June 2022

The Ministry of Finance has launched a public consultation on proposed amendments to regulations for application of the Value Added Tax (VAT) Act. The main amendments are the following:

• new requirements for evidencing certain zero-rated supplies;
• further clarifications concerning the new VAT rules for e-commerce applicable as of 1 July 2021; and
• introducing of details regarding the rules for adjustments of incorrectly issued invoices even when a tax audit assessment notice has entered into force.

The full text of the proposal, issued on 30 May 2022, is available here (in Bulgarian only).

The public consultation will be open until 29 June 2022. Further developments will be reported as they occur.

In the first four months of the year, Bulgaria's exports outside the European Union increased by 27.5% compared to the same period in 2021 and amounted to BGN 9.224 billion. Bulgaria's main trade partners are Turkey, Serbia, USA, North Macedonia, United Kingdom, China and Egypt, which account for 52.6% of exports to third countries.

As expected, part of the growth is due to higher production prices as a result of inflation. Data from the National Statistical Institute for April show an increase in production prices of 40%.

The largest growth was in the sectors "Mineral fuels, oils and related products" (198.3%) and "Fats, oils and waxes of animal and vegetable origin" (141.8%), and a decrease - in the sector "Goods classified mainly by type of the material" (14.4%).

Imports from January to April grew more - by 58.3% on an annual basis and amounted to BGN 14.385 billion. The largest is the value of goods imported from Russia, Turkey, China and Ukraine. Russia has traditionally held the leading position in data on imports due to natural gas, the supply of which, however, was suspended in late April.

During the four months, the highest growth of imports is again in the two sectors, where the highest growth is in exports - "Mineral fuels, oils and related products" (151.3%) and "Fats, oils and waxes of animal and vegetable origin "(138.7%). No decline was observed in any of the sectors.

Bulgaria's foreign trade balance with third countries in the period January - April 2022 was negative and amounted to BGN 5.160.3 billion.

In the period January - April 2022, a total of BGN 28.781 billion worth of goods were exported from Bulgaria (including the EU), which is 33.6% more than in the same period of 2021.

Imports for the four months totaled BGN 32.678 billion, or 40.5% more than in the same period of 2021.

The total foreign trade balance is negative and amounts to BGN 3.897 billion.

Novinite

The Ministry of Finance has launched a public consultation on proposed amendments to regulations for application of the Excise Duties and Tax Warehouses. The main amendments are the following:

• clarifications regarding certain exemptions from excise duties for goods used by armed forces;
• details on refunds of excise duties in the cases of performed distance sales of goods;
• requirements for registration of certified consignors and consignees, including in the cases of temporary certification; and
• clarifications regarding the requirements for containers for transportation used in road and water transport.

The full text of the proposal, issued on 30 May 2022, is available here (in Bulgarian only).

The Department of Finance of Guangdong Province released on June 1, 2022 the Circular of the Ministry of Finance and the State Taxation Administration on Implementing Preferential Corporate Income Tax Policies in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin ("Hengqin Zone"), with retroactive effect on January 1, 2021.

It is clarified that corporate income tax ("CIT") on qualified industrial enterprises in Hengqin Zone would be levied at a reduced rate of 15%, and the tax can be waived on eligible companies in the tourism, modern service and high-tech sectors in the Zone for their income from new overseas direct investments. It is further specified that, enterprises in the Zone may include their cost of no more than 5 million yuan for purchase of fixed assets or intangible assets (including self-built or self-developed assets) in one-off cost of the current period for tax deduction, and can accelerate the depreciation or amortization of new purchase costing over 5 million yuan.

The Chinese government released on June 14, 2022 the Overall Plan on Promoting the Comprehensive Cooperation among Guangdong, Hong Kong and Macao by Further Deepening Opening-up in Nansha District of Guangdong Province.

The Plan will be implemented in the whole area of Nansha district, with Nanshawan, Qingsheng hub and Nansha hub in the southern areas of China (Guangdong) Pilot Free Trade Zone serving as the launching areas in the first phase. It proposed to build industrial cooperation bases for sci-tech innovation, implement preferential import tax policies to support sci-tech innovation, and extend the number of years for carry-over of losses in high-tech enterprises or enterprises in key sectors. The corporate income tax would be levied at a reduced rate of 15 percent for enterprises in sectors encouraged, and the catalog of industries for preferential policies would be formulated according to the procedures. Residents from Hong Kong or Macao who are working in Nansha would be exempted from the individual income tax for their portions of income in a tax burden higher than that in Hong Kong or Macao.

Reference: http://www.gov.cn/zhengce/content/2022-06/14/content_5695623.htm

The State Taxation Administration ("STA") released on May 31 2022 the Announcement on Matters Concerning Enterprise's Access to the Preferential Policy for Additional Deduction of Research and Development (R&D) Costs in Declaration and Prepayment of Corporate Income Tax (No.10 in 2022), with retroactive effect on January 1, 2022.

Compared with the 2021 rules, the new rules have kept the policy access timing and procedures unhanged. Specifically, an enterprise may decide on their own to access the preferential policy for additional deduction of R&D costs incurred in the first three quarters earlier when it declares for prepayment of the corporate income tax in October. If it does not choose to access the policy earlier, it may access the policy combined when it handles annual final settlement. An enterprise's access to the policy for additional deduction of R&D costs should be conditional on that "the costs are actually incurred, and the enterprise declares for the access on its own decision, with the relevant materials kept for future reference".

Reference: http://www.chinatax.gov.cn/chinatax/n362/c5175756/content.html

On 16th June 2022, the State Administration of Taxation, the Ministry of Public Security, the Supreme People's Procuratorate, the General Administration of Customs, the People's Bank of China, the State Administration of Foreign Exchange held the meeting in Beijing to jointly crack down tax fraud on VAT credit refund and export tax refund.

The meeting stressed that the six departments at all levels should carry out a three-dimensional, full-chain crackdown on the upstream and downstream enterprises of tax fraud, focusing on gang-style, trans-regional, illegal acts of fraudulently issuing invoices to obtain VAT credit rebates and export tax rebates, and severely punish them. The meeting stressed that cases should be handled in accordance with laws and regulations, and that law-abiding enterprises should be risk-free and undisturbed. To the non-subjective intentionally illegal acquisition of tax rebate retention enterprises, to remind them to rectify; An entity enterprise that promptly makes up the tax payment or recovers the tax loss for a first or accidental offense may be given a lenient punishment according to law; Enterprises that maliciously fabricate, falsely issue invoices or fraudulently obtain tax rebates by gangs, especially those involving huge amounts of tax fraud, egregious circumstances and serious harm, shall be strictly and resolutely punished.

Reference: https://mp.weixin.qq.com/s/AHum4sXtUWDa4XF8wJ4CNw

Premier Li Keqiang chaired an executive meeting of the State Council on May 23, 2022, deciding to adopt a package of measures to stabilize economic performance. The 33 measures concern six aspects.

It is decided that the policy of refunding outstanding and newly added-value added tax (VAT) credits will be extended to more industries, which is expected to increase tax refunds by 140-plus billion yuan. The policy of deferred premium payments of old-age, unemployment and workplace safety insurance programs by micro, small and medium-sized enterprises (MSMEs) in the five hard-hit sectors will be prolonged till the end of this year, and extended to other industries facing serious difficulties. The scale of the support facility for inclusive loans to micro and small businesses, and its share of the increase in the loan balance will both be doubled this year. The payment period of commercial acceptance bills will be cut from one year to six months. Platform companies will be encouraged to list on domestic and overseas markets in accordance with laws and regulations. The industrial and supply chains will be stabilized. Consumer spending and effective investment will be boosted. Car purchase restrictions will be relaxed. The purchase tax of passenger vehicles will be partially cut to the amount of 60-plus billion yuan on a time-limited basis. Energy security will be ensured. The meeting also stressed the imperative to ensure basic livelihood.

