January 2022

  • China
    • China’s cargo, container throughput see steady growth in 2021

      Cargo and container throughput at China's ports registered stable growth in 2021, data from the Ministry of Transport shows.

      Last year, cargo throughput at China's ports totaled 15.55 billion tonnes, up 6.8 percent year on year, according to the ministry.

      The country's container throughput at ports during the period climbed 7 percent from a year earlier to 282.72 million twenty-foot equivalent units (TEUs), the ministry said.

      In December 2021, China's ports handled nearly 1.34 billion tonnes of cargo, while container throughput stood at 23.07 million TEUs, according to the ministry.

      China has adopted multiple measures to cope with the container shortage amid the COVID-19 pandemic, such as shipping empty containers back to domestic ports, accelerating the production of containers and promoting digital transformation of ports for smooth flow of cargo.

      The country's total goods imports and exports expanded 21.4 percent year on year to 39.1 trillion yuan (6.14 trillion U.S. dollars) in 2021.

      Source: XINHUANET

    • China promotes green consumption amid decarbonization drive

      Chinese authorities on Friday unveiled a master plan on boosting the green transformation of consumption in key areas, the latest move for the country to achieve its carbon peak and neutrality goals.

      The plan, jointly released by the National Development and Reform Commission (NDRC) and six other government organs, said that green consumption modes will prevail by 2025, calling for efforts to arouse people's awareness of green consumption, curb extravagance and waste, and enhance the market share of green and low-carbon products.

      "China's green consumption is yet to be stimulated," NDRC official Chang Tiewei told a press conference. He noted the importance of green consumption in spurring the low-carbon transition on the supply side, improving the attractiveness of China as a super-large market, and shoring up high-quality development.

      The plan detailed measures in various major fields, ranging from food, clothing and housing to transport, tourism and electricity.

      To encourage green housing, the plan urged efforts to incorporate measures of energy saving and environmental protection while renovating old urban residential communities and rural houses.

      On green transport, efforts will be made to vigorously promote the use of new-energy vehicles (NEVs), such as enhancing supporting facilities like battery charging and swapping stations, and increasing the application of NEVs in public service vehicles.

      Official data shows that China's NEV sales came in at 3.52 million units last year, ranking first globally for a seventh straight year. NEV ownership in China rose to 7.84 million units in 2021, accounting for about half of the world's total.

      As for shifting to green electricity consumption, the plan underlined that newly-added renewable energy and energy used as raw materials would be excluded from the cap on total energy consumption. The proportion of green electricity in residential power consumption will be raised.

      As an active participant in addressing climate change, China has announced its ambition of peaking CO2 emissions by 2030 and achieving carbon neutrality by 2060.

      2021 is viewed as a critical year for China's decarbonization efforts. The country released a top-level design document for peaking carbon emissions and achieving carbon neutrality and an action plan for peaking carbon emissions by 2030, both of which outlined specific measures on boosting green consumption.

        Source: XINHUANET
    • China details measures to boost consumption for upcoming holiday

      China's top economic planner has released a notice aimed at boosting consumption as the Spring Festival holiday approaches while maintaining precise COVID-19 control.

      The notice has been issued to cater to residents' growing consumption demand and unleash the potential of the domestic market, as part of efforts to propel the economy to achieve a stable start in the first quarter, according to the National Development and Reform Commission.

      Multiple measures should be taken to meet residents' festive needs, including ensuring the supply of daily necessities, providing more contactless services and helping senior citizens enjoy convenient transportation to reunite with their families, said the notice.

      It also set out policies to upgrade online festival consumption and expand consumption in rural areas.

      Consumption related to the ice-snow industry, as well as culture and entertainment, should be encouraged, the notice said, adding that the vitality of the smart retail sector should be further supported.

      In 2022, China will utilize its microeconomic policies to stimulate the vitality of market entities and deepen the supply-side structural reform with a focus on smoothing the circulation of the national economy, said the tone-setting Central Economic Work Conference in December 2021.

      Source: XINHUANET

    • China takes more measures to improve patent quality

      China has taken more measures to boost the country's innovation drive and is shifting from focusing on the intellectual property (IP) quantity to quality, the country's top IP regulator said Wednesday at a press conference.

      One of the efforts is that China has canceled subsidies for patent applications at all levels to eliminate the improper behavior of patent applications that can not protect innovation, said Zhang Zhicheng, a senior official of the National Intellectual Property Administration.

      To improve efficiency, the administration has used computer-aided screening and manual labor to investigate cases suspected of abnormal patent applications, reporting 815,000 abnormal patent applications last year, Zhang said.

      Hu Wenhui, a spokesperson for the administration, also highlighted China's progress in the IP protection of the Beijing Winter Olympics. Hu added that China had announced to protect 63 Olympic symbols submitted by the Beijing Organising Committee for the upcoming Winter Games, including emblem, name, abbreviation, mascot, and slogan.

      Hu also summarized China's protection efforts on the patents and trademarks of Olympics emblems and torches, realizing comprehensive Olympics-related IP protection.

      Source: XINHUANET

    • MOF and STA Release Measures for Collection of IIT on Income from Equity Investments

      The Ministry of Finance and the State Taxation Administration released on December 31, 2021 the Announcement on the Collection of Individual Income Tax on Income from Equity Investments, to be effective from January 1, 2022.

      It is specified that the audit collection method would be uniformly applied for the calculation and collection of individual income tax (IIT) on wholly Individually-owned enterprises and partnerships that hold equity investments such as equity interest, shares, and property shares of partnership, and the said enterprises and partnerships should voluntarily inform the tax authorities about their holding of equity investments within 30 days from the holding date, or inform the tax authorities about their holding of equity investments before January 30, 2022 if they have held the investments before the implementation of the Announcement.

    • Extension on IIT policies of expats’ allowances and IIT calculation of annual bonus

      The Ministry of Finance and the State Taxation Administration released on December 31, 2021 two documents on the extension of some personal income tax policies.

      1. IIT preferential calculation for annual bonus

      The preferential method for calculating IIT of annual bonus is extended its validity by STA until 31st December 2023. Generally, the method applies preferential IIT rate to annual bonus separately. Such amount shall be apportioned over 12 months for tax computation purpose, with no deduction, and subject to the Monthly Tax Rate Table for computation of tax payable amount. However, only tax resident individual shall enjoy and apply this tax computation method once within a calendar year.

      1. Expats’ subsidies and allowances

      Originally, from 2022 expats shall cease to enjoy IIT exemption policies for subsidies and allowances such as housing allowance, language class fees, children education fees. Delightfully STA announced to extend the validity of IIT exemption policy for expats’ subsidy and allowance to 2023/12/31. The relevant subsidies and allowances are:

      (1) The housing allowance, food allowance, relocation allowance and laundry charge received by individual aliens in the non-cash form or in the form of full expense reimbursement;

      (2) The travel allowance received by individual aliens according to reasonable standards;

      (3) The family reunion fee, the language training fee and the children's educational fee received by individual aliens that have been approved by the local tax authorities to be reasonable.

    • VAT policy relating to export goods insurance

      From January 1, 2022 to December 31, 2025, the following cross-border taxable activities of domestic units and individuals will be exempted from VAT: (1) product liability insurance with export goods as the subject matter of insurance; (2) product quality assurance insurance with export goods as the subject matter of insurance.   The collection and administration of VAT for the above-mentioned cross-border taxable activities of domestic units and individuals shall be implemented in accordance with the current regulations on the administration of VAT exemption for cross-border taxable activities. Matters that have occurred before and have not been dealt with shall be implemented in accordance with the provisions of this Announcement; The relevant taxes already paid shall not be refunded.
    • STA Revises Measures governing Entities Violating Major Tax Laws or Acting in Bad Faith

      The State Taxation Administration recently released the revised Administrative Measures for the Exposure of Entities Violating Major Tax Laws or Acting in Bad Faith, to be implemented from February 1, 2022.

      It is the third time that the STA revises the Measures since it was released for the first time in 2014. There are 12 revisions, which raise the standards for the determination of some dishonest entities, including raising the amount of evaded tax in arrears to 1 million yuan from 10,000 yuan, and increasing the amount of falsely issued ordinary VAT invoices to more than 4 million yuan. The Measures included four types of violating entities into the scope of dishonest entities, such as those withholding agents who do not pay or underpay the taxes that have been deducted and collected and the amount has exceeded 1 million yuan. It is clarified that only the information of the legal person, responsible person and actual person in charge of the violating entities would be exposed.

  • United Arab Emirates
    • DP World launches new digital platform to streamline customs procedures

      DP World, the leading global logistics company and provider of smart supply chain solutions, today announced the launch of its new digital compliance and revenue platform, CARGOES Customs. The platform facilitates completely paperless trade easing the flow of the customs process using innovative technology solutions, including an Artificial Intelligence driven risk engine and smart valuation. Its advanced classification wizard, based on machine learning, vastly reduces classification issues. It is designed and supported by customs experts and digital transformation leaders, and is backed by more than 40 years of experience in logistics to solve challenges in the supply chain. CARGOES Customs provides an intelligence-enabled, unified customs operating model that optimises border management and revenue collection activities. The system empowers customs agencies to facilitate trade, secure global supply chains, and increase compliance. At the same time, it minimises revenue leakage for government agencies. The platform is built to assist global customs organisations in reforming and modernising processes by streamlining digital transformation through the latest technology and tools. The CARGOES Customs platform is based on the belief that with technology as a foundation, any customs organisation can vastly improve its digital capabilities and better integrate with key agencies and other countries, while also satisfying any regional agreements. The CARGOES Customs system is further enhanced by its powerful risk engine which detects revenue leakages. This technology improves visibility and traceability, and is based on WCO best practices, thereby optimising the customs clearance process. As an intelligent risk engine, it helps enforce compliance and promotes seamless collaboration between authorities, government departments and stakeholders. Offering a single window interface, CARGOES Customs is highly configurable and uses a template-based design which means customs organisations can update or roll-out new services at the click of a button. It supports all file formats commonly used in customs, and is WCO, WTO and SAFE framework compliant. Sultan bin Ahmed Sulayem, Group Chairman and Chief Executive Officer of DP World, said, "Trade is a key driver to help economies around the world to recover fairly and sustainably from the economic shock of the pandemic. At DP World, we are doing our part to make trade flow as smoothly and seamlessly as possible, and with CARGOES Customs we really help customs authorities around the world to become dramatically more efficient – now and for the long term. This new digital solution connects customs officials and traders through an easy-to-use interface and a suite of custom-built tools. We will continue to invest in our digital platforms to bring simplicity, transparency and efficiency to global trade – at customs, and beyond." Pradeep Desai, Chief Technology Officer, DP World, concluded, "Demand for digital solutions has never been higher and will only keep growing. We are leveraging technology to create value for our customers and help drive growth. CARGOES Customs by DP World is part of the broader CARGOES software suite of products. DP World created CARGOES to solve pressing challenges caused by supply chain related inefficiencies. It’s a holistic solution powered by technology targeting all aspects of global trade including Finance, ERP, Tracking, Terminal Operating System, Customs software and enabling end-to-end logistics. We are excited to provide Logistics as one of our first CARGOES offerings to customers."

