty and Countervailing Duty on steel products and copper scrap will benefit MSMEs.
      2. Reduction in gold duty will give impetus to its consumption, thus, boosting gems and jewellery retail.
      3. Reduction in duty on textile raw material will further help scale manufacturing, thus, allowing companies to ensure competitive retail prices.
    • Back to Growth: Union Budget 2021-22 announcement – Infrastructure outlay


      • Highest ever allocation towards capital expenditure: A sharp increase in capital expenditure is proposed at 5.54 lakh crore, from Rs 4.39 lakh crore in 2021.
      • National Infrastructure Pipeline expanded to 7,400 projects. 217 projects worth over INR 1 lakh crore completed under National Infrastructure Pipeline.
      • Government has committed INR 1.97 lakh crore for PLI schemes covering 13 sectors.
      • Enhancing India’s textiles competitiveness globally, alongside PLI, the scheme for Mega Integrated Textile Regions and Apparel Parks (MITRAs) will be rolled out creating world class infrastructure with plug and play facilities. 7 mega textile parks to be established in 3 years.
      • Government to support the development of a world-class fintech hub at GIFT, investor charter to be introduced.
      • Allocation to rural infrastructure development increased to INR 40,000 crore in next fiscal, up from INR 30,000 crore.
      • Policies to make it easy for foreign investors to invest in India's infrastructure projects. Proposal to make dividend payments to REIT (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) exempt from Tax Deducted at Source (TDS).

      Road & Highways Infrastructure

      • By March 2021, an additional 8,500 Kilometers (KMs) of National Highways will be awarded and works on 11,500 KMs of National Highway corridor will be completed this year. Planned economic corridors include:
        • INR 1.03 lakh crore for development of 3,500 KMs of National Highway works in Tamil Nadu, including Madurai-Kollam Corridor.
        • INR 65,000 crore for development of 1,100 KMs of National Highways works in Kerala, including 600 KMs of Mumbai-Kanyakumari Corridor.
        • INR 25,000 crore for development of 675 KMs of Highway work in West Bengal, including upgradation of existing Kolkata – Siliguri Road.
        • 1,300 km in Assam in the next 3 years.
      • Voluntary Vehicle Scrapping Policy: Vehicles to undergo fitness test at automatic fitness centres on a voluntary basis. All private vehicles beyond 20 years and commercial vehicles older than 15 years old will have to undergo fitness test.
      • National Highway Authority of India (NHAI) sponsored InvIT to be launched with 5 operational toll roads.
      • Centre to provide INR 18,000 crore for public buses.
      • Advanced Traffic management system with speed radars, variable message signboards, GPS enabled recovery vans will be installed in all new four and six lane highways.
      • Major Expressways/Corridors:
      • Delhi-Mumbai Expressway: Remaining 260 km will be awarded before 31st March 2021.
      • Bengaluru – Chennai Expressway: 278 KM will be initiated in the current financial year. Construction will begin in 2021-22.
      • Delhi-Dehradun economic corridor: 210 KM corridor will be initiated in the current financial year. Construction will begin in 2021-22.
      • Kanpur-Lucknow Expressway: 63 KM expressway providing an alternate route to NH 27 will be initiated in 2021-22.
      • Chennai – Salem corridor: 277 KM expressway will be awarded and construction would start in 2021-22.
      • Raipur-Vishakhapatnam: 464 km passing through Chhattisgarh, Odisha and North Andhra Pradesh will be awarded in the current year. Construction will start in 2021-22.
      • Amritsar-Jamnagar: Construction will commence in 2021-22.
      • Delhi –Katra: Construction will commence in 2021-22.


      • Railways to monetize dedicated fright corridor assets for operations and maintenance after commissioning.
      • INR 1.10 lakh crore outlay for railways, of which Rs 1.7 lakh crore for capital expenditure
      • Central fiscal funding for Kochi Metro, Chennai Metro, Bengaluru Metro, Nagpur Metro and Nashik Metro projects.
      • Metrolite/Metroneo systems requiring lower outlay and higher comfort and convenience to be deployed.
      • National Rail Plan 2030: Create a future ready railway system to bring down the logistics cost of industry at the core of the ‘Make in India’ strategy.
      • Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor to be commissioned by June 2022. Sonnagar-Dankuni section to be implemented through Public-Private Partnership (PPP) mode.
      • Total broad-gauge network electrified to reach 72% of the entire route length up from 65% in the previous year.
      • Introduction of modern Vistadome Linke Hofmann Busch (LHB) coaches for a safer travel experience.
      • Indigenously produced cutting edge anti-collision system on high density routes to reduce manual errors.

