July 2023

  • Bulgaria
    • Bulgaria Publishes Draft Budget Act for 2023

      The Ministry of Finance has published for public consultation the draft Budget Act for 2023, which is aimed at protecting wages and preserving social security benefits. To combat inflation and strengthen the economic and social pillars for the future, the government plans to reduce expenditure, but not increase taxes.

      The key tax measures relate to the following fields:

      • corporate income taxation:
        • implementation of the Minimum Taxation Directive (2022/2523) into domestic legislation; and
        • extension of the beneficial rules for food vouchers;
      • personal income taxation:
        • increased tax relief for children; and
      • indirect taxation:
        • value added tax; and
        • excise duties.

      The Draft Budget further proposes an anti-tax evasion measure by requiring dividends to be paid out only by a transfer or deposit to a payment account, and not in cash.

      The package also includes the mid-term budget forecast for the period 2023-2025.

      The draft Budget Act and the mid-term budget forecast, published on 27 June 2023, are available here (in Bulgarian only).

  • China
    • China’s GDP expands 5.5% in H1

      China's gross domestic product (GDP) grew 5.5 percent year on year in the first half (H1) of 2023, data from the National Bureau of Statistics (NBS) showed Monday.

      China's GDP reached 59.3 trillion yuan (about 8.3 trillion U.S. dollars) in the first half, NBS data showed.

      In the second quarter, the country's GDP expanded 6.3 percent year on year, according to the NBS.

      In the first half of this year, in the face of a grave and complex international environment and arduous tasks of reform, development and stability at home, all regions and departments made great efforts to stabilize growth, employment and prices, said NBS spokesperson Fu Linghui at a press conference.

      Market demand gradually recovered, production and supply continued to increase, and economic performance, on the whole, picked up, Fu added.

      China's retail sales of consumer goods went up 8.2 percent year on year in the first half of this year, 2.4 percentage points faster than that of the first quarter, the NBS spokesperson said. Retail sales of consumer goods totaled around 22.76 trillion yuan in H1. In June alone, retail sales edged up 3.1 percent year on year.

      The country's value-added industrial output, an important economic indicator, went up 3.8 percent year on year in H1, according to the NBS. In June alone, industrial output rose 4.4 percent year on year.

      China's fixed-asset investment went up 3.8 percent year on year in H1, NBS data showed.

      The country's value-added service output went up 6.4 percent year on year in H1. The growth rate accelerated by 1 percentage point from the pace recorded in the first quarter.

      The surveyed urban unemployment rate in China stood at 5.3 percent in H1 of 2023, 0.2 percentage points lower than that in the first quarter, official data showed. On a monthly basis, the rate stayed unchanged from that in May, at 5.2 percent.

      China's per capita disposable income stood at 19,672 yuan in H1, up 6.5 percent year on year in nominal terms, data showed on Monday. After deducting price factors, per capita disposable income rose 5.8 percent from the previous year.

      Source: scio.gov.cn

    • L’Accordo sull’imposizione dei frontalieri con l’Italia è entrato in vigore

      L’Accordo relativo all’imposizione dei lavoratori frontalieri e un Protocollo che modifica la Convenzione tra la Svizzera e l’Italia per evitare le doppie imposizioni sono entrati in vigore il 17 luglio 2023. Le nuove disposizioni saranno applicabili a partire dal 1° gennaio 2024. Il nuovo Accordo sui frontalieri, che sostituisce l’Accordo del 1974, migliora notevolmente l’attuale regolamentazione sull’imposizione dei lavoratori frontalieri e contribuisce al mantenimento dei buoni rapporti tra i due Paesi.

      Con il nuovo Accordo, la Svizzera trattiene l’80 per cento dell’imposta alla fonte regolarmente prelevata sul reddito dei nuovi frontalieri che lavoreranno in Svizzera. I nuovi lavoratori frontalieri saranno tassati in via ordinaria anche in Italia. La doppia imposizione verrà evitata. Sono considerati nuovi lavoratori frontalieri coloro che entrano nel mercato del lavoro transfrontaliero dopo il 17 luglio 2023.

      Ai frontalieri che lavorano o che hanno lavorato nei Cantoni dei Grigioni, del Ticino o del Vallese tra il 31 dicembre 2018 e il 17 luglio 2023 si applica un regime transitorio. Queste persone continueranno infatti ad essere imposte esclusivamente in Svizzera, la quale verserà ai comuni italiani di confine, fino all’anno fiscale 2033, una compensazione finanziaria del 40 per cento dell’imposta alla fonte prelevata in Svizzera.

      In seguito all’entrata in vigore dell’Accordo sui frontalieri, il Dipartimento federale delle finanze ha adeguato l’ordinanza sull’imposta alla fonte per quanto attiene all’imposizione dei lavoratori frontalieri italiani. Le modifiche entreranno in vigore il 1° gennaio 2024.

      Fonte: Admin.ch

    • China to Take Measures to Promote Consumption of Home Appliances

      The State Council has listened to a report on further strengthening the prevention and defusion of major production safety risks, and adopted the Measures on Promoting Home Appliances Consumption, according to a State Council executive meeting chaired by Premier Li Qiang on June 29, 2023.