      Source: Media Office

    • Cabinet Introduces Administrative Penalties Instalments and Waivers Rules

      The UAE Cabinet has issued Resolution 105/2021 (the decision) setting up rules and mechanisms for requests regarding the payment in instalments, waiver and refund of administrative penalties.

      The request for payment in instalments, waiver or refund of administrative penalties should be submitted to a committee (the Committee) formed by decision of the Chairman of the Federal Tax Authority (FTA).

      Conditions for submitting requests for payment in instalments or waiver of administrative penalties

      Payment in instalments of administrative penalties

      Taxpayers may request payment in instalments of unpaid and undisputed administrative penalties of at least AED 50,000.

      Waiver of administrative penalties

      The Committee may approve the waiver of administrative penalties if the following conditions are met:

      • the violation in respect of which the administrative penalties were imposed should not be related to a crime of tax evasion;
      • the request must be submitted within the period specified by the Committee; and
      • the taxpayer's request should be related to one of the following cases:
        • illness or death of a registered natural person or the owner of a sole proprietorship, when the illness or the death was a direct cause of non-implementation of the tax obligation;
        • existence of precautionary or preventive measures imposed by the government, which directly caused the unfulfilment of the tax obligations;
        • a defect in the FTA's systems, payment systems, or telecommunications services, which directly prevent the taxpayer from the fulfilment of the tax obligations;
        • when the taxpayer pays the tax due through another account registered for tax purposes with the FTA;
        • if a taxpayer is declared insolvent or bankrupt, and the tax amounts due from him is paid prior to the date of the bankruptcy or insolvency declaration, unless the purpose of registering the bankruptcy or insolvency is to evade the payment of such administrative penalties; and
        • any other cases accepted by the Committee.

      Procedures for submitting requests for payment in instalments or waiver of administrative penalties

      The requests for payment in instalments or waiver of administrative penalties shall be submitted to the FTA through the forms prepared for this purpose. The request must include the following documents and data:

      • name of the person, including the email and mailing address;
      • tax registration number (if any);
      • the amount of administrative penalties and violations related to the request;
      • the date of imposing the administrative penalties, subject to the request;
      • reasons for applying;
      • an undertaking from the person to pay the required payment according to the administrative penalties instalments plan approved by the Committee, if the request is related to the administrative penalties instalments plan;
      • an undertaking from the person that he corrected his violation and to not repeat the violation, if the request is related to the waiver of administrative penalties; and
      • any other documents or data required by the Committee.

      A person may not submit more than one request for payment in instalments or be exempted from the same administrative penalties under study.

      The Cabinet decision was issued on 28 December 2021, in accordance with Federal Decree-Law No. 7 of 2017 as amended on tax procedures law. The decision shall enter into force on 1 March 2022.

    • UAE Government launches ‘Big Data for Sustainable Development’ platform

      The UAE Government has launched the United Nations (UN) platform, "Big Data for Sustainable Development", as part of an initiative aimed at meeting the needs of the Middle East and North African (MENA) region.

      The UAE is one of four countries selected as a regional headquarters for the platform.

      The announcement was made during the 'Mobilising Big Data and Data Science for the Sustainable Development Goals' forum, which kicked off today at Expo 2020 Dubai, in cooperation with the United Nations, and witnessed the participation of Emirati ministers, government and international officials and a large roster of experts and specialists in data science and sustainable development.

      Reem bint Ibrahim Al Hashemy, Minister of State for International Cooperation and Chairperson of the National Committee for Sustainable Development Goals, said the UN's decision to make the UAE the MENA headquarters of the platform underscores its stature and will enhance its position as a global hub for technology and big data.

      It also highlights the UAE leadership's keenness to achieve the sustainable development goals (SDGs) by employing big data and artificial intelligence (AI) technologies, she added.

      Shamma bint Suhail Al Mazrouei, Minister of State for Youth Affairs, said the UAE has supported the youth's growing interest in big data, future technologies and sustainability, adding that the government’s initiatives have encouraged youth participation in the UN Youth Hackathon.

      She also affirmed the UAE’s commitment to empower youth and hone their skills and capabilities in big data and AI technologies, noting that the country has placed youth at the forefront of its development strategy.

      Sarah bint Yousif Al Amiri, Minister of State for Advanced Technology and Chairwoman of the UAE Space Agency, said the UAE has begun its journey into the next fifty years guided by its leadership’s directives to adopt proactive plans, supporting its priorities in sciences and advanced technologies.

      SDGs include supporting comprehensive and sustainable manufacturing and promoting innovation, she noted, adding that the Ministry of Industry and Advanced Technology has adopted a strategy aimed at motivating innovation and adopting advanced industrial tech solutions.

      Omar bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy, and Teleworking Applications, said that data is the true wealth of the government of the future and the main tool for developing the next-generation government services.

      The UAE cooperates with several countries and international organisations to align data protection efforts, by drafting legislation and establishing partnerships to ensure aligning laws issued by countries that produce digital technology and social media platforms, he added.

      The UAE seeks to establish a conducive environment for fostering talents in advanced data to achieve SDGs, by focussing on improving the efficiency of AI and big data utilisation across vital sectors.

      Liu Zhenmin, Under-Secretary-General for for Economic and Social Affairs at the UN, congratulated the UAE Government for the successful launch of the platform’s regional centre, noting that it could help build the capacities of statistical authorities in the MENA region in utilising big data, thus fast-tracking the achievement of SDGs.

      Hanan Mansour, Acting Director of the Federal Centre for Competitiveness and Statistics, said that the centre’s experts collaborated with a UN team to create the ideal infrastructure for the platform, which can meet the needs of the MENA region.

      The centre manages 578 national statistical indexes and is connected to over 40 authorities to ensure data security, she added, noting the centre is capable of handling over 100 million units of raw data annually.

      Source: WAM

    • One year extension on grace period to benefit from re-determination of administrative penalties: Federal Tax Authority

      The Federal Tax Authority (FTA) has called on tax registrants to benefit from the Cabinet Decision to extend the grace period to benefit from the re-determination of administrative penalties on violating tax laws until 31st December, 2022, which would make the amount of the total unpaid penalties due until 28th June, 2021 equal to 30 percent of such unpaid penalties, provided the conditions set by the Cabinet Decision are met.

      The FTA reaffirmed that the Cabinet Decision provided an opportunity for the business sector to benefit from the reduction of the administrative penalties. The Cabinet Decision is in keeping with the wise leadership’s directives to reduce burdens on business sectors and enhance their abilities to contribute more to the growth of the national economy. The Decision is also a part of the FTA’s goal to provide a legislative environment that encourages a high level of tax compliance.

      The FTA explained that according to the Cabinet Decision on Re-Determination of Administrative Penalties imposed for violating tax laws, the tax registrant who was not able to fulfil the conditions to benefit from redetermination before 31st December 2021, may fulfil the conditions before 31st December, 2022. The FTA called tax registrants to fulfil the requirement to pay the full tax payable, and 30 percent of the total unpaid administrative penalties that were imposed before 28th June, 2021.

      The Cabinet Decision stated that the FTA will determine the procedures for implementing the provisions related to the re-determination of administrative penalties imposed for violating tax laws. The FTA confirmed that administrative penalties imposed on the tax registrant will be redetermined within a maximum of 30 business days from the dates specified in the Cabinet Decision, providing all conditions are met.

      The FTA clarified that tax registrants who had not met the necessary conditions to benefit from the administrative penalties re-determination by 31st December, 2021, can do so by ensuring they meet the conditions by 31st December, 2022. First, the administrative penalty should have been imposed under Cabinet Decision No. 40 of 2017 before 28th June, 2021, and the amount due was not settled in full before that date. Second, the tax registrant has settled all payable tax by 31st December, 2022 (which means that the registrant must not have any tax due at the end of year 2022). And third, the tax registrant has settled 30 percent of total unpaid administrative penalties due until 28th June, 2021, no later than 31st December, 2022.

      The FTA continues to review and audit the records of tax registrants who have fulfilled the requirements prescribed in the law to benefit from the re-determination of administrative penalties scheme that was imposed under Cabinet Decision No. 40 of 2017 before 28th June, 2021, to be equal to 30 percent of the total unpaid penalties due until 28th June, 2021.

      The FTA explained that the actual values resulting from the re-determination of administrative penalties have already been reflected in the accounts of many eligible tax registrants who, by 31st December 2021, met the conditions specified per Cabinet Decision No. 49 of 2021 on amending some provisions of the Cabinet Decision regarding Administrative Penalties for Violation of Tax Laws in the UAE, which came into effect on 28th June, 2021. For such registrants, the new values after re-determination appeared on the accounts of registrants on the FTA’s e-Services portal; registrants were also informed by emails that the re-determination process had been completed.