Reference: http://www.gov.cn/premier/2022-05/23/content_5691961.htm

The State Council released on May 31, 2022 the Circular of the State Council on Adopting a Package of Measures to Stabilize Economic Performance.

The policy of refunding value added tax (VAT) credits will be expanded. In addition to the unveiled policy of refunding outstanding VAT credits in full and refunding newly added credits in full on a monthly basis to businesses in six sectors including manufacturing, the country is also exploring to expand the policy to cover businesses in seven other sectors including wholesale and retail, agriculture, forestry, animal husbandry and fishery industries, accommodation and catering, residential services, repair and other services, education, health and social work, culture, sports and entertainment. It also urged to accelerate refunding of VAT credits to micro and small businesses and self-employed individuals, calling for basic completion of the outstanding VAT refunding prior to June 30, 2022 in a centralized manner on the basis of taxpayer's voluntary applications, according to the Circular.

Reference: http://www.gov.cn/zhengce/content/2022-05/31/content_5693159.htm

As a response to the requirement for reduction of vehicle purchase tax for passenger vehicles under certain displacement imposed in the Announcement of the State Council on Adopting a Package of Policy Measures to Stabilize Economic Performance released on May 31, 2022, the Ministry of Finance ("MOF") and the State Administration of Taxation jointly released the Announcement on Reduction of Tax for Purchase of Selected Passenger Vehicles (Announcement (2022) No.20 of the MOF and the STA).

It is clarified that the vehicle purchase tax can be halved for purchase of passenger vehicles in displacement of 2.0-liter or below during the period from June 1, 2022 to December 31, 2022 at a unit price (excluding VAT) of not exceeding 300,000 yuan, and the passenger vehicles refer to vehicles designed to carry passengers and their carry-on luggage and/or temporary goods, with seats of no more than nine, including the driver's seat.

$300 million Fund launched by infrastructure investor Harith General Partners, and power company Anergi Group to accelerate the adoption of renewable energy across Africa. (News24)

10 Films and television shows to be produced by Nigeria's LaVida Studios under a 3-year deal with Dentsu’s The Story Lab US. PAC Capital Limited has committed the initial $50 million  to bring African stories to the global stage. (Variety)

55% Increase in the value of Uganda's coffee exports in May 2022 despite a 7.75% drop in volumes. The monthly rise is part of a year-long trend, which saw exports bring in $837 million in May 2021-June 2022, 55% more than the year before. (Food Business Africa)

$26.1 billion Pledges made in support of Ivory Coast's 2021-25 development plan by by multilateral and bilateral lenders including the West Africa Development Bank, AfDB, the World Bank and the Islamic Development Bank. The plan will require $94.74 billion, with $70.09 billion to be provided by the private sector. (Reuters)

500 Locations across Nigeria said to be endowed with commercial-quality minerals that could boost the country's economy through revenue growth and job creation. The resources comprise 44 different minerals that cut across various mineral spectrums. (The Guardian)

64.7% First-quarter results of Ghana's new Logistics Managers Index (LMI), a score which is indicative of growing logistics activities in the country. Developed by the Center for Applied Research and Innovation in Supply Chain – Africa (CARISA) to track the movement of logistics activities, the index aims to fill the data gap in the sector. (Joy Online)

31 million tonnes  Gold ore discovered in Uganda, with extractable pure gold estimated to gross 32,000 tonnes. These reserves are valued at some $12 trillion, according to the government. If these estimates are accurate, it would suggest the new gold find would topple the expected windfall from oil still in the ground in the Albertine region. (The Citizen)

$15.6 billion  Cost of planned highway connecting Nigeria and Ivory Coast via Benin, Togo, and Ghana. The 1000-km highway funded by African Development Bank is expected to boost the economies of the five countries it will traverse. (Global Construction Review)

35% Electricity coverage launched by SolarAfrica to boost automaker Ford’s Silverton assembly plant in South Africa. The project puts the assembly plant on the map as part of Ford’s commitment to shift its energy supply from fossil fuels to environmentally friendly and renewable sources. (CEO Business Africa)

$100 million Venture capital fund launched by Constant Ventures to invest in technology startups working on financial inclusion, education, and healthcare. Nigeria and Ghana will be the first target markets for the fund, which will later expand to the rest of West Africa. (CEO Business Africa)

188% Decline in earnings recorded by Honeywell Flour Mills, resulting in a $2.3 million full year loss for Nigeria's leading manufacturer of wheat-based products. This fall was attributed to a 32.9% rise in costs at its three operational factories. (Food Business Africa)

30 GW  Generation of renewable energy set to be achieved by Mauritania's $40 billion green hydrogen AMAN, to be undertaken by the government and renewable energy developer CWP Global. One of the largest of its kind in Africa, the project is expected to transform the regional energy mix while generating critical revenue for the Mauritanian government. (Energy Capital & Power)

Tunisia has established the list of jurisdictions with which country-by-country (CbC) reports will be automatically exchanged with effect from the 2020 reporting fiscal year.

The list is important in relation to the secondary local filing requirements, which include that a non-parent constituent entity in Tunisia is required to submit a CbC report if the ultimate parent is resident in a jurisdiction with a tax information exchange agreement with Tunisia but does not appear on the list. Although the secondary local filing requirements do not apply for 2020 and 2021 as per Common Note No. 18/2022, the list may still be relevant for these years in relation to secondary local filing requirements in other jurisdictions in which constituent entities of Tunisia-parented MNE groups are resident.

From the 2022 reporting fiscal year, the list will effectively apply for secondary local filing in Tunisia unless local filing is further limited to ultimate parent entities resident in Tunisia.

The list provides the following 90 jurisdictions:

Andorra, Anguilla, Argentina, Aruba, Australia, Austria, Azerbaijan, Bahamas, Bahrain, Barbados, Belgium, Belize, Bermuda, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Chile, China, Colombia, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Gabon, Georgia, Germany, Gibraltar, Greece, Guernsey, Haiti, Hong Kong (China), Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Italy, Japan, Jersey, Kazakhstan, Korea, Latvia, Liechtenstein, Lithuania, Luxemburg, Macau (China), Malaysia, Maldives, Malta, Mauritius, Mexico, Monaco, Morocco, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Peru, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Senegal, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Swiss, Turkey, Turks and Caicos Islands, United Arab Emirates, United Kingdom, and Uruguay.

The list was published under Ministerial Decree of 15 June 2022 and has been published in the Official Gazette.

The Business Registration Ordinance (Amendment of Schedule 2) Order 2022 (Order) was gazetted today (June 10) and will be introduced into the Legislative Council on June 15.

The Order seeks to reduce the rate of the business registration levy, which finances the Protection of Wages on Insolvency Fund (the Fund), from $250 per annum to $150 per annum with effect from June 17.

Having considered the stable financial position of the Fund and other relevant factors, the Protection of Wages on Insolvency Fund Board (Fund Board) made the proposal to reduce the levy rate to $150 per annum. The proposal was endorsed by the Labour Advisory Board and has gone through consultation with the Legislative Council Panel on Manpower with its support.

The new rate is applicable to (1) the incorporation submissions in relation to simultaneous business registration applications made on or after June 17 and (2) all other cases, if the commencement date of business or branch registration certificates is on or after June 17.