      Ports and Shipping

      • Seven projects worth more than INR 2,000 crore in PPP mode for ports.
      • Move towards privatisation of major ports.
      • Indian companies to be given subsidy in global tenders under scheme for promoting flagging of merchant ships in India.
      • Recycling of ships to be doubled by 2024. 90 Ship recycling yards in Alang expected to generate 1.5 lakh jobs for Indian youth. Efforts to bring ships from Japan and Europe.

      Power and Energy

      • Proposal to create a framework to give consumers alternatives to choose from more than one power distribution company to avoid monopoly of Distribution Companies (DISCOMS).
      • Establishment of an independent gas transport system operator for facilitation and coordination of booking of common carrier capacity encompassing all the natural gas pipelines in a non-discriminatory open access basis.
      • Power transmission assets of INR 7000 crores to be transferred to Power Grid Corporation of India (PGCIL) InVits.
      • INR 3.05 lakh crore outlay for the power sector.
      • 100 more cities to be added in the next 3 years to the gas distribution network.
      • Ujjwala scheme extended to cover 1 crore more beneficiaries.
      • Gas pipeline project to be taken up in Jammu and Kashmir.
      • INR 1,000 crore to solar energy corporation of India and INR 1,500 crore to renewable energy development agency.
      • Introduction of schemes for DISCOMS for infrastructure creation like pre-paid smart metering and feeder upgradation worth INR 3.05 lakh crores.
      • Announcement of Hydrogen Energy Mission to generate hydrogen from green power sources.
      • To build up domestic capacity, a phased manufacturing plan for solar cells and solar panels to be notified.
      • Duty on solar inverters raised from 5% to 20% and on solar lanterns raised from 5% to 15%, to encourage domestic production.


      • Affordable housing projects will get a tax holiday for one year till 31st March 2022.
      • Additional deduction of interest: INR 1.5 lakhs for loans taken up to 31st March for the purchase of affordable housing.
      • Affordable rental housing for migrant workers - tax exemption for notified affordable rental housing projects.
  • Switzerland
    • Federal Tax Administration Announces Safe Haven Interest Rates for 2021

      The Federal Tax Administration published 2 Circulars and announced the safe haven interest rates applicable to shareholder and related party loans in 2021.

      Circular of 28 January 2021: Loans denominated in CHF

      The minimum interest rates for loans in CHF granted to shareholders or related parties are:

      • on loans financed through equity: 0.25%; and
      • on loans financed through debt: the interest incurred (prime costs) plus 0.5% on amounts up to CHF 10 million, or plus 0.25% on amounts exceeding CHF 10 million; in all cases, however, at least 0.25%.

      Conversely, the maximum interest rates payable for loans in CHF given by shareholders or related parties are:

      • on real estate loans: 1.0% to 2.25% (depending on loan type and level of debt financing); and
      • on operational loans received by a Swiss trading or production company: 3.0% for loans up to CHF 1 million and 1.0% on the excess; by a Swiss holding or administration company: 2.5% for loans up to CHF 1 million and 0.75% on the excess.

      Circular of 29 January 2021: Loans denominated in foreign currencies

      For loans in foreign currencies (e.g. EUR and USD) given to shareholders or related parties, the minimum interest rates are:

      • on loans financed through equity: EUR: 0.25%, USD: 1.25%; in all cases, however, at least the safe haven interest rate for loans denominated in CHF, i.e. 0.25%; and
      • on loans financed through debt: the interest incurred (prime costs) plus 0.50%; in all cases, however, at least 0.25% for loans denominated in EUR, or 1.25% for loans in USD.

      These safe haven interest rates are also applicable to loans in EUR and USD received from shareholders or related parties. However, higher interest rates based on the arm's length principle can be paid if they are justified by a business purpose.

      The Federal Tax Administration published the Circulars and announced the safe haven interest rates on 29 January 2021.