      The FTA indicated that the review of some tax registrants’ records is still ongoing to identify anyone else eligible to benefit from the re-determination of administrative penalties scheme.

      FTA called on tax registrants who received notifications to provide the FTA with supporting data, to submit the required information without delay so that the FTA team may complete the procedures for reviewing such records and implement the re-determination of administrative penalties on the accounts of eligible registrants.

      Source: WAM

  • Switzerland
    • Federal Council Decides To Implement OECD Corporate Minimum Tax Through Constitutional Amendment

      In its meeting of 12 January 2022, the Swiss Federal Council decided to implement the minimum tax rate for certain companies agreed by the OECD and G20 member states by means of a constitutional amendment. Based on that decision, a temporary ordinance will ensure that the minimum tax rate comes into force on 1 January 2024.

      The Federal Council noted that the amendment of Swiss law will be done with a sense of proportion and focusing on an attractive business location. With the involvement of the parliament, the cantons and the people (through a referendum), a new constitutional basis will be created in order to provide legal certainty for the affected companies. On that basis, the Federal Council will first issue a temporary ordinance that implements the minimum tax rate as from 1 January 2024. Subsequently, the legal basis will be prepared in an ordinary legislative procedure without time pressure, and the ordinance will be replaced.

      The plan providing for a minimum tax rate of 15% for multinational companies with a turnover of more than EUR 750 million has been agreed by 137 countries. If a country maintains lower tax rates, other countries can impose an additional tax on those undertaxed companies. The Federal Council stated that the incorporation of a minimum tax rate into Swiss law thus ensures that large companies do not become involved in foreign proceedings. Furthermore, Switzerland should not forego any tax receipts to which it is entitled.

      In Switzerland, the minimum tax will be collected in a targeted manner and with due regard for federalism, i.e. nothing will change for purely domestically focused companies and SMEs. In this regard, the Federal Council has adopted the following content-related parameters:

      • ensuring the minimum tax rate for multinational companies with annual turnover of at least EUR 750 million;
      • collection of the additional taxes by the cantons. The additional tax receipts go to the cantons; and
      • additional tax receipts are subject to the general rules for national fiscal equalization.

      101 foreign companies set up in the Zurich economic area last year. Together, they plan to create around 1,500 jobs in the coming years.

      The last time more than 100 new companies set up in the Zurich economic area was in 2010, revealed the Greater Zurich Area AG (GZA) in a statement. In 2015, the location marketing organisation and its partners in cantons, regions and authorities succeeded in attracting 93 foreign companies to the Zurich economic area.

      A total of 63 of the companies set up are from the GZA's focus industries, which include pharmaceuticals, biotechnology, medical technology, ICT, cleantech and mechanical engineering. 39 of the companies are headquartered in Europe, 31 in the USA and nine

      The 101 new companies created 434 new jobs in the year of their establishment in Switzerland. They plan to increase this figure to 1,541 in the next five years.

      The new companies “will bring new innovative capacity, jobs and tax revenue to the Greater Zurich Area,” commented GZA managing director Sonja Wollkopf Walt in the statement. She added: “The positive result cannot be taken for granted in view of the strong franc, the uncertainty surrounding corporate taxes, implementation of the mass immigration initiative and of Brexit.”

      Examples of successful establishments cited in the statement are the biopharmaceutical company Alnylam and the medical technology company Cardinal Health. Both companies hail from the USA and have set up in the canton of Zug. They cited access to the best international talent among their reasoning.

      Source: Switzerland - Global Enterprise


      The Swiss MEM (MEM is an acronym for Machine-building, Electrical Equipment and Metallurgy) cluster serves as living proof of the fact that even ‘heavy-weight’, conservative manufacturing sectors may have an infrastructure that fosters innovation and explosive business growth. The secret lies in its ‘light-weight’ organization: it is largely represented not by giants, but by mobile, small and medium-sized companies focused on global export. For innovative MEM enterprises, Switzerland is an excellent platform for rapid growth and global expansion.

      Swiss machine-building dates back to the 19th century with its textile manufacturing. At the time, virtually all European textile manufacturers (Italy, France and Germany) used British looms and equipment. At a point when British looms became too expensive, Switzerland focused on making its own looms. Today Swiss machine- and machine-tool building enterprises are among the most competitive in the world – as are the manufacturers of electrical equipment, electronics and precision measuring tools. The MEM cluster currently employs over 300,000 people and sells 90 billion US dollars worth of products every year. In contrast with other Swiss clusters, this one is not limited to any particular geography: its manufacturing facilities are evenly spread across the country, with a higher concentration in the central cantons.

      Driven by export-oriented small business

      In the opinion of Hans Hess, President of Swissmem (the MEM Cluster Association), the key point is that companies in this sector are mostly export-oriented. “Small and medium-sized companies exporting 80% of their products constitute 95% of the Swiss MEM cluster”, he says. If your company depends on export, it is necessary to monitor all the latest market trends. This kind of approach helps Swiss companies to gain technological advantage and be able to compete globally. The ‘anchor’ players in the sector (such as ABB, Alstom, Siemens, Liebherr, Schmolz+Bickenbach and others) have gained international fame and can shape trends and create demand on the B2B market. They form the core of a peculiar cluster ‘ecosphere’ surrounded by hundreds of small vendors of equipment, spare-parts and services; design bureaus; experts on technology rights, intellectual property and the neighbouring sectors.

      Specialized technology parks have their part to play in establishing connections within the cluster. Park Biel/Bienne only has about ten companies working alongside one another, manufacturing high precision industrial tools for the automation and medical technology sectors (Haag-Streit, Balluff HyTech, Ziemer Group, etc.). They do not directly compete, but can request services from one another or join efforts in locating raw material suppliers. MEM-oriented parks can be found in any Swiss canton.

      Any business, irrespective of its size, sales or staff numbers, may enjoy the benefits of cluster affiliation, which include applying for grants or tax support to institutes of development, working with the most advanced research institutions under technology transfer programmes as well as being supported by industry associations in global expansion.

      Technology transfer and education

      The MEM industry in Switzerland relies on the solid groundwork of research done by world-famous Swiss technology universities and institutes. But how do you transform an idea into a competitive product in practice and how do education establishments and enterprises exchange knowledge and technical achievements?

      According to  Swissmem, MEM cluster companies spend around 5% of their sales on R&D. However, it is not the custom with science-based businesses to bear R&D costs all on their own. The government is very forthcoming in supporting innovative research and development. Accordingly, universities and businesses can launch joint research projects, and MEM is the most active sector in this regard: almost half of all joint research and development projects with education establishments involves companies and experts in machine-building, machine tool building, automation, informatics, electronics and other exact sciences.

      Importantly, projects of that kind may be funded by CTI (the Commission for Technology and Innovation) whose grants may cover up to 50% of R&D costs of joint projects between businesses and research institutes. Title to research products under projects with the use of lab equipment, HR and technologies is reserved by businesses.

      As an example, in 2013 Streamer International AG, a manufacturer of lightning protectors (read our success story), launched- together with the University of Applied Sciences Rapperswil - a two-year joint research project, in which half of the project costs was covered by an CTI grant. In addition, as a Grisons innovative company Streamer received a municipal grant, one part of which was a free subsidy and the other an interest-free loan for five years.

      Gamaya, a partner of Fly & Firm that manufactures drones for agriculture (read our success story), is using the platform and technology labs and receives advice from professors of the Swiss Federal Institute of Technology in Lausanne (EPFL). However, it is Gamaya (and not EPFL) who retains intellectual property rights to its developments. This example is not an exception but a standard procedure in Switzerland: ownership of IP rights remains in the hand of clients.

      Industry associations are also involved in the transfer of knowledge and technology. Swissmem, for example, facilitates cooperation between companies who are members of the Association and the most advanced education establishments in the relevant field (such as the Zurich University of Applied Sciences, the University of Applied Sciences and Arts of Western Switzerland, the Lucerne University of Applied Sciences and Arts and others). Swissmem keeps an eye on technology projects under way at universities and on the potential services that education may offer to business – and helps to build bridges. On request, Swissmem arranges visits to university competence centers so that companies can learn more about process management, efficiency improvement, production upgrade, etc. Associations also establish contacts with external platforms, such as the Paul Scherrer Institute, the Swiss Federal Laboratories for Materials Science and Technology (EMPA), the Swiss Center for Electronics and Microtechnology (CSEM), the three major Swiss organizations working with nanomaterials, microelectronics and other breakthrough technologies. Together with business and universities, they hold joint conferences, workshops and training courses and, more importantly, are closely involved in creating and developing new businesses, such as SwiSS-9, an EMPA laboratory spin-off that designs all kinds of nano-coatings at the Biel/Bienne technology park.

      And finally, universities and businesses are increasingly engaged in joint programmes to create pools of talent. For example, ABB has partnership relations with several dozens of education establishments around the world, including Switzerland. ABB contributes to the development of curricula for new subjects, makes presentations at campuses, participates in vacancy fairs, holds contests for onsite training and pays its own scholarships. This was one of the reasons why Swiss engineering students named it one of the best employers around the world in 2016. Professional education includes vast apprenticeship training. Professional associations have their own training centercenters. Swissmem trains about 10,000 employees in machine-building, design, automation, electronics and informatics.

      ”Made in Switzerland” as a major competitive advantage

      According to the Swissness Worldwide 2016 poll conducted this year by the University of St. Gallen (over 900 consumers in 15 countries), public confidence in Swiss-made products is still a prevailing trend. The ‘Made in Switzerland’ brand is particularly valued in Russia, China, India and Brazil – home to around 40% population of the world. Consumers there are willing to pay 40% more for Swiss-made products compared to similar products from elsewhere. Respondents said they were prepared to pay twice as much more for a Swiss watch, half as much again for Swiss cheese and 7% more for a vacation in the Swiss Alps. A Swiss national is also willing to pay extra for locally produced goods.