The Fund provides to employees whose employers become insolvent an ex gratia payment covering arrears of wages, wages in lieu of notice, severance payment, pay for untaken annual leave and pay for untaken statutory holidays. It is financed by a levy per annum on each business registration or branch registration under the Business Registration Ordinance. The Fund Board has the statutory functions of administering the Fund and making recommendations to the Chief Executive with respect to the rate of levy.

Source: IRD

The Hong Kong Legislative Council passed the Inland Revenue (Amendment) (Tax Deductions for Domestic Rents) Bill 2022 on 22 June 2022. The Bill gives effect to the measure proposed in the 2022-23 Budget for allowing a tax deduction for domestic rental expenses.

Deduction details are available here.

On 15 June 2022, the European Commission decided to impose definitive anti-dumping and countervailing duties on imports of tubes and pipes of ductile cast iron originating in India.

The rates of the anti-dumping duty are: (i) 3% for the company Jindal Saw Limited; (ii) 0% for the company Electrosteel Castings Ltd; and (iii) 14.1% for all other companies.

The rates of the countervailing duty are: (i) 6% for the company Jindal Saw Limited; (ii) 9% for the company Electrosteel Castings Ltd; and (iii) 9% for all other companies.

These rates were determined based on the investigation carried out by the European Commission concluding that the EU industry continued to suffer material injury during the investigation period. Therefore, the European Commission decided that the previous provisional anti-dumping measures on imports of tubes and pipes of ductile cast iron should be maintained to prevent further injuries to the EU industry.

The decisions to impose definitive anti-dumping and countervailing duties on imports on the referred goods were adopted by Commission Implementing Regulation (EU) 2022/926 and Commission Implementing Regulation (EU) 2022/927, respectively, which were published in the Official Journal of the European Union (OJEU) on 16 June 2022. These Regulations will enter into force on the day following its publication in the OJEU.

According to a press release of 17 June 2022, published by the European Commission, the European Union and India formally resumed negotiations for a free trade agreement (FTA) on the same day, in Geneva. The next round of negotiations is scheduled to take place from 27 June to 1 July 2022, in New Delhi. The parties aim to conclude the negotiations by the end of 2023. Further developments will be reported as they occur.

Agriculture is one of the most fertile industries there are for artificial intelligence (AI) and machine learning (ML). AI, machine learning and the Internet of Things (IoT) sensors that provide real-time data for algorithms increase agricultural efficiencies, improve crop yields and reduce food production costs. Global spending on smart, connected agricultural technologies and systems, including AI and machine learning, is projected to triple in revenue by 2025, reaching $ 15.3 billion. IoT-enabled Agricultural (IoTAg) monitoring is smart, connected agriculture's fastest-growing technology segment projected to reach $ 4.5 billion by 2025, according to PwC.

Indian Government, during 2020-21 and 2021-22, has allocated funds to the tune of INR 1756.3 cores and INR 2422.7 crores to the States for introducing new technologies including drones, artificial intelligence, block chain, remote sensing and GIS etc in agriculture. Further, the Government also allocated INR 7302.50 crores and INR 7908.18 crores in 2020-21 and 2021-22 respectively to ICAR (Indian Agricultural Research Institute) for undertaking Research and Development in Agriculture for developing new technologies, their demonstration at farmer’s field and capacity building of farmers for adoption of new technology.

In addition to due focus on ensuring improved service delivery and facilitating market access to farmers, the government also accords adequate emphasis towards reducing transaction costs, promotion of Farmer Producer Organisations (FPOs) to improve their bargaining power. Development of infrastructure has also been given due attention to ensure better connectivity of farmers to national and international markets. High-yielding, cost-saving, disease/pest resistant and climate-resilient varieties and technologies in crops, horticulture, animal and fisheries science developed by ICAR have played important role in increasing production and productivity, reducing cost of production and enhancing income of the farmers. Adoption of Farming Systems Models developed by ICAR have also enabled farmers to enhance their income and strengthen their economic condition. Besides, State specific strategies for increasing farmers income, provided to States by ICAR, are also helping farmers to increase their incomes.

Some of the areas that exhibit maximum potential to improve agriculture, with the integration of artificial intelligence are described below:

• Cognitive computing has become the most disruptive technology in agricultural services as it can learn, understand, and interact with different environments to maximize productivity. Microsoft is currently working with 175 farmers in Andhra Pradesh to provide agricultural, land and fertilizer advisory services. This initiative has already resulted in 30 per cent higher average yield per hectare last year. The pilot project was completed using agricultural AI applications to communicate dates, soil preparation, fertilization based on soil tests, seed treatment, optimal spreading depth, and more. Further, mobile robots and field sensors support digital agricultural robots, multidisciplinary cameras and laser scanners are used for facilities and areas of radiation that cannot be measured.
• Proximity sensing, remote sensing, Internet of Things (IoT) and image-based Precision Farming are being used for intelligent data integration related to historical meteorology, soil reports, recent research, rainfall, insect infections, along with drone imagery is being used for in-depth field analysis, crop monitoring and field surveys.
• The artificial use of image recognition using intelligence approaches for plant identification, cation, pest infestation and disease diagnosis is also becoming prevalent. Using AI and machine learning-based surveillance systems to monitor every crop field's real-time video feed identifies animal or human breaches, sending an alert immediately can become very useful to prevent crop damages.
• Yield mapping to find patterns in large-scale data sets and understand the orthogonality of them in real-time, and optimizing irrigation systems to measure effectiveness of frequent crop irrigation is invaluable for crop planning.
• Today, there is a shortage of agricultural workers, making AI and machine learning-based smart tractors, agribots and robotics a viable option for many remote agricultural operations that struggle to find workers. These robots can harvest faster, locate and remove weeds more accurately, and thus reduce operating costs and dependence on labour. In the meantime, farmers are already turning towards chatbots for help. Chatbots help farmers by answering their questions and provide advice and guidance on specific agriculture and yield related quires.
• Improving the track-and-traceability of agricultural supply chains by removing roadblocks to get fresher, safer crops to market can help reduce inventory shrinkage by providing greater visibility and control across supply chains.

Use of AI in agriculture, however promising, isn’t bereft of its challenges. Artificial Intelligence systems require a lot of data to train machines and make accurate predictions. It is difficult to find temporal data for large agricultural areas, although spatial data are easy to collect. Since data infrastructure requires maturity, it takes time to develop a powerful machine learning model. This is one of the reasons why Al is used in agricultural products like seeds, fertilizers, and pesticides, rather than in field solutions. Another important disadvantage is the inflated cost of the many different solutions available in the agricultural market. Solutions need to be more affordable and open-source so that technology can be accessed even at the farm level. With consistent efforts and scalable innovations by both public and private sector, these technological interventions can completely overhaul agriculture and change lives of farmers, for better.

Article co-authored by Ishita Sirsikar and Cherishi Maheshwari - Invest India

The country’s determination to achieve a smooth transition to a green and cleaner economy has witnessed significant fervour. Significant emphasis has been laid on the transition to a carbon neutral economy and the emergence of Electrical Vehicular (EV) systems. This is the foundational step in going beyond the ‘end of pipe’ solutions to control carbon emissions and initiating efforts to prevent vehicular pollution in the country. The upcoming projects and investments in this regard are envisaged to produce significant results in the country, in addition to encouraging good practices to reduce polluting effluents. This pivot to clean mobility has become the need of the hour, considering the focus on climate change and building sustainable development goals. In the recently released World Air Quality Report 2021, 35 out of 50 cities with the worst air quality were from India. In this context, the need for heavy reliance on carbon-neutral public transport by the residents, the promotion of electrical vehicles for personal and/or commercial purposes and the need to adopt other relevant cleaner mobility practices remain at the forefront of several policy discourses. Thus, in particular for the electrical vehicular systems, the coming few years remain pivotal as the Centre targets to achieve at least 30 per cent of the on-road vehicles to be electric by 2030.