    • United Kingdom and Switzerland Agree on Deepening Cooperation on Financial Matters

      In a virtual meeting held on 27 January 2021, the Swiss Federal Councillor, Ueli Maurer, and the Chancellor of the Exchequer, Rishi Sunak, set the roadmap for negotiations on a mutual recognition agreement in the financial sector in order to enhance cooperation, trust and the cross-border market between the United Kingdom and Switzerland.


      On 30 June 2020, the two countries signed a joint statement agreeing on their shared ambition to develop an international agreement on financial services. The joint statement outlined the objectives of the mutual recognition agreement and the basis of the cooperation.

      Following discussions on the progress of the cooperation taking place as part of the financial dialogue of 8 September 2020, the two countries held a virtual meeting on 27 January 2021. In that context, the two financial ministers acknowledged the success of initial exploratory talks and agreed on moving forward with negotiation on delivering a comprehensive agreement.

      Purpose and model of cooperation

      The purpose of the mutual recognition agreement is to improve access to the cross-border provision of financial services, as well as to reduce or remove costs and barriers for UK firms accessing the Swiss market and vice versa.

      This is expected to be achieved through mutual recognition of each other's regulatory and supervisory regimes in the fields of insurance, banking, asset management and capital markets (including market infrastructure).

      The prospective agreement will follow an outcome-based approach and establish the appropriate regulatory and supervisory framework allowing the cross-border provision of financial services between the United Kingdom and Switzerland, while reducing the regulatory frictions.

      Stock exchange equivalence

      Earlier in January 2021, the United Kingdom launched legislation aimed at granting share trading equivalence to Switzerland's trading venues. Subject to parliamentary approval, this will come into force on 3 February 2021, with the expectation that Switzerland will reciprocate removing restrictions on UK trading venues.

      Since 2019, as an EU member at the time, the United Kingdom has had to comply with the EU decision to revoke its recognition of Swiss stock exchanges, which cost the City of London almost EUR 1.2 billion per day in trades.

      Impact and next steps

      The commitment to a mutual recognition agreement signals the United Kingdom's wider vision for the industry since the country's departure from the European Union, as well as demonstrates the United Kingdom's strategy to cement London's role as an international financial centre.

      The Chancellor of the Exchequer, Rishi Sunak, said in a speech he gave in June 2020: "Nearly half of all Swiss financial services imports come from the UK; and the UK is one of the main destinations for Swiss foreign direct investment. And as the two biggest financial centres in Europe, we also share a common governing and regulatory philosophy."

      Both countries have expressed their shared belief in the value of open and resilient financial markets and are committed to high regulatory standards, market integrity and investor and consumer protection.

      The discussions are set to continue at official level over the coming months and the agreement's impact on other areas, including taxation, is expected to be significant.

      Further information can be found here.

  • United Arab Emirates
    • Dubai Economy issues 33,769 e-MOA and e-MOA addendums in 2020, a growth of 16.2% from 2019

      The Business Registration & Licensing (BRL) sector of Dubai Economy has issued 33,769 electronic Memorandum of Association (MOA) and e-MOA addendums in 2020, an increase of 16.2% from 29,067 issued in 2019. This is in line with the Federal Decree-Law No. 7 of 2018 by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan amending articles within Federal Law No. 02 of 2015 on Commercial Companies.

      The report showed that the electronic MOAs issued in 2020 varied with 60% being professional, followed by 39% commercial and the rest were distributed among tourism and industrial activities, while e-MOA addendums issued in 2020 varied with 73% commercial, followed by 23% professional and the rest distributed among tourism and industrial activities.

      These figures underscore Dubai Economy’s strategy to further strengthen ease of doing business in Dubai, as well as enhance the emirate’s competitiveness and ability to attract businesses and support their sustainable growth, as well as to expand the number of businesses in various economic sectors in Dubai.

      Business owners in Dubai can get the e-MOAs and all its addendums through Dubai Economy service centres or through approval to the text message from 6969 without the need to visit Dubai Economy.

      The BRL sector has added new procedures for e-MOAs that include: Selling shares contract for a Limited Liability Company and for a One-Person Limited Liability Company; and Issuing a Civil Company contract if UAE or GCC nationals are parties. Approval of a service agent contract ratification for a Sole Proprietorship and a Civil Company have also been added.

      E-signatures for MOAs are available whereas the representative of the company (a Legal Person) can electronically sign on behalf of the company provided that a valid legal agency is available by the company or by a decision from the board of directors or through the powers of the manager mentioned in the articles of MOAs.