      Even a start-up that decides to expand onto the new emerging markets in Asia, Africa or the Middle East can benefit from the brand. “The growing trend to produce locally plays into the hands of Swiss companies,” says Klaus Stahlmann, CEO of engineering company Sulzer, “Swiss products will be perceived as a yardstick of quality even if a company moves production to a foreign market.” A good illustration of how Swiss engineering expertise can help to capture a foreign market is the story of Bombardier Switzerland who used their research centers in Zurich and Winterthur to design hybrid locomotive ALP 45DP specifically for export to the US. ALP 45DP is driven by a combination of diesel and electric traction and enables non-stop transportation.

      Industry of the future

      The course for smart production, digitalization and process automation (known as Industry 4.0) pursued by the developed economies has been likened to a new industrial revolution that may have a dramatic effect on the labour market and our everyday lives.

      Broad opportunities for creating innovative products and services are emerging up and down the country. Given that new technologies are affordable to players of any size, these sectors are no longer dominated by large corporates. In this environment even a small company is able to handle average-sized custom-tailored orders, bringing its labour, energy consumption and production wastage costs down 20-30%. Oleg Sharonov, the founder of start-up Fly & Film, believes there is no better place than Switzerland for an innovative hi-tech start-up.

      The government and the industry associations are doing everything they can to ensure that ‘industrial revolution’ takes the stage quickly and painlessly. Swissmem has already launched itsnew initiative Industry 2025 helping companies to navigate through the new trends and use the opportunity to work together. Its objective is to set up automated, industrial-Internet-based production in the Swiss MEM cluster by 2025. New, efficient production will help Swiss companies to grow, even with a strong Swiss franc that somewhat weakens their export potential. Among the high-potential MEM segments highlighted by experts are renewable energy sources, efficient accumulation and distribution, solutions for sewage and waste water disposal, mobility and transportation technologies, medical instrument manufacture.

      Source: Switzerland - Global Enterprise

  • India
    • Innovation Led Indian Economy

      India's vision of becoming a $ 5 trillion economy is complexly connected with an innovation-oriented approach to economic expansion. While most governments are looking inward, in the current Covid-19 crisis-hit world, India is utilising this opportunity to create its innovative capacities to fulfil future international demands by delivering a spectrum of new approaches, services, and products.

      India has mounted two places and has been ranked 46th by the World Intellectual Property Organization in the Global Innovation Index 2021 rankings. India has been on a rising course over the past several years in the Global Innovation Index (GII) from a rank of 81 in 2015 to 46 in 2021.

      Innovation is a vital driver of economic advancement that helps customers, industries, and the economy in its entirety. In financial terms, innovation defines the development and application of visions and technologies that enhance goods and services or make their production more efficient. India is moving towards an innovation-led economy, because inventions bring new concepts and technologies, and produce more important outputs with the same input. This results in better-made goods and services, boosting earnings and business profitability.

      India fosters innovation by executing structural standards such as improved spending on research and development, funding in education, and facilitating entrepreneurs to initiate an enterprise more efficiently and for failed businesses to retire the market more quickly. It is also carrying its intricacy to its benefit by utilising the extensive and heterogeneous user segments in India that are keen on exploring new solutions to their unmet needs. The combination of strong capabilities and mature varieties makes India a productive innovation base.

      India is comprehensively prepared to steer in a new age of creation and expansion in the current scenario. Compelled by 'Atmanirbhar Bharat' and 'Make in India' endeavours, there is a solid stimulation to empower the regional manufacturing sectors that would, in turn, contribute to the production of innovative products at economical rates. Along with improving the production scale, India has also strived to enhance its study capabilities by introducing new Science, Technology, and Innovation Policy 2020. These efforts  play a critical part in promoting the country's innovative power.

      The government's Atal Innovation Mission, DST-NIDHI's PRAYAS, Digital India and Startup India has also uplifted the entrepreneurial spirit. These initiatives have facilitated access to the essential resources to harness the youthful vibrancy of the country. The current innovation ecosystem has been made a part of India's policy plan to expand, bolster and drive a positive impact.

      The past decade has seen numerous Indian harboured brands (startups or otherwise) tapping into the global market with their product and service. Whether it's a premium skincare brand like Forest Essentials or an affordable brand like Lenskart, this approach is still impeccable. They create an ingenious solution to an existing void and ensure that they craft high-quality products and services. Service brands like Ola and Zomato are positively expanding their offerings across nations after having perfected their product through numerous rotations of iteration with user segments in India. Indian creators are creating services and products designed to provide an increase in complex capabilities related to technological constraints, user segmentation, and competitive prices. This allows for the advantageous transfer of innovations to different markets with parallel potential demands. India is an invention creator among emerging countries, and it demonstrates its innovation leadership in other developing countries in a unique way.

      As India steers into an undetermined future where the global economy is still staggering from the pandemic, innovation harbours the key to transitioning any developing economy toward the developed class. India has the potential and ability to be such a country that alters its economic originality by leaning on innovation.

      This article is co-authored by Kanika Verma and Bhakti Jain.

    • COVID-19 Pandemic: India Further Extends Various Compliance Deadlines

      The Central Board of Direct Taxes (CBDT) has extended the filing deadlines of certain tax returns and reports, including income tax returns for the assessment year (AY) 2021/22, in view of difficulties reported by taxpayers and stakeholders due to the COVID-19 crisis.

      The extension applies to the following returns or reports:

      • income tax return for AY 2021/22:
        • due on 31 October 2021: extended further to 15 March 2022 (previously to 30 November 2021, then 15 February 2022); and
        • due on 30 November 2021: extended further to 15 March 2022 (previously to 31 December 2021, then 28 February 2022);
      • report of audit for the previous year (PY) 2020/21:
        • due on 30 September 2021, in the case of assessees referred to in clause (a) of Explanation 2 to section 139 (1) of the Income Tax Act (ITA): extended further to 15 February 2022 (previously to 31 October 2021, then 15 January 2022); and
        • due on 31 October 2021, in the case of assessees referred to in clause (aa) of Explanation 2 to section 139 (1) of the ITA: extended to 15 February 2022; and
      • report from an accountant for persons entering international transactions or specified domestic transactions for PY 2020/21 due on 31 October 2021: extended further to 15 February 2022 (previously to 30 November 2021, then to 31 January 2022).
    • Cold Storage Chains in India

      Human civilization has come to a juncture where everything we consume is compromised by pollutants like deadly viruses and bacteria. The Covid-19 virus made it evident that to lead a healthy life in today’s world, one needs to look after their health and ensure the presence of a well-connected strong medical infrastructure. To achieve this, one of the primary needs is for a country to have fully functional cold chains in place which can cater to the medicinal storage requirements and other industry requirements like food. While medical cold storage infrastructure in India accounts for 43.7 per cent of the total revenue from the cold chain industry, there is still a lot more room in the market for growth, and need for cooler refrigerators to store vaccines like Moderna and Pfizer which require temperatures as low as -70*C.

      In furtherance to last years’ talks, the Luxemburg-based company B Medical Systems inaugurated a cold chain manufacturing facility in Mundra, Gujarat. This collaboration between India and Luxemburg will not only save millions of human and animal lives but will also help in meeting the demand of the healthcare ecosystem. The company will provide a reliable vaccine cold chain with real time monitoring which would support the country’s ability to transport safely stored vaccines throughout the year and ensure zero wastage of Covid-19 vaccine rollout. Today, Covid-19 vaccine issues and development is a matter of national interest for India and the opening of the facility is a testament to India’s commitment to ‘Aatmanirbhar Bharat’ and the vision of India stepping up in the race to become the vaccine cold chain capital of the world.

      The cold chain facility is an investment of over INR 100 crore with an annual production capacity of 100,000 units of medicinal cold chain products such as refrigerators, freezers and transport containers to fulfill the domestic demand. Another pain point for the Indian industry has been ineffective and unmonitored cold chains. Companies like Elanpro have helped by launching a remote-data monitoring device and provided support during the pandemic to various Non-Government Organizations (NGOs) and hospitals. However, since cold chain deployed for vaccines in India is a novelty, the technology and services offered by Elanpro were scarcely employed. However, B Medical Systems' recent collaboration with 1mg, one of the largest Covid-19 vaccine securers, and Dr. Reddy’s will help India maintain proper cold chain storage and build transportation infrastructure for vaccine administration, and thereby, avoid any possible wastage.

      Witnessing the corollaries of the second wave, the Indian government has prioritized the need for the country to strategize and expand its cold chains in matters of health infrastructure and set up vaccine and oxygen plants to sustain in the time of a medical emergency. Throughout the country, states are offering various incentives for smooth setting up of infrastructure to deal with Covid-19 and are now paying attention to cold storage as a vital element in the battle. The cold chain storage set up in Gujarat is of tremendous significance in India’s vaccine diplomacy and its strategic location provides impetus for the nation to link healthcare infrastructure and renewable energy, and further provide space for setting up of more chains in neighboring states like Rajasthan and coastal states like Goa where storage units can function in a cost effective and environment friendly manner while eyeing a 20 per cent Compounded Annual Growth Rate (CAGR) by 2025.

      This article is co-authored by Bhamini Rathore and Kanika Verma.

    • India and United Kingdom Launch Negotiations for FTA

      According to a press release of 13 January 2022, published by the UK India Business Council, India and the United Kingdom formally launched negotiations for a free trade agreement (FTA) between them in New Delhi on 13 January 2022. A first round of negotiations is expected to start next week. Further developments will be reported as they occur.

  • United Kingdom
    • Businesses most impacted by Omicron variant to benefit from over £700 million as government delivers funding to local authorities

      New grant funding for businesses impacted by the pandemic.

      • Businesses in England most impacted by COVID-19 and the Omicron variant to benefit from £700 million in government grants delivered by local councils
      • hospitality, leisure and accommodation businesses will be able to apply for one-off cash grants of up to £6,000
      • businesses are urged to engage with their council and apply for funding

      Businesses in England most impacted by the Omicron variant will be able to tap into a multimillion-pound support package in the coming weeks, as the government today (7 January) delivered funding to councils across the country.