Several schemes have been put in place to incentivise companies to build EVs and batteries locally, in order to boost supply and complement a myriad of benefits for EV buyers. The country has been doubling down on its EV ambitions, focusing on cultivating demand for EVs at the domestic forefront while also developing its own locally-produced EV manufacturing industry which could cater to this demand at home and of the neighbours. For instance, initially envisioned for three years, FAME-II got a two-year extension in June 2021 owing to a number of factors including the pandemic. It aims to support 10 lakh e-two-wheelers, 5 lakh e-three-wheelers, 55,000 e-four-wheeler passenger cars and 7,000 e-buses. As a part of this, the government has made a push for indigenous manufacturing with a number of automakers answering the call. While e-two-wheelers and e-four-wheelers receive significant coverage, the three-wheeled EV is an emerging key player in the market.

Three-wheeler EVs, such as e-autos and e-rickshaws, currently account for over 65 per cent of all EVs registered in India and cater to the huge demands of public transportation in the country. Two-wheeler EVs, on the other hand, are a distant second, accounting for over 30 per cent of registrations, while passenger four-wheeler EVs account for only 2.5 per cent, as highlighted by NITI Aayog.

Furthermore, the EV registrations data for various states highlight that Assam, Bihar, Delhi, Uttar Pradesh and West Bengal account for close to 80 per cent of all e-three-wheeler registrations, with U.P. accounting for close to 40 per cent of all registrations. Of these five states, Assam, Delhi, U.P., and West Bengal have formalised EV policies while Bihar has a draft policy with a final policy due to be introduced later in 2022. E-three-wheelers, such as e-rickshaws, are now a familiar sight in these States, having been created and manufactured locally. These cars, which cost between 1 lakh and 1.5 lakh and are made by a slew of local workshops and small businesses, have dominated the e-three-wheeler industry. Local manufacturers have created a truly Indian EV with its unique design suited to Indian commuter needs, thanks to financial aid from FAME-II. Legacy automakers have been struggling to compete with these local producers with their own e-three-wheeler solutions. These states' EV regulations, implemented as part of FAME-II, have played a key role in encouraging this growth.

The goal of these five states' EV regulations is to increase consumer acceptance of EVs while also boosting local manufacturing. All five states offer a complete exemption from road taxes and registration fees. In some circumstances, Assam, Delhi, and West Bengal have tied incentives to battery size (in kWh), with extra benefits such as lower lending rates and scrappage incentives. The state of Uttar Pradesh has taken a different approach to subsidies, providing 100 percent interest-free loans to state government employees for the purchase of electric vehicles in the state, as well as a 30 percent subsidy on the road price of electric vehicles to families with a single girl child. To encourage the sale of electric vehicles manufactured in the state, the state of Uttar Pradesh exempts all such vehicles from SGST. It has established incentives to encourage the manufacture of electric vehicles in the state. Bihar's draught electric vehicle policy follows a similar pattern, focusing on uptake and manufacture. These states have done very well in the FAME-II initiative and are on track to meet the 5-lakh e-three-wheeler target.

India's success in the e-three-wheeler industry is due to the development of both the demand and supply sides. Subsidies, tax breaks, and zero-interest loans have all helped to boost demand for these vehicles. These vehicles provide a low-cost mode of transportation for millions of people, are simple to maintain, and have low operating expenses, making them extremely popular among operators. In comparison to its two-wheeler and four-wheeler counterparts, the indigenous design enables for easy local manufacturing in workshops and small businesses, as well as making them comparatively straightforward to charge and maintain. This success in the e-three-wheeler market has been difficult to reproduce in the e-two-wheeler and e-four-wheeler markets, which face demand and supply issues. Evidently, two-wheelers and four-wheelers are primarily associated with personal use, customers are understandably hesitant to accept such vehicles due to the challenges accompanied with the models. The recent occurrences of e-scooter fires have further contributed to the fear. In India, finding dependable manufacturers with proven track records in the two-wheeler and four-wheeler EV space is difficult. This exacerbates the supply shortage, and there are few economical options available to consumers.

Thus, such challenges must be given special attention in future EV policies. Local manufacturing companies may lack the resources to invest in safety-focused design developments. The lack of effective regulatory control of these producers adds to the difficulties. As a result, future practice must include suitable design and passenger safety criteria. For effective implementation, future EV policies must take into account existing and growing stakeholders on both the demand and supply sides. Given the current state of EVs, India must learn from its e-three-wheeler success story in order to maintain its EV objectives in other areas.

Several experts have further underlined the significance of priority-sector recognition for retail lending in the electric mobility ecosystem. Financial institutions play a crucial role in accelerating the adoption of EVs in India and further supporting the transition to de-carbonised Indian road transport. The central bank’s public sector lending mandate has contributed extensively in improving the supply of formal credit towards areas of national priority. It aims to facilitate a strong regulatory incentive for banks and NBFCs to scale their financing to EV producers, manufacturers and emerging entrepreneurs. Furthermore, to maximise the impact of the inclusion of EVs, several suggestions to recognise EVs as an infrastructure sub-sector by the Ministry of Finance and the incorporation of EVs as a separate reporting category under the RBI have been made. Multi-prong solutions such as these will not only aid EV penetration and businesses, but also the financial sector and India’s 2070 net-zero target.

The government’s focused efforts to establish an indigenous EV manufacturing sector in the country with a vision to cater to the clean mobility demands of the domestic and other key global markets has been readily aligned with the initiatives and schemes of various state departments, agencies and policy networks to incentivise pivotal players in the sector, in addition to urging the upcoming entrepreneurship efforts. Overall, the sector’s performance is noteworthy. As further steps, focus can be laid on establishing frameworks for quality assurance and passenger safety, particularly for personal use vehicles, in the current and upcoming vehicles and to bring such aspects of the sector at the forefront of eminent sector-focused policy discourses.

This is co-authored by Ishita Sirsikar and Srijata Deb - Invest India

The Ministry of Finance has indicated that 75% of the additional revenue raised from the imposition of the OECD/G20 minimum 15% tax (Pillar 2) will go to the cantons, and 25% will go to the Confederation (i.e. federal government).

The Confederation will use funds to cover the additional national fiscal equalization (NFE) expenditure and to promote the attractiveness of Switzerland as a business location. For the Confederation, the proposal is budget neutral.

The cantons will receive the major part of the receipts as the companies located there are the entities actually affected by the minimum tax. These additional funds should help the cantons safeguard their appeal as business location. The cantons are free to decide how to use the revenue, but they must appropriately take (the impact on) the communes (municipalities) into account.

A constitutional amendment is required to empower the Confederation to implement the OECD/G20 minimum tax. In order to ensure that the minimum tax is introduced as from 2024, the Federal Council will draw up a temporary ordinance. This ordinance will be replaced by a federal law at a later stage.

For the full text of the announcement by the Ministry of Finance of 23 June 2022, see here (in English), here (in French), here (in German) and here (in Italian).

Note: The OECD/G20 minimum tax will be imposed on large corporate groups with worldwide turnover of at least EUR 750 million that are below the minimum taxation of 15%.