      The new procedures included adding administrative powers that give the manager rights such as: Establish, manage and cancel subsidiaries of the main company; Register value-added tax and submit returns with the Federal Tax Authority; Transfer the salaries of workers and employees to banks in the UAE; Represent the company before all courts and quasi-judicial bodies in the UAE; and finally Appoint an arbitrator in case of any disputes.

      Dubai Economy strives to deliver solutions that contribute to facilitating ease of doing business in Dubai and expanding growth, in addition to maintaining a sustainable economy that reflects Dubai’s position as a global economic destination.

      The continuous partnership between the governmental and private sectors will raise the level of efficiency and provide a seamless service environment for the business community as per the highest international standards. The Business Registration and Licensing sector in Dubai Economy focuses on making the process of registering new companies and issuing commercial licenses easy and fast, which reflects positively on Dubai's global competitiveness.

    • Federal Tax Authority Provides Exceptions Regarding the Supporting Evidence for Excise Goods Exports

      The UAE Federal Tax Authority (FTA) has clarified administrative exceptions with regard to the Excise Tax Guide (the guide). The guide provides that a registrant for excise tax purposes (the registrant) may request permission to retain alternative evidence that goods have been exported from the UAE other than the commercial and official evidences.

      The exception is granted if the registrant can prove to the FTA that he is unable to provide any of the requested evidence due to circumstances beyond his control. The registrant should complete a request form and file it electronically along with the following information:

      • a detailed description of the request; and
      • any documentary proof to support the factual and legal grounds on which the request is based (e.g. sample invoices, contracts, payment slips).

      The FTA has up to 40 business days to respond to the request. Any questions on specific fields in the Excise Tax Administrative Exception Form, are to be addressed to: info@tax.gov.ae.

      According to Article 14(5) of the cabinet decision No. (37) of 2017 on the executive regulation of the federal decree-law no (7) of 2017 on excise tax, the FTA may specify alternative forms of evidence for exports other than commercial and official evidence according to the nature of the exports as well the nature of the goods being exported.

      The guide was published on 31 December 2020 on the FTA's official website.

    • UAE grants citizenship and passport to investors, professionals, special talents

      DUBAI, 30th January, 2021 (WAM) -- The United Arab Emirates has approved amendments to the Executive Regulation of the Federal Law concerning Nationality and Passports allowing investors, professionals, special talents and their families to acquire the Emirati nationality and passport under certain conditions.

      The step aims at appreciating the talents and competencies present in the UAE and attracting more bright minds to the Emirati community in a way that contributes to the development and prosperity of the country.

      Categories that can qualify to acquire the Emirati nationality include: investors, doctors, specialists, inventors, scientists, talents, intellectuals, artists and their families (spouse and children), meanwhile the amendments allow retaining the current nationality.

      Acquiring the Emirati citizenship will be done through nominations from Rulers and Crown Princes Courts, Executive Councils, and the Cabinet based on federal entities nominations.

      Conditions for granting citizenship Under the directive of President His Highness Sheikh Khalifa bin Zayed Al Nahyan, the Cabinet chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, approved the amendments of the Executive Regulation of the Federal Law concerning Nationality and Passports.

      The amendments specified the conditions that must be met in each category such as: Investors are required to own a property in the UAE.

      Doctors and specialists must be specialised in a unique scientific discipline or any other scientific principles that are highly required in the UAE, the applicant must have acknowledged scientific contributions, studies and research of scientific value and a practical experience of not less than 10 years, in addition to obtaining membership in a reputable organisation in his field of specialisation.

      Scientists are required to be an active researcher in a university or research centre or in the private sector, with a practical experience of not less than 10 years in the same field. They also should have contributions in the scientific field such as winning a prestigious scientific award, or securing substantial funding for their research during the past ten years, it is also mandatory to obtain a recommendation letter from recognised scientific institutions in the UAE.

      Inventors who are willing to acquire Emirati citizenship are required to obtain one or more patents that are approved by the UAE Ministry of Economy or any other reputable international body, in addition to a recommendation letter from the Economy Ministry.

      Individuals with creative talents such as intellectuals and artists should be pioneers in the culture and art fields and winners of one or more international award. A recommendation letter from related government entities is mandatory as well.