      Firms in the hospitality, leisure and accommodation sectors, many of which have seen a decline in footfall and increased cancellations due to the Omicron variant, will be able to apply for one-off grants of up to £6,000 per premises depending on rateable value:

      • businesses with a rateable value of £51,000 or above: £6,000
      • businesses with a rateable value between £15,000 and £51,000: £4,000
      • businesses with a rateable value of £15,000 or below: £2,667

      In addition, more than £100 million worth of discretionary funding is also being made available for local authorities to support other businesses.

      Business Secretary Kwasi Kwarteng said:

      All through the pandemic we have stood by the side of business to ensure they are supported at every stage. The spread of the Omicron variant is presenting new challenges, particularly for the hospitality and leisure sectors, so it’s only right that we are stepping up with an urgent £1 billion support package.

      I urge businesses to come forward, engage with their local council and tap into these cash grants, which will help to cover costs and protect jobs as we double down on our efforts to get boosted and defeat this virus.

      The grant funding forms part of a £1 billion support package which includes an additional £30 million for the Culture Recovery Fund and reintroducing the Statutory Sick Pay Rebate Scheme - reimbursing eligible businesses for the cost of Statutory Sick Pay for COVID-related absences.

      Rishi Sunak, Chancellor of the Exchequer said:

      We know the Omicron variant has hit our hospitality and leisure businesses – which is why, as we have throughout the pandemic, we stepped in to help.

      From today, local councils will be able to distribute this £1 billion package of support to the hundreds of thousands of pubs, restaurants and theatres in need – protecting the millions of people they employ.

      Businesses are encouraged to apply to their council for grant funding which will be administered over the coming weeks. Find your local authority on GOV.UK.

      Businesses eligible for grants are those that offer in-person services, where the main service and activity takes place in a fixed rate-paying premises, in the hospitality, leisure and accommodation sectors. For example, this includes businesses whose main function is providing a venue for the consumption and sale of food and drink, those that provide facilities linked to recreation and entertainment, as well as businesses whose main premise is used for holiday accommodation.

      The government has chosen to provide generous grants that are the same size as the monthly cash grants provided to hospitality businesses when they were fully closed earlier this year – despite businesses now being still able to trade.

      Other businesses impacted by Omicron, such as those that supply the hospitality and leisure sectors as well as personal care services, are also able to apply for grants with the government allocating more than £100 million to the Additional Restrictions Grant (ARG) fund for local authorities in England.

      Local authorities will have discretion to allocate this funding to businesses most in need.

      The Business Secretary has written to those local authorities who have more than 5% left over from previous ARG funding rounds, instructing them to disburse their remaining funding.

      Additional information

      The £1 billion support package consists of:

      • £635 million for targeted grants for hospitality and leisure businesses in England
      • £102 million top-up for the Additional Restrictions Grant
      • £30 million for Culture Recovery Fund
      • £154 million of Barnett funding covering all three above
      • Funding for the Statutory Sick Pay Rebate scheme will be additional to these amounts

      Further information will be available in the published factsheets.

      The one-off grants of up to £6,000 for eligible businesses in the hospitality, leisure and accommodation sectors, depend on rateable value:

      • businesses with a rateable value of £51,000 or above: £6,000
      • businesses with a rateable value between £15,000 and £51,000: £4,000
      • businesses with a rateable value of £15,000 or below: £2,667
      • The additional funding is the third top-up to the ARG scheme. The most recent data on local authority payments to businesses is to 28 November 2021 and so does not capture any recent spending. As of this date 88% of the funding available prior to this third top-up had been spent
      • note that local authority funding allocations for the Omicron Hospitality and Leisure Grant have been calculated using the latest available data (31 March 2021) on business numbers provided by the VOA
      • figures by local authority are available on request
      Source: Press Release
    • Penalty Reform for VAT

      In Finance Act 2021, the Government legislated to reform penalties for late submission and late payment of tax, initially from 1 April 2022,  and to align interest charges for VAT with other major taxes. Today, I am announcing that these changes for VAT businesses  will now be introduced 9 months later, on 1 January 2023. HMRC is committed to becoming one of the most digitally advanced tax authorities in the world. The ambition and pace of change needs to be balanced with  well-tested systems and  good customer service, particularly when businesses are facing additional challenges and uncertainty. This  extra  time allows HMRC to ensure the IT changes necessary for the new penalties and interest charges can be introduced as effectively as possible,  ensuring a high standard of service to customers.   Statement made by Lucy Frazer, The Financial Secretary to the Treasury Conservative
    • Government to strengthen rules on misleading cryptocurrency adverts

      Plans to strengthen the rules on cryptoasset advertisements and protect consumers from misleading claims were published by the Government today 18 January.

      • The government plans to legislate to address misleading cryptoasset promotions
      • Adverts will be brought into line with other financial advertising, ensuring they are fair and clear
      • New rules will increase consumer protection while encouraging innovation

      Around 2.3 million people in the UK are now thought to own a cryptoasset with their popularity rising - but research suggests that understanding of what crypto actually is is declining, suggesting that some users may not fully understand what they are buying. This poses a risk that these products could be mis-sold.

      The consultation response, published today, sets out the government’s plan to bring the promotion of cryptoassets within the scope of financial promotions legislation. This means the promotion of qualifying cryptoassets will be subject to FCA rules in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to.

      This will balance the desire to encourage innovation with the need to ensure that cryptoasset advertisements are fair, clear, and not misleading.

      Chancellor of the Exchequer, Rishi Sunak said:

      Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims.

      We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.

      The government is eager to support innovation in cryptoassets and recognises the potential benefits of certain products like stablecoins, such as providing a more efficient means of payment, and in 2018 the government launched the the Cryptoasset Taskforce, which continues to steer the UK’s regulatory response to the cryptoasset market.

      However, research undertaken by the FCA highlighted the potential for misleading advertising of crypto products to cause consumer harm.

      The Government’s decision to bring these types of advertisements into the scope of regulation will mitigate the risks of consumer harm, ensuring people have the appropriate information to make informed investment decisions.

      This will be done via secondary legislation to amend the Financial Promotion Order, which sets out the investments and activities to which the financial promotion regime applies. Under the Financial Services and Markets act 2000, a business cannot promote a financial product unless they are authorised by the FCA or the PRA, or the content of the promotion is approved by a firm which is. Firms that wish to promote such investments and activities must comply with binding rules that financial promotions must be fair, clear, and not misleading.

      This will provide the Financial Conduct Authority with the appropriate powers to regulate the market more effectively. The FCA will shortly be consulting on their proposed financial promotions rules that will apply to cryptoassets.

      Further information

      • The government intends to put in place a suitable transitional period (approximately six months) from both the finalisation and publication of the proposed Financial Promotion Order regime and the complementary FCA rules
      • The legislation will be brought forward once parliamentary time allows
      • Consultation response available here
      • FCA Cryptoasset consumer research 2021
      • Today’s announcement complements broader proposals on cryptoassets and stablecoins set out via the government’s consultation on a regulatory framework for stablecoins last year, with next steps due to be announced in due course

      Source: HM Treasury  
    • United Kingdom Seeks Public Comments on Implementation of Global Minimum Tax Deal

      On 11 January 2022, the United Kingdom (UK) launched a public consultation seeking input on the domestic implementation and administration of the newly released model rules on the OECD-led global anti-base erosion (GloBE) proposal under Pillar Two.

      The public consultation, particularly, seeks feedback on the following:

      • how the model rules should be translated into UK legislation;
      • how the model rules should be administered; and
      • what implementation issues may ensue that should be addressed in the envisaged implementation framework.

      Additionally, the consultation seeks public input on the introduction of a UK domestic minimum tax (DMT), as well as on a wider reform to the existing UK Base Erosion and Profit Shifting (BEPS) legal framework.

  • Bulgaria
    • Bulgaria Plans to Amend Corporate Income Tax Act and Implement Hybrid Mismatch Rules

      The Bulgarian parliament has approved at first reading the following amendments to the Corporate Income Tax Act:

      • implementation of the rules for hybrid mismatches provided in the Anti-Tax Avoidance Directive (2016/1164) (ATAD);
      • extension of the scope of application of the provisions for controlled foreign companies (CFCs) which will be applied to all Bulgarian taxable persons that are subject to corporate income tax in the country and have CFCs regardless of their form of taxation; and
      • clarification of the tax aspects of lease buy-back agreements, which are classified as operating leases under the International Accounting Standards.

      As a next step, the proposal will be voted at second and final reading by the parliament.

      The full text of the proposal, approved on 20 January 2021, is available here (in Bulgarian only).

    • Bulgaria: Forecast for Economic Growth in 2022

      Economic growth in 2022 will remain at last year's levels amid growing fears of inflation

      Economists of UniCredit Bulbank forecast economic growth of 3.6% in their latest report. Experts slightly reduce the forecast for annual GDP growth for 2022, compared to the expected 3.9% three months ago, due to more severe and prolonged disruptions in supply chains and the looming higher and longer-term inflation. Its growth is projected to reach 6% on average for the whole of 2022, with the main reasons continuing to be related to high energy prices, supply chain disruptions, and base effects. Economists expect these factors to have a temporary effect in 2023, inflation to fall to 3% on average for the year, and economic growth to accelerate to 4.3%, with unemployment falling to levels corresponding to full employment.

      Bulgaria: 7.8% annual inflation in December

      Economic forecasts for inflation are based on the assumption that electricity and heat prices for households will rise by 15% in April 2022. According to economists, inflation will have an adverse effect on consumer confidence and the structure of GDP is likely to change.

      Increase in investments at the expense of private consumption in the structure of GDP

      Private consumption will contribute less to economic growth in 2022 than in 2021, mainly due to projected higher consumer price inflation. This year the rise in prices will reduce the disposable income of households to a much greater extent than in 2021. Despite lower consumption levels, economists at UniCredit Bulbank expect an increase in investment growth, driven mainly by larger projects in the public sector. They expect public investment in support of the green transition and digitalization, funded by the EU's Next Generation mechanism, to stimulate potential growth, with the necessary reforms.