The first Swiss AI Report is addressing the hype around artificial intelligence (AI) and helping companies to orient themselves in the complex area of innovation. For this, Mindfire, a foundation specializing in AI, has joined forces with the think tank W.I.R.E. to assess the AI activities of 92 Swiss companies from a variety of sectors. This involved startups, SMEs, and even IT giants such as Google. In actual fact, AI is already firmly integrated into the day-to-day business of many companies. Stefan Pabst of W.I.R.E states: “Those who take the matter seriously prioritize it and want to thoroughly understand it to be able to fully exploit its potential.” According to Daniela Suter from Mindfire, this is supported by the fact that 80 percent of participating companies have an AI strategy. She comments: “It is important and proper for the subject to be dealt with at a management level.” Furthermore, 71 percent collaborate with research institutes on AI queries. As a world-leading research location, Switzerland provides the ideal conditions for this.

Greater Zurich Area is an AI hotspot

For example, dynamic AI clusters with global reputations have developed around the Swiss AI Lab IDSIA in Lugano and the Swiss Federal Institute of Technology in Zurich (ETH). The ETH AI Center focuses specifically on sustainability and ethics in the area of AI. According to Daniela Suter, these are aspects where companies could be more strongly positioned in future.

Two of the three AI application examples from the study come from the Greater Zurich Area: the autonomous onboarding solution from the fintech company ti&m from Zurich and the analytical instrument for customer feedback from the Zurich-based startup Caplena for the Swiss retailer Coop. Out of 32 case studies, these were selected by a jury including big names from research such as Thierry Bücheler, the AI strategist at the large IT company Oracle.

Companies optimize their processes with AI

All submitted case studies are exclusively available to the participating companies and aim to promote further exchange within the network. According to Daniela Suter, this is because everyone could learn from each other when it comes to AI questions. Even at this early stage of the technology, there are many parallels. A significant share of the companies use the new technology to optimize processes. As AI recognizes patterns in data sets and learns from them, errors can be minimized and process automation levels can be increased as well. Stefan Pabst states that pragmatism is precisely the right approach. He adds: “The greatest challenges are that sometimes digitization has not yet been completed and data sets are very different. It is best to start with a single corporate sector and create a good basis there.”

Investment in specialists and expertise

Investments are also showing that companies are reading the signs of the times correctly. A third have a dedicated AI budget and another third want to increase AI expenditure by more than 100 percent over the current year. Among other uses, the funds are spent on training existing employees: almost half of the companies invest in AI training. Stefan Pabst views this as one of the most important success factors for AI projects, bringing as many participants as possible along on the journey toward a data-based business.

However, companies are also investing in new specialists. In this regard, the Greater Zurich Area is considered a mecca for recruitment. Rasmus Dahl, Zurich boss of the technology company Meta, confirmed this in a recent interview. According to Dahl, the skills shortage in Switzerland for his highly specialized field is the lowest in the world. He adds: “The skilled workers that we have access to here are world-class.” Meta plans to grow from 200 to 350 employees in Zurich over the next year.

By Yvonne von Hunnius

Full Swiss AI Report 2022

Source: S-GE

The Federal Council has proposed to increase the federal deductions for (i) interest received from savings accounts; and (ii) insurance premiums paid for life, sickness and private accident insurance (see Note). The decision to propose these increases was taken during its meeting of 22 June 2022.

The deductions will be increased as follows:

• from CHF 1,700 to CHF 3,000 for single taxpayers;
• from CHF 3,500 to CHF 6,000 for married couples; and
• from CHF 700 to CHF 1,200 for children and persons that need support.

For the full text of the announcement of 22 June 2022, see here (in French), here (in German) and here (in Italian).

Note: The Federal Council is the executive branch of the federal government of Switzerland.

ABU DHABI, 21st June, 2022 (WAM) -- Mohamed Ali Al Shorafa Al Hammadi, Chairman of the Abu Dhabi Department of Economic Development, announced that Abu Dhabi will launch a new industrial strategy in two weeks, which will include four strategic pillars.

In his statement to the Emirates News Agency (WAM) on the sidelines of the "Make it in the Emirates" Forum held in Abu Dhabi, Al Hammadi said the leadership’s vision and directives include capitalising on the achievements of the country's industrial sector.

Abu Dhabi’s industrial sector is the second leading sector in terms of contributing to the emirate's GDP, valued at AED85 billion in 2021, he added, stressing that the forum will highlight the sector's attractiveness, including all its competitive advantages and flexible legislative infrastructure, which have attracted investors from around the world to the UAE.

Abu Dhabi offers a wide variety of support programmes to the sector, such as reducing electricity tariffs and allocating industrial land, enhancing the emirate's competitiveness, he further added.

Sameh Al Qubaisi, Director-General of Economic Affairs at the Department, said the emirate’s industrial sector provides many financial incentives, such as reduced electricity tariffs at 20 fils per kilowatt, and will witness the launch of a new package of incentives.

This new financial plan includes further reductions to electricity tariffs and the cost of industrial land, as well as many other important incentives, he said. The department has successfully reduced the number of licensing requirements from 26,000 to 6,000, in cooperation with local authorities and strategic partners.

There are 111 factories registered in the golden list, which produce 602 products, all of which are part of procurement by governmental and semi-governmental entities, he further added.

WAM

DUBAI, 20th June, 2022 (WAM) -- His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, announced the opening of Expo City Dubai, this coming October 2022. The new city is an ideal smart and futuristic destination for business and innovation, driven by sustainability, innovation, education and entertainment.

His Highness Sheikh Mohammed bin Rashid said, "Brothers and Sisters, after the historical success of Expo 2020 Dubai, which was visited by more than 24 million visitors, and which left an indelible mark in the 170-year history of World Expositions, today we announce the transformation of the exhibition site into Expo City Dubai, a city that represents the most beautiful ambitions of Dubai.

"Expo City Dubai will be an environmentally-friendly city, one friendly to families, to the economy, and to future generations. A city connected to a port and two airports, and also to beautiful memories in the hearts and minds of millions of people. A city in which the magic of Expo will live on: Al Wasl will continue to shine, the waterfall will continue to delight, and the UAE, Alif and Terra pavilions will continue to fascinate visitors of all ages."

"This new city will be home to an extraordinary new museum, a world-class exhibition centre, and the headquarters of cutting edge and fast-growing companies. It will continue to host the pavilions of Saudi Arabia, Morocco, Egypt, and others. It will be a city that embodies the dreams of every city, and one which continues to bring joy to our children, our families, and all those we love."

Expo City Dubai – the legacy plan of Expo 2020 Dubai and part of the Dubai 2040 Urban Master Plan – builds on the momentum and resounding success of the six-month World Expo to create an environmentally-friendly, tech-enabled city of the future.

Opening 1st October 2022, it will feature a number of Expo 2020 Dubai’s flagship pavilions, entertainment and technology offerings, while also carrying forward the event’s magic, energy and excitement.

With an array of diverse attractions, the comprehensive city will feature offices, leisure facilities, food and entertainment venues, sports facilities and a mall. It will be reachable by the Dubai Metro and will also house the world-class Dubai Exhibition Centre (DEC), a sought-after venue that hosted a range of global summits, conferences and concerts during Expo 2020 Dubai, DEC will continue to host a range of conferences, events and activations.

Three of Expo 2020’s most visited attractions, the iconic Al Wasl Plaza, the Garden in the Sky observation tower and the Surreal water feature, will remain. While Alif, the Mobility Pavilion and Terra, the Sustainability Pavilion, will live on as interactive educational experiences.

Later this year, the Opportunity Pavilion will become the Expo 2020 Dubai Museum – a new addition highlighting the history and impact of World Expos and celebrating the success of the six-month event.

Other attractions set to stay include the Woman’s Pavilion, which features female change-makers across the world, and the Vision Pavilion, honouring the vision of His Highness Sheikh Mohammed bin Rashid.