      In case of qualifying, and before acquiring the citizenship, other requirements include swearing the oath of allegiance, committing to abide by the Emirati laws and officially informing the respective government agency in case of acquiring or losing any other citizenship are mandated.

      The UAE citizenship offers a wide range of benefits includes the right to establish or own commercial entities and properties, in addition to any other benefits granted by federal authorities after the approval of the Cabinet or local authorities.

      As per the amendments, the citizenship can be withdrawn upon breach of the conditions.

      Acquiring the Emirati citizenship will be done through Rulers and Crown Princes Courts, Executive Councils, and the Cabinet based on federal entities nominations.

      WAM/Esraa Ismail/MOHD AAMIR
  • United Kingdom
    • United Kingdom Clarifies Rules on VAT Refunds for Overseas Businesses

      On 31 December 2020, HM Revenue and Customs (HMRC) updated its guidance providing clarifications with respect to the ability of overseas businesses having incurred value added tax (VAT) on goods and services acquired in the United Kingdom for use by those businesses to claim a VAT refund. The overseas businesses must have been registered as businesses outside the United Kingdom. The guidance sets out the following items:

      • who is eligible to claim a VAT refund;
      • on what relief the VAT can and cannot be claimed;
      • how to claim a VAT refund;
      • what the minimum limits for claims of VAT refunds are;
      • what are the documents needed; and
      • what the timescales are for making claims of a VAT refund.
    • United Kingdom Updates Import Duty Relief Rules

      On 31 December 2020, HM Revenue and Customs (HMRC) updated its guidance with respect to the ability to claim relief from import duty and value added tax (VAT) on goods imported into the United Kingdom in certain circumstances. In all cases, the guidance covers who can claim, how to claim and when to claim. The following situations are covered:

      • disabled people: the import of goods that are specifically designed or adapted for use by disabled people, including blind or partially sighted people, for everyday activities is subject to relief;
      • charities: the import of goods by bodies specializing in the welfare of needy people that have been provided free of charge by an organization that is not established in the United Kingdom is subject to relief;
      • scientific instruments: the import of scientific instruments by organizations involved in non-commercial and non-profit activities in the field of education or scientific research is subject to relief;
      • substances for chemical or biological research: the import of those substances from outside the European Union and United Kingdom is subject to relief. The guidance contains a list of substances eligible for relief and how to obtain approval to claim the relief;
      • inherited goods: the import of those goods by a UK resident inheriting goods bequeathed to them in the will of a deceased person is subject to relief;
      • decorations and awards: persons are eligible for relief provided that the decorations or awards have been given to the persons in a country outside the United Kingdom or that the eligible persons will be giving a decoration or award to persons in the United Kingdom; and
      • blood grouping, tissue typing and therapeutic substances: those goods are subject to relief provided that they are liable to a positive rate of import duty or are products of a non-human origin.
  • United States
    • US IRS: Important reminders before filing 2020 tax returns

      WASHINGTON — Following an unpredictable year with many changes and challenges, the Internal Revenue Service today shared important reminders for taxpayers who are about to file their 2020 federal tax returns.

      Choose direct deposit

      The safest, most accurate and fastest way to get a refund is to electronically file and choose direct deposit. Direct deposit means any tax refund is electronically deposited for free into a taxpayer's financial account.

      Eight out of 10 taxpayers get their refunds by using direct deposit. It is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.

      Earned Income Tax Credit

      The Earned Income Tax Credit (EITC) can give qualifying workers with low-to-moderate income a substantial financial boost. EITC not only reduces the amount of tax someone owes but may give them a refund even if they don't owe any taxes or aren't required to file a return.

      People must meet certain requirements and file a federal tax return in order to receive this credit. The EITC assistant on IRS.gov can help people determine if they qualify.

      The IRS reminds taxpayers that they may elect to use their 2019 earned income to figure the EITC if their 2019 earned income is more than their 2020 earned income. For details, see Publication 596, Earned Income Credit. Taxpayers also have the option of using their 2019 income to figure the Additional Child Tax Credit for 2020.

      Taxable unemployment compensation

      Millions of Americans received unemployment compensation in 2020, many of them for the first time. This compensation is taxable and must be included as gross income on their tax return.