      Without a significant increase in wages

      The expected higher inflation in 2022 will not lead to a significant increase in wages, according to a new analysis by UniCredit Bulbank. Unemployment and other important labor market indicators show that the economy has not yet reached full employment. It is also important to note that the share of managers who report problems with finding labor now compared to the period before the pandemic is lower in Bulgaria than in other CEE countries (see chart), for which such data are available. All this indicates that the process of recovery in the labor market is slower in Bulgaria than in most CEE countries, and this has a positive side, as what is happening in the labor market is not among the factors contributing to the increase of inflation at the moment.

      The development of the economy in 2022 will continue to be closely linked to the course of the Covid-19 pandemic. Despite the emergence of the new variant Omicron, the prospects are for vaccines to remain effective and for the percentage of the vaccinated population to increase, although most likely leaving below the required values to achieve group immunity. Under these conditions, the negative impact of new waves of the pandemic on the growth trajectory should be more limited than in the past.

      Source: Novinite

    • Bulgaria Plans to Implement EU Legislation on Excise Duties

      The Bulgarian parliament has approved at first reading the following amendments to the Value Added Tax Act:

      • Excise Framework Directive (Recast) (2020/262) of 19 December 2019 laying down the general arrangements for excise duties;
      • Council Directive (EU) 2020/1151 of 29 July 2020 amending Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages; and
      • Council Directive (EU) 2019/2235 of 16 December 2019 amending VAT Directive (2006/112) on the common system of value added tax and Excise Directive (2008/118) concerning the general arrangements for excise duties as regards defence efforts within the Union framework.

      As a next step, the proposal will be voted at second and final reading by the parliament.

      The full text of the proposal, approved on 20 January 2021, is available here (in Bulgarian only).

    • Bulgaria Plans to Extend Scope of Reduced VAT Rate

      The Bulgarian parliament has approved at first reading the following amendments to the Value Added Tax Act:

      • implementation of Council Directive (EU) 2021/1159 of 13 July 2021 amending VAT Directive (2006/112) in response to the COVID-19 pandemic, and Council Directive (EU) 2019/2235 of 16 December 2019 amending EU VAT Directive (2006/112) and Excise Directive (2008/118);
      • introduction of rules for adjustments of incorrectly issued invoices even when a tax audit assessment notice has entered into force;
      • extension of the scope of application of the reduced 9% VAT rate by including specialized milk formulas (with partially hydrolyzed protein and formulas for children with allergies) and dietary foods for special medical purposes intended for infants (falling within EU code 2106 90 92 and EU code 2106 90 98);
      • inclusion of food vouchers within the scope of application of the special VAT rules for vouchers (currently, they are explicitly excluded from this scope); and
      • various clarifications concerning the new VAT rules for e-commerce applicable as from 1 July 2021 and the supplies of goods between Bulgaria and Northern Ireland.

      As a next step, the proposal will be voted at second and final reading by the parliament.

      The full text of the proposal, approved on 20 January 2021, is available here (in Bulgarian only).

  • Hong Kong
    • Opening up new opportunities for SMEs

      Innovation and technology is taking the world into a new era, opening up fresh opportunities in the upcoming economic powerhouse: Guangdong-Hong Kong-Macao Greater Bay Area (GBA). For companies setting their sights on this vibrant region, a range of support is at hand in Hong Kong. Among them is global banking giant HSBC’s US$1.13 billion “GBA+ Technology Fund”, and US$700 million “GBA+ Healthcare Fund”, which provide flexible financing support for new-economy companies in the region.

      HSBC possesses insights on how enterprises can achieve success in the GBA, where it had started operating when the Pearl River Delta began to develop.

      “The development of Hong Kong and Guangdong are inseparable,” remarked Frank Fang, Head of Commercial Banking, Hong Kong, HSBC.

      “We opened the first representative office in Shenzhen as early as 1982. To date, we have around 50 branches in 21 cities in the Guangdong province,” he said.

      “The advantage of having comprehensive coverage in the Greater Bay Area is that no matter which GBA city the Hong Kong customer has business or investment in, we can serve them all the same. On the other hand, we can also reach more customers in Mainland China and help them expand overseas markets through our services.”

      After years of deployment, HSBC has become the largest international bank with the widest network in the GBA, Mr Fang said.

      Hong Kong-Guangdong collaboration

      Throughout the decades, the opening up of the mainland has catalysed Hong Kong's transformation from a manufacturing base into a service-oriented economy and an international trade and financial centre, laying a solid foundation for its development into an innovation and technology hub. Mr Fang said Guangdong province and Hong Kong have respective and complementary advantages in innovation and technology, while China’s 14th Five-year Plan and Guangdong-Hong Kong-Macao Greater Bay Area Development Plan will drive the cooperation of the two locations in innovation and technology to the next level. "The biggest advantage of Guangdong province lies in production. Industrialists there can quickly commercialise new concepts from around the world and optimise products after launch,” Mr Fang said. “For its part, Hong Kong provides outstanding talent. It has first-class universities, and indeed one of the world’s highest concentrations of world-class education institutes,” he added. There are 16 “state key laboratories” (SKL) and six local branches of the Chinese National Engineering Research Centres in Hong Kong. In the 2021 Global Innovation Index (GII) report, Hong Kong’s ranking in the world jumped from 13th to 11th. “Hong Kong gathers together professional service talents who can help obtain technology patents and conduct intellectual property trading, creating favourable conditions for scientific research,” Mr Fang noted. "However, Hong Kong needs to rely on the production advantages and huge market of the GBA. “There is this ‘0 to 100’ model, in which Hong Kong is responsible for the 0-to-1 phase, or product conception, leaving the commercialisation and production process, or the 1-to-100 stage, to Guangdong. “This can greatly accelerate the commercialisation of scientific research results and increase the value of goods. In this way, the two places can complement each other to achieve a win-win situation," Mr Fang said.

      Enterprise links

      To build on Hong Kong’s potential for technological innovation, HSBC launched "GBA+ Technology Fund” in 2019. The fund supports fast-growing innovation and technology companies in the Greater Bay Area, be they local or international. Sectors covered include e-commerce, financial technology, robotics and biotechnology. To accommodate growing customer demand, HSBC recently upsized the Fund from US$880 million to US$1.13 billion. HSBC also rolled out a US$700 million debt financing scheme to support fast-growing, early-stage healthcare companies in GBA, covering sub-sectors of healthcare tech, healthcare services, pharmaceutical, medical device, contract services and third-party medical institutions. Together, HSBC has earmarked over US$1.8 billion in facilities for new economy companies in the vibrant city cluster. “These young, high-growth companies engaged are unable to provide several years of financial reports to banks,” Mr Fang said. “In order to assist them in financing, we have some innovative ideas: The ‘GBA+ Technology Fund’ offers flexibility. “When evaluating applications, in addition to being flexible, we will also consider other factors such as future capital injection, potential investors. In terms of ‘lending to borrowers without bricks’, we are ahead of the industry," Mr Fang said. As start-up customers lack business experience, HSBC would line up professionals to help them solve operational issues and focus on production. "These 'one-stop services' are actually beyond the scope of banking services, but we are happy to go the extra mile to help customers grow."

      Helping SMEs connect to the world

      Mr Fang noted that online shopping has ushered in innovative technologies and spawned a new economy, creating an e-commerce market and stimulating market demand for related payment and digital banking services.

      "In recent years, e-commerce has developed rapidly in the mainland and Hong Kong, while cross-border transactions between the two places have grown especially fast,” Mr Fang said.

      Through its “Account Connect”, “Credit Connect”, “Payment Connect” and “Service Connect” services, HSBC brings an integrated service experience to Greater Bay Area enterprises.

      “In order to meet the increasing demand for cross-border payments in the region, HSBC has increased the speed with which it processes payments from Guangdong to Hong Kong. Payment instructions can now be completed within two minutes, efficiently connecting companies to opportunities in the GBA,” he said.

      HSBC has also launched a mobile digital platform dedicated to addressing the cross-border business needs of small and medium-sized enterprises (SMEs). The HSBC GBA WeChat Mini Programme delivers a simple and unified digital service experience and provides customers with direct access to GBA-related market insights and knowledge together with other functions. Customers can also make real-time balance enquiries for both mainland and Hong Kong accounts.

        Source: HKTDC    
    • HK grows as green finance hub

      The Greater Bay Area lies at the heart of the world’s sustainable-development hotspot and Hong Kong has a key role to play.

      The fast-growing and densely populated Asian region is home to half the world’s population and the source of 50% of greenhouse gas emissions, making centrally located Hong Kong a natural base for efforts to counter global warming.

      At the same time, many emerging markets in Asia have yet to achieve or enjoy wealth in line with developed economies, giving the continent the double challenge of expanding economies and improving the living standards of its citizens while simultaneously reducing carbon dioxide emissions.

      Sustainability hub

      Jonathan Drew, Managing Director, ESG Solutions in the Global Banking division of HSBC, pointed this out during a panel discussion titled “Sustainable Development in the Greater Bay Area: Opportunities for Hong Kong” at the Asian Financial Forum earlier this month. He explained why the global bank had chosen to base its worldwide environmental, social and governance (ESG) efforts in the city. “Hong Kong has role in providing finance in the GBA and Asia generally,” he said.

      Introducing the discussion, Laurence Li, Chairman of Hong Kong’s Financial Services Development Council, said the financial services industry was seeing a rapid and broad-based transformation to bring climate change measures on board.

      As of 2020, assets being managed under sustainable development strategies amounted to a staggering US$35.3 trillion, a 15% increase from two years previously and accounting for more than one third of global assets.

      He said more than 130 countries and regions had committed to cut carbon dioxide output. Mainland China had committed to reach peak output by 2030 and achieve net zero by 2060. The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) was looking towards becoming a comprehensive green and sustainable development site requiting Rmb2.2 trillion (US$347 billion) in Guangdong. This has prompted Hong Kong to consider its role in this context.