Visitors will also be able to explore the falcon-inspired UAE Pavilion and the Kingdom of Saudi Arabia Pavilion. Details of several other Country Pavilions – including reworked versions of Luxembourg, Australia, Pakistan, India, Morocco and Egypt will be announced in the coming months.

Expo City Dubai will be free of single-use plastic and retain 80% of infrastructure and buildings that have been constructed, including 123 LEED-certified buildings, epitomising the highest levels of sustainable design, construction and operations. It will also be the first WELL-certified community in the region, demonstrating the built environment’s positive impact on health and wellness.

Offering a wealth of opportunities for businesses that meet its sustainable targets, Expo City Dubai is already attracting interest from a large number of commercial tenants. It will soon become the new headquarters of DP World, Siemens, as well as start-ups and Small and Medium Enterprises (SMEs).

The Central Bank of the UAE (CBUAE) has decided to raise the Base Rate applicable to the Overnight Deposit Facility (ODF) by 75 basis points, effective from Thursday, 16 June 2022.

This decision was taken following the US Federal Reserve Board’s announcement on 15 June 2022 to increase the Interest on Reserve Balances (IORB) by 75 basis points.

The CBUAE also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the Base Rate.

The Base Rate, which is anchored to the US Federal Reserve’s IORB, signals the general stance of the CBUAE’s monetary policy. It also provides an effective interest rate floor for overnight money market rates.

Announcement

The Federal Tax Administration (FTA) has clarified the excise duties relief available for defective or missing products and the process for the destruction of excise goods in a designated area, as follows:

Wastage of excisable goods already released for consumption

The Executive Regulations of the Federal Decree-Law No. 7 of 2017 on Excise Tax (the Executive Regulation) do not provide the possibility to recover the excise tax on goods that cannot be sold or otherwise used during business after their release to consumption.

Wastage of excisable goods within a designated zone

Excise goods will be deemed to leave the designated excise tax area and be released for free circulation where there is a shortage or lack of quality and for this to occur:

• the warehouse keeper responsible for the excise goods notifies the FTA within 30 days of discovering the deficiency in the stock or shortage in quantity; and
• it appears that the shortage of, or deficiency in, the excise goods is due to a legitimate cause accepted by the FTA.

FTA considers "legitimate cause" the following cases:

• force majeure: circumstances beyond the warehouse keeper or taxable person's control, which lead to the excisable goods being damaged or destroyed.
• natural wastage and shortage: unintentional deterioration, shortage, contamination or otherwise unfit for consumption for any natural reason; and
• waste or shortage during production: an allowable threshold of excise goods that become unusable, or a shortage that occurs as a result of the manufacturing process to produce another excise good.

The destruction of the goods must not occur until permission has been obtained from the FTA that the goods may be destroyed, and FTA may wish to inspect the goods prior to granting its approval to apply the excise tax relief.

Excise tax relief process

The taxpayer must submit to the FTA the loss and damage declaration (Declaration EX203B), which must be approved by the warehouse keeper, within 30 days of discovering the deficiency or shortage in the goods. The declaration submitted to the FTA must contain the following information:

• the registration number (TRN) of the owner of the goods;
• the registration number of the warehouse keeper;
• information on the intended place of destruction (if any) of the goods (e.g. at a specified disposal facility);
• the reference number of the designated area in which the goods are held;
• the date of entry of the goods into the designated area;
• the date on which the defect, damage or shortage of goods was discovered;
• the reason for the notification (i.e. the cause that led to the shortage or deficiency of the goods) and the reason for the request for approval of destruction, if applicable;
• the supporting documents validating the reason for the notification indicated above;
• the description of the type of goods to be destroyed, including the item code; and
• the value of the excise tax that would have been due on these goods.

The taxpayer, as well as the warehouse keeper, must provide the documents proving the legitimate cause for the loss or damage. The FTA will assess the declaration submitted and respond to the request within 30 days from receipt of the declaration.

The FTA will then respond to the request by either:

• accepting the reason for the insufficiency or deficiency of the excisable goods and granting a total or partial exemption from excise tax; or
• rejecting the application for exemption from excise tax if the reason for the deficiency or deficiency of the excisable goods is an illegitimate reason, or if the application is not made within 30 days of the date of discovery of the deficiency or deficiency of the excisable goods.

For requests related to goods that are intended to be destroyed or disposed of, the FTA may notify the warehouse keeper of the intention to inspect the goods or to allow the goods to be destroyed or disposed of without the need of inspection. In both cases, the taxpayer will be required to provide evidence that the goods have been destroyed or disposed of after completing the destruction process in order to grant him relief from excise tax.

The Excise Tax Public Clarification EXTP007 was published on the FTA's official website on 21 June 2022.

New law to allow businesses to supply skilled agency workers to plug staffing gaps during industrial action.

• Government acts to help reduce disruption from strike action by removing the restrictions on employment businesses supplying temporary workers to cover striking staff
• companies will have the freedom to fill vital roles more easily so that peoples’ daily lives remain uninterrupted
• in addition, the government has also raised the damages cap businesses can claim against a union when a court finds a strike is unlawful

A change in the law enabling businesses to supply skilled agency workers to plug staffing gaps during industrial action has been unveiled by the government today (Thursday 23 June).

Under current trade union laws employment businesses are restricted from supplying temporary agency workers to fill duties by employees who are taking part in strikes. This can have a disproportionate impact, including on important public services, causing severe disruption to the UK economy and society – from preventing people from getting to work to creating challenges for how businesses manage their workforce.

Today’s legislation, repealing these burdensome legal restrictions, will give businesses impacted by strike action the freedom to tap into the services of employment businesses who can provide skilled, temporary agency staff at short notice to temporarily cover essential roles for the duration of the strike.

Removing these regulations will give employers more flexibility but businesses will still need to comply with broader health and safety rules that keep both employees and the public safe. It would be their responsibility to hire cover workers with the necessary skills and/or qualifications to meet those obligations.

It would also help mitigate against the impact of future strikes, such as those seen on our railways this week, by allowing trained, temporary workers to carry out crucial roles to keep trains moving. For instance, skilled temporary workers would be able to fill vacant positions such as train dispatchers, who perform vital tasks such as giving train drivers the signal they are safe to proceed and making sure train doors aren’t obstructed.

During this week’s strikes, that role has had to be carried out by train managers who could have been better used in more safety critical roles, such as guards. This legislation would allow that, as well limiting the impact future strikes have on hardworking commuters and the economy.

The change in law, which will apply across all sectors, is designed to minimise the negative and unfair impact of strikes on the British public by ensuring that businesses and services can continue operating. For example, strikes in public services such as education can often mean parents have to stay at home with their children rather than go to work, or rail sector strikes stopping commuters getting to work or to other businesses.

Subject to parliamentary approval, these changes are made through a statutory instrument and are set to come into force over the coming weeks and will apply across England, Scotland and Wales.

Business Secretary Kwasi Kwarteng said:

Once again trade unions are holding the country to ransom by grinding crucial public services and businesses to a halt. The situation we are in is not sustainable.

Repealing these 1970s-era restrictions will give businesses freedom to access fully skilled staff at speed, all while allowing people to get on with their lives uninterrupted to help keep the economy ticking.

Transport Secretary Grant Shapps said:

Despite the best efforts of militant union leaders to bring our country to a standstill, it’s clear this week’s strikes did not have the desired impact due to more people being able to work from home. However, far too many hard working families and businesses were unfairly affected by union’s refusal to modernise.

Reforms such as this legislation are vital and will ensure any future strikes will cause even less disruption and allow adaptable, flexible, fully skilled staff to continue working throughout.