      Taxpayers can elect to have federal taxes withheld from their unemployment benefits or make estimated tax payments, but many do not take these options. In that case, taxes on those benefits will be paid when the 2020 tax return is filed. Taxes can be paid throughout the year. For safe and secure ways to pay taxes electronically go to IRS.gov/payments.

      Taxpayers can find more details on taxable unemployment compensation in Tax Topic 418, Unemployment Compensation, or in Publication 525, Taxable and Nontaxable Income, on IRS.gov.

      Interest is taxable income

      Many individual taxpayers who received a refund on their 2019 tax returns also received interest from the IRS. The interest payments were largely the result of the postponed filing deadline of July 15 due to the COVID-19 pandemic.

      The 2019 refund interest payments are taxable, and taxpayers must report the interest on their 2020 federal income tax return.

      The IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10. The average refund interest amount is $18, but the amount for each taxpayer varies based on the tax refund that the taxpayer received. Form 1099-INT will be issued no later than February 1, 2021.

      Home office deduction

      The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy.

      However, the Tax Cuts and Jobs Act suspended the business-use-of-home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home. IRS Publication 587, Business Use of Your Home, provides more on the home office deduction.

      Workers moving into the gig economy

      Many people found different employment in 2020, including jobs in the gig economy. Taxpayers must report income earned in the gig economy on their tax return. However, gig-economy workers generally do not have taxes withheld from their pay as salaried workers normally do. The IRS encourages people earning income in the gig economy to consider making quarterly estimated tax payments to stay current with their federal tax obligations.

      Charitable donation deduction for people who don't itemize

      Individuals who take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.

      Before making a donation, the IRS reminds people they can check the special Tax Exempt Organization Search (TEOS) tool on IRS.gov to make sure the organization is eligible for tax-deductible donations.

      Under this change, individuals can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2020. This deduction does not apply to donated property. The maximum deduction is $150 for married individuals filing separate returns. More information is available in Publication 526, Charitable Contributions, on IRS.gov.

      Disasters such as wildfires, flooding or hurricanes

      Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area. Some 2020 tax deadlines in certain counties have been extended into 2021 due to recent wildfires, hurricanes or flooding.

    • US Increases Social Security Wage Ceiling for 2021

      The US Social Security Administration (SSA) has announced that the 2021 wage ceiling is increased from USD 137,700 to USD 142,800 for the Old Age Survivors Disability Insurance (OASDI) portion of US social security taxes imposed under the Federal Insurance Contribution Act (FICA). The FICA is composed of two components: OASDI and Medicare or Hospital Insurance.

      The SSA made the announcement in its Fact Sheet and Press Release.

      For 2021, employees are subject to OASDI tax on wages up to USD 142,800 at a rate of 6.20%. Employers are also required to pay OASDI tax for their employees at the same rate. Earnings above the wage ceiling amount are not subject to OASDI tax.

      Employees and employers are also subject to Medicare tax at a rate of 1.45%, but there is no limit placed on the amount of wages subject to the Medicare tax. Individuals with wages of more than USD 200,000 (USD 250,000 for married taxpayers filing jointly and USD 125,000 for married taxpayers filing separately) pay an additional Medicare tax at a rate of 0.9% beginning in 2013.

      Self-employed individuals must pay their own portion of the US social security taxes plus the portion that would otherwise be paid by an employer. The combined OASDI tax rate for self-employed individuals for 2021 is thus 12.40%, and the combined rate for the Medicare tax is 2.90%. The USD 142,800 ceiling amount applies to the OASDI tax imposed on the net earnings of the individuals from self-employment.

      Note: Foreign nationals working in the United States are subject to OASDI and Medicare taxes unless exempted under a Social Security Totalization Agreement between the United States and their country of residence.

    • USTR: China Section 301 Exclusions

      The Office of the United States Trade Representative (USTR) announced it has granted 19 new exclusions and 79 extensions from Section 301 China tariffs on China. These exclusions are effective until March 31, 2021. Please CLICK HERE to see the full list of extended and new exclusions.
    • Aluminum import licenses required beginning January 25th 2021

      The U.S. Department of Commerce published a final rule in the Federal Register adopting the Aluminum Import Monitoring and Analysis (AIM) system regulations.  The AIM website consists of an online aluminum import license application platform and public AIM monitor. The license application system will be available for early registration on or after January 4, 2021, and licenses will be required for entries of covered aluminum products beginning January 25, 2021.   For more information and to access the new system, click here