      Connector role

      As China's international financial centre with extensive links to the world, Hong Kong has a natural connector role to play. The city can serve sustainable investments on both sides. To capture long-term opportunities, Hong Kong can look at carbon markets, which will soon reach US$50 billion globally. The European Union is a leader in this space, while the United States and Mainland China are increasingly active. As the world transitions towards net zero, demand for capital will increase, Mr Li pointed out.

      Panel moderator Dr King Au, Executive Director of the Financial Services Development Council, pointed out that China’s 14th Five Year Plan named Hong Kong as a green financial centre and set 2060 as its net-zero carbon goal, which means the country might need as much as US$15 trillion in green project investment over the next 30 years. An estimated 75% of this funding will need to come from the private sector, Dr Au said.

      The Hong Kong government has been responding to the challenges, and since the establishment of green bonds the instrument had gone from strength to strength in the city, turning Hong Kong into a green bond hub. ESG bonds make up 21% of bond offerings, the highest proportion in Asia-Pacific. The government plans to issue US$20 billion in green bonds within the next five years and introduce retail green bonds later this year.

      Smart cities

      Posing a question to Thomas Pang, Partner in smart-city solutions provider Venturous Group, Dr Au first explained that Hong Kong government began looking at sustainability as early as 2003, establishing the Council for Sustainable Development along with the Sustainable Development Fund. In May 2020 the government also established a green and sustainable finance cross-agency steering group with the Hong Kong Monetary Authority and Securities and Futures Commission as co-chairs and including such bodies as the Mandatory Provident Fund Authority. Smart cities are also regarded as a solution – so how, Dr Au asked, would Venturous Group contribute?

      Mr Pang said sustainable city technologies are probably the best for addressing sustainability problems. Rapid urbanisation and climate change challenges have become the main concerns of governments, which are the most important players in sustainability issues.

      The mainland is now most important economy for smart-city development, he said. Three converging factors led to this. The mainland’s rapid technology development, and the fact that almost all citizens eschew cash; the mainland is rapidly urbanising, probably at the fastest pace in world; and there is also a growing middle class and younger generation. Mr Pang said since 2004, about 800 smart-city projects had been announced with most of these having a data collection bureau.

      Carbon trading

      Dr Au asked HSBC’s Mr Drew about Hong Kong’s prospects as a carbon credit trading hub.

      Mr Drew said Hong Kong could establish carbon markets through a localised carbon dividend scheme, taxing at one point and redistributing as a per capita dividend – this, he explained, would be the simplest approach.

      Another alternative is cap and trade – compliance markets where the right to emit is allocated and becomes transferable. The mainland’s power sector has a national market in this, covering 40% of emissions. The baselining concept is critical and tough, with emitters needing to compensate if they deviate from the baseline.

      He said in order to really cut emissions a twin approach was needed – decarbonising emissions and also demonstrating support for low-carbon alternatives. He added that offsets through trading may not be appropriate.

      Janet Li, Wealth Business Leader for Asia at investment company Mercer, said her firm had looked at carbon trading programmes. In July last year, for example, the mainland launched a national emissions trading programme. She pointed out that carbon trading programmes faced opposition from critics who saw them as a distraction and half-measure.

      Ms Li said Mercer expected this area to develop but the company did not have a complete platform yet.

      Source: HKTDC

  • United States
    • Biden-⁠Harris Administration Bringing Semiconductor Manufacturing Back to America

      Intel Announces $20 Billion Ohio Facility; Latest Company to Invest in U.S., Strengthen Domestic Supply Chains

      Semiconductors are an essential building block in the goods and products that Americans use every day. These computer chips are critical to a range of sectors and products from cars to smartphones to medical equipment and even vacuum cleaners. They help power our infrastructure from our grid to our broadband. The United States used to lead the world in global semiconductor manufacturing. But in recent decades, the U.S. lost its edge—our share of global semiconductor production has fallen from 37 percent to just 12 percent over the last 30 years.

      The COVID-19 pandemic shined a spotlight on the fragility in the global semiconductor supply chain. Experts estimate that the global chip shortage knocked off a full percentage point from U.S. gross domestic product (GDP) last year. U.S. autoworkers faced furloughs and production shut downs due to pandemic-driven disruptions in Asian semiconductor factories, contributing to large increases in the price of cars for U.S. consumers. One-third of the annual price increases in core consumer price index (CPI) last year was due to high car prices alone.

      The Biden-Harris Administration has been working around the clock with Congress, our international allies and partners, and the private sector to expand U.S. chip manufacturing capacity, bring back critical American manufacturing jobs, address the chip shortage, and ensure we are not exposed to these disruptions again. Today, Intel will announce a new $20 billion factory outside Columbus, Ohio.

      Today’s announcement is the latest marker of progress in the Biden-Harris Administration’s efforts to ramp up domestic manufacturing for critical goods like semiconductors, tackle near-term supply chain bottlenecks, revitalize our manufacturing base, and create good jobs here at home. This investment will create 7,000 construction jobs and another 3,000 permanent jobs, another sign of the strength of the American economy.

      To accelerate this progress, the President is urging Congress to pass legislation to strengthen U.S. research and development and manufacturing for critical supply chains, including semiconductors. The Senate passed the U.S. Innovation and Competition Act (USICA) in June and the Administration is working with the House and Senate to finalize this legislation. It includes full funding for the CHIPS for America Act, which will provide $52 billion to catalyze more private-sector investments and continued American technological leadership.

      Since the beginning of 2021, the semiconductor industry has announced nearly $80 billion in new investments in the United States through 2025, according to the Semiconductor Industry Association. These investments will create tens of thousands of good-paying U.S. jobs, support U.S. technological leadership, and promote security and resilience in global semiconductor supply chains. In addition to Intel’s announcement today, investments include:

      • A $17 billion Samsung factory in Texas – the result of sustained work by the Administration, including the President’s meeting with President Moon of the Republic of Korea in May.
      • Texas Instruments investing up to $30 billion in Texas;
      •  A new Global Foundries factory in New York state;
      • Cree’s intention to spend $1 billion to expand a current plant in North Carolina;
      • SK Group investments in a new U.S. R&D center; and
      • Micron to expanding U.S. production.

      The Biden-Harris Administration has led a whole of government effort to secure these critical investments.

      • President Biden prioritized domestic semiconductor manufacturing and research and development (R&D) shortly after taking office, designating semiconductor supply chains as a centerpiece of his national supply chain initiative launched in February 2021.
      • In June, the Commerce Department issued a set of recommendations on how to secure the U.S. semiconductor supply chain. Since that time, Commerce Secretary Gina Raimondo, National Security Advisor Jake Sullivan, and National Economic Council Director Brian Deese have held regular follow-up engagements with industry leaders and diplomatic partners and allies to advance practical solutions to strengthen the global semiconductor supply chain. This includes White House has met with the CEOs of multiple semiconductor companies in this effort.
      • In October, President Biden hosted a global summit on supply chains with the heads of state from 14 countries and the European Union on the margins of the G20 in Italy to discuss supply chain disruptions, with a focus on semiconductors. The President also focused on semiconductor supply chain resilience in his bilateral meetings with foreign leaders and directed the Administration to cooperate with Europe on strengthening global supply chains through the U.S.-E.U. Trade and Technology Council (TTC) and through the Quad’s focus on critical technologies.

      Investments in new foundries are critical to the long-term resilience of our semiconductor supply chains. At the same time, the Administration is working to address the near-term disruptions in semiconductor supply chains that have contributed to challenges in a number of manufacturing sectors and to price increases for U.S. consumers.

      • In April 2021, the President hosted a virtual summit with leading firms that produce chips and those that use chips to identify practical ways to discuss actions they could to address the disruptions resulting from the global chip shortage. By the end of the year, the participants had announced new partnerships between semiconductor companies and U.S. automakers to strengthen the resiliency of the automotive chip supply chain.
      • In the summer, the Administration worked with governments and companies around the world to mitigate COVID-related disruptions to semiconductor manufacturing and in September 2021 established a global early alert system to identify and address pandemic-related disruptions.
      • The Commerce Department promoted transparency in semiconductor supply chains, including through a Fall 2021 survey on the chips shortage to identify the key chokepoints in the semiconductor supply chains. Over 150 responses were received from all parts of the supply chain – producers, consumers, and intermediaries – include responses from nearly all the major semiconductor producers and the major automakers. The results of the survey will be released publicly by the end of January 2021.
      • The U.S. Department of Defense has used Defense Production Act authorities to strengthen supply chains for key defense-related semiconductors.
      Source: White House
    • Congressional Research Service Discusses Corporate Income Taxation in Globalizing US Economy

      The Congressional Research Service (CRS) of the US Library of Congress issued a new report, entitled "Corporate Income Taxation in a Global Economy" (R47003-Verision 1) to address issues emerging in the taxation of corporations in an increasingly global economy.

      The report provides a brief overview of US corporate income tax as well as shifts in US economic activity toward globalization in recent years. It further explains the rise of the intangible asset as a key economic component and lays out the basics of international income taxation.

      The report goes on to list a series of issues that arise in the sphere of corporate taxation as the US economy becomes more global, including:

      • location of tangible investment;
      • debate on value creation and digitalized companies; and
      • profit shifting:
        • the significance level of profit sharing and rules to address it;
        • transfer pricing and its rules; and
        • debt.

      Note: The CRS is an agency within the US Library of Congress and serves the US Congress by providing legislative research and analysis throughout the legislative process.

    • National Taxpayer Advocate Submits 2021 Annual Report to Congress

      The National Taxpayer Advocate (NTA) has issued its Annual Report to the US Congress as required by section 7803(c)(2)(B)(ii) of the US Internal Revenue Code (IRC). According to the NTA, Erin M. Collins, "2021 was the most challenging year ever for taxpayers."