The government has also announced today that it is raising the maximum damages that courts can award against a union, when strike action has been found by the court to be unlawful. The caps on damages, which have not been changed since 1982, will be increased. For the biggest unions, the maximum award will rise from £250,000 to £1 million.

Trade Secretary launches free trade negotiations between the UK and the Gulf Cooperation Council, made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

• Talks kick off in Riyadh to agree trade deal with countries covering £33.1 billion of trade
• UK food and drink, manufacturing and renewable energy sectors would benefit from new agreement between the UK and the Gulf Cooperation Council
• Landmark deal would add at least £1.6 billion a year to the UK economy and support new jobs in key industries

Trade Secretary Anne-Marie Trevelyan is launching free trade negotiations today (Wednesday 22 June) between the UK and the Gulf Cooperation Council (GCC), made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE.

Equivalent to the UK’s seventh largest export market, the GCC bloc’s demand for international products and services is expected to grow rapidly to £800 billion by 2035, a 35% increase – opening huge new opportunities for UK businesses.

A free trade deal would also open the door to increased investment from the Gulf, supporting and creating jobs across the country.

In a visit to Riyadh, Saudi Arabia, the Secretary of State will meet the GCC Secretary General, Dr Nayef Falah M. Al-Hajraf, and her counterparts from all six GCC countries, to launch talks expected to culminate in a trade deal worth £1.6 billion more a year to the UK economy.

It is the fourth major set of Free Trade Agreement (FTA) negotiations launched by the Trade Secretary this year, following visits to begin talks in India in January, Canada in March, and the launch of negotiations with Mexico last month.

UK Trade Secretary Anne-Marie Trevelyan said:

Today marks the next significant milestone in our 5-star year of trade as we step up the UK’s close relationship with the Gulf. Our current trading relationship was worth £33.1 billion in the last year alone. From our fantastic British food and drink to our outstanding financial services, I’m excited to open up new markets for UK businesses large and small, and supporting the more than ten thousand SMEs already exporting to the region.

This trade deal has the potential to support jobs from Dover to Doha, growing our economy at home, building vital green industries and supplying innovative services to the Gulf.

UK-GCC deal would mean significant benefits for British farmers and producers, as the Gulf is highly dependent on imported food. British food and drink exports to GCC countries were worth £625 million last year, and a deal could significantly reduce or remove tariffs on UK food and drink exports.

Tariffs that could be slashed include cereals, which currently face a tariff of up to 25%; chocolate, up to 15%; baking products, up to 12%; sweet biscuits, up to 10%; and smoked salmon, which has a 5% tariff at present.

With almost £30 billion already invested in each other’s economies, this deal would also help unlock even more opportunities for investment between the UK and GCC countries.

Gulf investments supported over 25,000 UK jobs in 2019 – a number that tripled over the previous decade – and analysis shows the East Midlands, West Midlands, North East and Yorkshire and the Humber will be in line for the greatest proportional gains when the ink dries on a new deal. The deal would also be estimated to boost the economies of Scotland, Wales and Northern Ireland by almost £500 million collectively.

Stephen Phipson, CEO of Make UK, the manufacturers’ organisation, said:

We welcome the launch of free trade negotiations with the Gulf Co-Operation Council, strengthening trade opportunities which will ensure that British manufacturing benefits from future positive flows of goods and services into the Gulf region.

It is also extremely helpful that the UK and GCC are committed to work towards seeking the opportunities from ‘green innovation’, which will bring significant opportunities for Britain’s innovative renewable energy companies which are already leading the way in this area of global concern. We look forward to working with government to make sure manufacturers large and small are able to benefit from the business possibilities this deal will open up.

Around 10,700 small and medium-sized businesses from every UK nation and region exported goods to the GCC in 2020, with SMEs accounting for more than 85% of total UK goods exporters to Qatar, Saudi Arabia and the UAE.

Co-Founder and Director of Spice Kitchen, an SME exporter based in Liverpool, Sanjay Aggarwal said:

We went to Gulfood with DIT on a research mission and from this we know there is a massive market for our products, like our spice tins and single spice blends in the premium gifting space.

It’s so important for our business to be linking with the GCC and enables us to grow rapidly in exciting ways we never thought possible. We are in the process of identifying retailers in the Gulf, including the UAE, Saudi Arabia and Qatar.

A strong trading relationship would allow the UK to play to our strengths as a manufacturing powerhouse and a world leader in technology, cyber, life sciences, creative industries, education, AI, financial services, and renewable energy.

UK businesses in these industries will also play a role in supporting GCC countries as they diversify their economies to move away from a reliance on oil and towards other sectors. The UAE, for example, has set a target of generating 50% of its electricity from renewable sources by 2050. Exports of UK wind turbine parts currently face tariffs of up to 15%.

RenewableUK’s CEO Dan McGrail said:

The global transition to clean energy includes countries throughout the Middle East which are seeking to make the most of their excellent renewable resources such as solar and wind.

As a global leader in wind, marine energy and green hydrogen, we’re perfectly placed to help other countries to accelerate their efforts to decarbonise their energy systems - and to boost our own economy by exporting around the world.

Background:

• Government analysis shows that a deal with the GCC is expected to increase trade by at least 16%, add at least £1.6 billion a year to the UK economy and contribute an additional £600 million or more to UK workers’ annual wages.
• There were around 600 GCC-owned businesses in the UK in 2019, supporting over 25,000 jobs – a number that tripled over the previous decade.
• More than 85% of total UK goods exporters to Qatar, Saudi Arabia and the UAE are SMEs. In 2020, around 10,700 UK SMEs exported goods to the UAE, 5,500 exported to Saudi Arabia and 4,100 exported to Qatar.
• Consumers in the Gulf have significant purchasing power and huge appetite for UK products and services. For example, Qatar is one of the richest economies in the world, ranking 9th globally with a GDP per capita of $53,804 (£41,912) in 2020.
• UK firms have at least £13.4 billion invested in GCC economies and GCC firms have £15.7 billion invested in the UK as of 2020.
• The GCC is equivalent to the UK’s seventh largest export market, and total trade was worth £33.1 billion in 2021.
• The UK is the second largest services exporter in the world and services exports to the GCC were worth £12.1 billion last year.
• Tariffs outlined on foods are mostly 5% across the GCC, where in some cases individual countries charge higher tariffs on specific products. Note that tariffs on chocolate does not include products containing alcohol.
• Source of statistics: ONS UK trade, all partners, seasonally adjusted, Q4 2021; IMF World Economic Outlook April 2022; ONS Business Structural Database (2022) ; ONS Foreign Direct Investment involving UK companies, 2020 ; HMRC trade in goods by business characteristics, 2020 ; HMRC Overseas Trade in Goods statistics, March 2022.

This notice gives guidance on the digital record keeping and return requirements for Making Tax Digital for VAT.

Making Tax Digital explained

Making Tax Digital for VAT requires all VAT-registered businesses to keep records digitally and file their VAT Returns using software.

The software businesses use must be capable of:

• keeping and maintaining the records specified in the regulations
• preparing VAT Returns using the information maintained in those digital records
• communicating with HMRC digitally through our Application Programming Interface (API) platform

If your digital records are up to date, the software will be able to collate and prepare your return for you. It will show you the return and ask you:

• to declare the information is correct
• confirm you want it submitted to HMRC.

Once you’ve submitted your return, you’ll receive confirmation through your software that it has been received.

This notice provides further details of the Making Tax Digital rules.

Exemptions from Making Tax Digital

You do not need to follow the rules for Making Tax Digital if HMRC is satisfied that:

• it’s not practical for you to use digital tools to keep your business records or submit your VAT Returns – this may be due to reasons such as age, disability or location
• you (or your business) are subject to an insolvency procedure
• your business is run entirely by practising members of a religious society (or order) whose beliefs are incompatible with using electronic communications or keeping electronic records
• you’re already exempt from filing VAT returns online

On 17 June 2022, the Financial Action Task Force (FATF) issued its updated lists of jurisdictions that have strategic deficiencies in their regimes for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF).

The FATF added Gibraltar to its list of Jurisdictions under Increasing Monitoring and removed Malta therefrom. The FATF's list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran and the Democratic People's Republic of Korea (i.e. North Korea) thereon.

The FATF is an intergovernmental body that was founded in 1989 on the initiative of the G7 countries to establish international standards for AML/CFT/CPF. It publicly identifies:

• Jurisdictions under Increased Monitoring, which refer to jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed-upon timeline; and
• High-Risk Jurisdictions Subject to a Call for Action, which refer to jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes to which enhanced due diligence, or in the most serious case, countermeasures must be applied.

The US Financial Crimes Enforcement Network (FinCEN) announced the update in its 23 June 2022 news release, urging US financial institutions to consider the FATF's stance toward the listed jurisdictions when reviewing their obligations (including the due diligence obligations) and risk-based policies, procedures and practices.

The FinCEN noted that US financial institutions must comply with the extensive US restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions.

In a 7 June 2022 testimony before the US Senate Finance Committee on the Biden Administration's fiscal year (FY) 2023 budget proposals, US Treasury Secretary Janet Yellen appealed to the US Congress to implement the global minimum tax as part of its legislative agenda.

Secretary Yellen highlighted that the global agreement on international tax reform, agreed to last year by 137 countries representing about 95% of the world's GDP, would level the playing field, ensure that corporations share their fair burden of financing government and raise crucial revenues that could be used in investing in security and crisis response.

In addition, Secretary Yellen stated that she is looking forward to working with the US Congress to ensure progress in "[b]uilding a fair and stable tax system that promotes broadly shared growth" which is crucial to "adequately funding investments and to reducing deficits and debt." She noted that the proposed FY 2023 budget investments have more than enough funding "through tax code reforms requiring corporations and the wealthiest Americans to pay their fair share, closing loopholes, and improving tax administration."

She also thanked the US Congress for supporting the Department's endeavours in responding to "Russia's illegal and unprovoked war against Ukraine" and providing USD 40 billion in security, economic and humanitarian aid for Ukraine.

The US Department of Treasury's Office of Foreign Assets Control (OFAC) has clarified the US's prohibition against providing accounting, trust and corporate formation and management consulting services (covered services) to persons in Russia. The White House announced the prohibition last month after President Joe Biden and G7 leaders met through a virtual conference with Ukraine President Volodymyr Zelensky and committed to take further measures to "strengthen Ukraine's position on the battlefield and at the negotiating table".

The OFAC issued clarification on the prohibition of covered services through the Treasury's FAQs on the Financial Sanctions webpage on 9 June 2022 (US Dept. of Treasury: Financial Sanctions FAQ). According to the OFAC, the prohibition applies to:

• tax preparation and filing services to any person in Russia, unless otherwise exempt or authorized by the OFAC;
• nominee officer or director services in which a US person is contracted to serve as a nominee officer, director, shareholder, or signatory of a legal person on behalf of a person located in Russia;
• services to a parent company located in Russia by a US subsidiary;
• trust and corporate formation services to persons located in Russia, regardless of whether the services are performed as part of the formation of a new trust or company, or as part of the administration or maintenance of an existing trust or company;
• services related to strategic business advice, organizational and systems planning, evaluation, and selection, development or evaluation of marketing programs or implementation, mergers, acquisitions, and organizational structure, staff augmentation and human resources policies and practices and brand management; and
• voting trustee services on behalf of, or for shares of, persons located in Russia, unless otherwise exempt or authorized by the OFAC.

In addition, the FAQs clarify that the prohibition does not apply to providing services:

• to persons located outside Russia that are owned or controlled by persons located in Russia, provided that the benefit of the services is not ultimately received by (i.e. an indirect export to) a person in Russia;
• as members of the board of directors of a company located in Russia;
• other than the covered services;
• on education (e.g. online university courses) regarding the subjects of the covered services to persons located in Russia, provided that they do not evade or avoid the prohibition on providing the underlying services; and
• associated with the export of software (e.g. software design and engineering) related to the covered services.

WASHINGTON — The Internal Revenue Service announced today that more forms can now be amended electronically. These include people filing corrections to the Form 1040-NR, U.S. Nonresident Alien Income Tax Return and Forms 1040-SS, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico) and Forms 1040-PR, Self-Employment Tax Return – Puerto Rico.

"This initiative has come a long way from 2020 when we first launched the ability to file amended returns, which was an important milestone to help taxpayers and the tax community," said IRS Commissioner Chuck Rettig. "This new feature will further help people needing to make corrections. This development will also assist the IRS with its inventory work on the current backlog of amended returns. This is another tool we're using to help get us back on track."

Additionally, a new, electronic checkbox has been added for Forms 1040/1040-SR, 1040-NR and 1040-SS/1040-PR to indicate that a superseding return is being filed electronically. A superseded return is one that is filed after the originally filed return but submitted before the due date, including extensions.

Taxpayers can also amend their return electronically if there is change to their filing status or to add a dependent who was previously claimed on another return.

About 3 million Forms 1040-X are filed by taxpayers each year. Taxpayers can still use the Where's My Amended Return? online tool to check the status of their electronically-filed Form 1040-X.

Forms 1040 and 1040-SR can still be amended electronically for tax years 2019, 2020 and 2021 along with amended Form 1040-NR and corrected Forms 1040-SS and Form 1040-PR for tax year 2021.

In general, taxpayers still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form.

The IRS continues to look at this important area, and more enhancements are planned for the future.

The US Supreme Court's landmark 2018 South Dakota v. Wayfair decision has increased state sales tax revenues as well administrative compliance costs for multi-state businesses according to a recent report from the US Government Accountability Office (GAO). The GAO presented its findings to the US Senate Finance Committee on 14 June 2022.

According to the GAO report, state revenue collections from remote sales increased steadily from USD 3.2 billion in 2018 to USD 23.1 billion in 2021 following the Wayfair decision. Collections from marketplace sales similarly increased from USD 344 million in 2018 to USD 9.5 billion (41% of total collections were from remote sales reported that period) in 2021.

The GAO also reported that during the same period, businesses incurred increased costs associated with multi-state sales tax collection compliance, such as:

• software-related costs for expanded multi-state collection;
• audit and assessment costs due to increased exposure to more tax jurisdictions; and
• research and liability costs to stay current.

During the 14 June 2022 Senate Finance Committee hearing, Committee Chairman Ron Wyden (D-OR) called on his fellow lawmakers to provide small businesses relief as long as the Wayfair decision stands, in response to the GAO's findings. Chairman Wyden asked for "clear, standardized rules that lay out what states can require of small businesses outside their borders." Committee Ranking Member Mike Crapo (R-ID) also advocated for "a more efficient and less burdensome approach" to sales tax collection for the benefit of small businesses.

Note: As of June 2021, all 45 states with a state-wide sales tax and the District of Columbia have adopted requirements governing sales tax collection by remote sellers based on an economic presence (e.g. a certain amount of sales into the state), as opposed to a physical presence standard. All except one state also adopted requirements shifting primary tax collection obligations from remote sellers to marketplace facilitators (e.g. Amazon, eBay, and Etsy).