      This 234-page Annual Report, which was submitted to both the US House Committee on Ways and Means and the US Senate Committee on Finance, includes a summary of the ten most serious problems encountered by taxpayers and offers administrative and legislative recommendations to mitigate those problems.

      In brevity, some of the most serious problems encountered by taxpayers were:

      • tax refund delays;
      • challenges in reaching US Internal Revenue Service (IRS) representatives;
      • the lack of sufficient and highly trained IRS employees;
      • tax collection policies and procedures adversely impacting low-income taxpayers;
      • difficulties in tax return filings; and
      • the lack of proactive transparency, which failed to provide timely, accurate and clear information.

      The NTA also suggested the following legislative recommendations:

      • providing sufficient funding to the IRS to improve the taxpayer experience and modernize the IRS's information technology (IT) systems;
      • authorizing the IRS to establish minimum competency standards for federal tax return preparers;
      • expanding the US Tax Court's jurisdiction to hear tax refund cases and assessable penalties; and
      • clarifying that supervisory approval is required under IRC section 6751(b) before proposing penalties.

      The IRS issued a News Release (IR-2022-11), dated 12 January 2022, to announce the NTA's Annual Report.

      Note: The Taxpayer Advocate Service (TAS), which is under the supervision and direction of the NTA, is an independent organization within the IRS whose job is to ensure that every taxpayer is treated fairly by:

      • protecting taxpayers' rights under the Taxpayer Bill of Rights;
      • helping taxpayers resolve problems with the IRS; and
      • recommending changes that will prevent the problems.
    • Congressional Research Service Discusses International Tax Avoidance and Evasion Through Tax Havens

      The Congressional Research Service (CRS) of the US Library of Congress issued a new report, entitled "Tax Havens: International Tax Avoidance and Evasion" (R40623) to address issues of tax avoidance and evasion in the US and abroad.

      The report reviews what countries might be considered tax havens, including a discussion of the OECD initiatives and lists. The report goes on to discuss the corporate profit-shifting mechanisms and the estimated revenue cost of profit-shifting activity. It also provides the same analysis for individual tax evasion.

      The report further details methods of corporate tax evasion as well as avoidance and evasion by individuals. It also provides alternative policy options to combat both corporate profit shifting and individual evasion.

      Note: The CRS is an agency within the US Library of Congress and serves the US Congress by providing legislative research and analysis throughout the legislative process.

  • Focus Africa
    • Africa in Review by the Numbers (January 2022)

      $12 million

      Value of deals closed via opportunities on our Digital Engagement platform. AfricInvest Private Credit and TDB both signed debt deals originated via their DealRooms, validating the efficacy of digital deal-making. Momentum continues to grow on the platform as we head into 2022.


      Companies profiled for Asoko clients though our Bespoke Research service. Africa-focused businesses, investors and multilateral used our corporate data and insights to support their market entry plans, map participants along their supply chains, long-list investment targets and facilitate bilateral trade and investment opportunities.


      Proportion of submissions to the Digital Engagement platform acted on by partners. The average comprises deal opportunities fed into investor pipelines as well as companies accessing visibility opportunities, KYC and business development support. Within the investment arena, our digitally enabled origination has a higher success rate than that achieved offline.


      Stake in Africa’s largest data centre services provider, Teraco, acquired by Digital Realty Trust in a deal has been valued at about $3.5 billion. The US firm, which operates 280 data centres worldwide, aims to to tap into the fast growth in Africa through the South African provider, which serves more than 600 clients, including global internet providers. (Reuters)

      $47 million

      Grant approved by Africa Development Bank Group to boost Mozambique's Special Agro-Industrial Processing Zone. This financing will help improve agricultural  productivity and agribusiness in the Niassa Province, in line with the economic diversification agenda of the national development plan 2015-35. (Africa Business)

      3,000 tonnes

      Initial daily capacity of the Naitiri Sugar Company, owned by the Rai Group in Kenya, when it starts production in Q1 this year. Capacity at the Bungoma-based plant is expected to ultimately double to 6,000 tonnes per day, helping to reduce reliance Kenya's on imports and increase competition for raw cane. (Business Daily)

      $36 million

      First close of Verdant Capital Hybrid Fund, a new fund to support micro, small and medium-sized enterprises (MSME) growth in Africa. German development bank KfW backed the fund, which will invest hybrid capital and subordinated debt instruments into inclusive financial institutions on a pan-African basis. (Africa Global Funds)

      600 KWp

      Generation capacity of a new mini-grid solar project inaugurated in Uganda, making it the most advanced mini-grid in the continent. This joint project between ENGIE Energy Access and Equatorial Power Ltd will connect more than 3000 households and 700 businesses to reliable electricity, impacting more than 15,000 people. (CEO Business Africa)


      Kenya joins South Africa as the only two countries in Africa to own a salvage boat after the Kenya Ports Authority (KPA) acquired a $16.65 million multipurpose salvage tugboat for use at Mombasa Port. The investment supports the government's ambition to boost port efficiency and drive trade through the country. (The East African)

      $100 million

      Investment by Safaricom in a new data centre in Addis Ababa. The prefabricated facility will support the telco's service rollout after winning the licence to become Ethiopia's second telecoms operator. (CEO Business Africa)


      Solar plants put out to tender by Botswana Power Corporation, inviting independent power producers to accelerate the country's deployment of renewable resources via public-private partnerships. (Afrik21)


      Reduction of mobile money charges offered by Ghana's telcos to offset the impact of the e-levy. The tax on digital transactions will be put before Parliament this month as a way to boost government revenues as more economic activity moves online. (Ghana Web)   Review by Kili Partners . Powered by Asoko Insight  
    • Central Bank of Nigeria Digitalizes Import and Export in Nigeria

      The Government of Nigeria has introduced the digitalized e-Evaluator and e-Invoicing system for taxpayers to use in the import and export sectors. Effective 1 February 2022, all import and export operations in Nigeria will require the submission of an electronic invoice authenticated by authorized dealer banks on the Nigeria single window portal – Trading Monitoring System (TRM).

      The new e-invoicing system will query and stop all imported and exported goods with unit prices that are greater than 2.5% of the verified global checkmate prices from completing Form M or Form NXP.

      The supplier/buyer is required to register for authentication and submit an e-invoice in a dedicated portal as specified by the Central Bank of Nigeria (CBN) by paying an annual subscription fee of USD 350.00

      All individual invoices with a value of less than USD 10,000 (or its equivalent in another currency) except where suppliers have an annual cumulative invoicing value equal to or above USD 500,000 (or its equivalent in another currency) are exempted from the submission of e-invoices. All import and export transactions made for supplies to security agencies, diplomatic and consular missions, and international agencies dependent on the United Nations are exempt from submitting e-invoices. Donations made by foreign governments or international organizations to foundations, charities and recognized humanitarian organizations, and goods directly supplied by a foreign government are equally exempted.

      The announcement to introduce the e-Evaluator and e-Invoicing system was made by the Trade and Exchange Department of the CBN on 21 January 2022 through Circular TED/FEM/ FPC/PUB/01/001.

    • Uganda Signs Multilateral Competent Authority Agreement on Automatic Exchange of Information on Financial Accounts (CRS-MCAA)

      According to a recent overview published by the OECD, Uganda has joined the Multilateral Competent Authority Agreement‎ on Automatic Exchange of Information Agreement (2014) (CRS-MCAA) on the introduction of the automatic exchange of information in tax matters on a reciprocal basis. The CRS MCAA is a multilateral competent authority agreement, based on article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, which aims to implement the automatic exchange of financial account information pursuant to the OECD/G20 Common Reporting Standard (CRS). The text of the CRS MCAA, background information and a list of all the signatories (status on 25 September 2021: 114 signatories) can be found here.
    • Uganda Expands Social Security Coverage

      The Ugandan government has enacted the National Social Security Fund (NSSF) (Amendment) Act 2021 (the Act) with the aim of increasing social security contribution coverage by making contributions to the NSSF mandatory for all workers in the formal sector and further allowing workers in both the formal and informal sector to make voluntary contributions to the NSSF.

      Major highlights of the Act are as follows:

      • it is mandatory for every eligible employee to register as a member and make contributions to the NSSF. The Act also obliges every employer, irrespective of the number of employees, to register with the NSSF as a contributing employer. According to the National Social Security Fund Act 1985 (NSSF Act), the employee's contribution amounts to 5% of his monthly wage while the employer's contribution amounts to 10% of the employee's monthly wage;
      • repealing the provision allowing cancellation of registration of a member if in the 2 years immediately preceding their application, the member has employed less than the minimum number of employees required (i.e. 5 employees) for compulsory registration. Previously, employers were only eligible for compulsory registration and contribution if they employed 5 people. However, voluntary registration for employers that did not meet this threshold was acceptable;
      • allowing mid-term access to benefits by members who have made contributions to the NSSF upon fulfillment of the following conditions:
        • a member must have made voluntary contributions to the NSSF;
        • a member must be 45 years and above and have made contributions for at least 10 years to the NSSF to be able to access up to 20% of their accrued benefits; or
        • a member must be a person with disability, aged 40 years and above and have made contributions to the NSSF for 10 years to be able to access up to 50% of their accrued benefits.
        Previously a person could only access their benefits at 50 years if they had retired from employment; were not engaged in any gainful occupation; or intended to engage in gainful occupation occasionally.
      • every worker can voluntarily save with the NSSF, over and above the mandatory 15% contributions. Any self-employed persons or any other person may also apply for membership and make voluntary contributions to the NSSF; and
      • a person is entitled to payment of the full balance of his savings with the NSSF if he ceases to be a member of the NSSF, in case:
        • they are employed in an organization that is exempted from NSSF; or
        • they emigrate permanently from Uganda to a country with no reciprocal arrangement for NSSF savings.

      The NSSF Act has not been amended since its enactment in 1985 but on 17 February 2021 the parliament passed the NSSF (Amendment) Bill 2021 which was assented to by the President on 2 January 2022. Earlier amendments were proposed in the NSSF Bill 2019 but were not approved due to specific clauses which caused controversial views from the public.