      The meeting stressed the need to implement a policy mix to coordinate the measures taken to promote home appliances consumption with those related to areas such as the renovation of old urban residential communities, the elderly friendly renovation of residential buildings, and the optimization of the country's recycling network. It said that quality and supply levels should be improved, and efforts should be made to encourage enterprises to provide customized home appliance products to boost residents' willingness to consume and improve the quality of their lives.

    • China online retail sales steadily expand in H1

      China's online retail sales logged steady growth in the first half (H1) of 2023, with emerging livestreaming e-commerce gaining steam, according to the Ministry of Commerce on Thursday.

      In the January-June period, online retail sales nationwide hit 7.16 trillion yuan (about 1 trillion U.S. dollars), up 13.1 percent year on year, said the ministry, citing data from the National Bureau of Statistics.

      The emerging livestreaming e-commerce industry has shown great vitality in this period. Key livestreaming platforms monitored by the commerce ministry sold merchandise worth 1.27 trillion yuan in the first six months of the year, with 110 million livestreaming shows held and 70 million types of products involved.

      Over 2.7 million live streamers are actively engaged in the online sales frenzy, said the ministry.

      Eight out of 18 categories of goods monitored by the ministry reported double-digit growth, the data showed.

      Specifically, sales of gold, silver and jewelry increased by 33.5 percent year on year, while sales of communication equipment rose 23.3 percent.

      Online service consumption also demonstrated a robust growth trend, with the sales of tourism products and tickets surging by 272.4 percent from the same period of 2022, and online culture and entertainment jumping by nearly 70 percent, the data revealed.

      Online retail sales in China's rural areas rose 12.5 percent year on year in H1, 3.7 percentage points faster than that of the first quarter. Rural online retail sales totaled 1.12 trillion yuan in the period, according to the ministry.

      Early data showed that China's retail sales of consumer goods maintained a relatively fast growth of 8.2 percent year on year in January-June, 2.4 percentage points higher than that of the first quarter. The country's retail sales of consumer goods totaled around 22.76 trillion yuan in the period.

    • China unveils measures to encourage private investment

      China's top economic planner unveiled detailed measures to encourage private investment further as the country moves to revive the private economy.

      The document, issued by the National Development and Reform Commission (NDRC), stressed fully recognizing the significance of promoting private investment and pledged efforts to maintain the share of private investment in fixed asset investment at a reasonable level.

      The NDRC said it would particularly recommend that private investment go into a selected number of industrial segments with great market potential and in line with national strategies and industrial policies from sectors like transport, water conservancy, clean energy, new infrastructure, advanced manufacturing, and modern facility agriculture.

      A catalog of recommended investment projects will be created, and a platform will be set up to introduce such projects to private investors, according to the NDRC.

      The NDRC also pledged to improve financial assistance for private investment projects and ensure the support of other resources like land supply. Private investment projects are encouraged to issue Real Estate Investment Trust (REIT) products, it said.

    • China Construction Bank increases loan support for manufacturing

      China Construction Bank, one of the country's largest state-owned commercial banks, has enhanced financial support for the manufacturing sector.

      According to the bank, by the end of June, its outstanding loans to the manufacturing sector exceeded 2.7 trillion yuan (about 377.85 billion U.S. dollars), expanding 21.4 percent compared with the same period last year.

      The bank's outstanding medium and long-term loans to the manufacturing sector exceeded 1.36 trillion yuan at the end of June, rising 36.23 percent year on year.

      To meet the financial needs of advanced manufacturing, strategic emerging industries and high-tech industries, the bank's outstanding loans to specialized and innovative firms increased 35 percent year on year to over 250 billion yuan during the period.

    • NFRA Issues No.2 Document Expanding Commercial Insurance Products Eligible for the Personal Income Tax Incentives

      The National Financial Regulatory Administration ("NFRA") released on July 6, 2023 the Circular on Matters concerning Commercial Health Insurance Products Eligible for the Preferential Personal Income Tax Policies, to be effective on August 1, 2023.

      The document expands the scope of commercial health insurance products that are eligible for the preferential individual income tax policies to include medical insurance products, long-term care insurance products, and sickness insurance products. It requires commercial health insurance information platforms to set up information accounts for the insureds, use the accounts to collect and record the information about all the commercial health insurance products purchased by insureds that are eligible for the preferential personal income tax policies, and support the insureds to make pre-tax deduction of personal income tax in accordance with the applicable rules. By clarifying four conditions, it also encourages qualified life insurers to carry out commercial health insurance business that is eligible for the preferential personal income tax policies.

    • China Extends, Optimizes, Improves and Ensures Implementation of Tax and Fee Reduction Policy

      The Political Bureau of the Central Committee of Communist Party of China held a meeting on July 24, 2023 to analyze the current economic situation and make arrangements for economic work in the second half of the year, according to a statement on the website of the Chinese government.

      It said that it is necessary to stick to a proactive fiscal policy and a prudent monetary policy, extend, optimize, improve and ensure the implementation of tax and fee reductions, give full play to the role of quantitative and structural monetary tools, and provide strong support for scientific and technological innovation, the real economy, and the development of micro, small and medium-sized enterprises. It stressed efforts to boost consumption of major items including automobiles, electronic products and household items, encourage spending on services such as sports, leisure and cultural and tourist services, promote the in-depth integration of digital economy with advanced manufacturing and modern services, advance the the safe and sound development of artificial intelligence, promote the well-regulated, healthy and sustained development of platform enterprises, strengthen financial regulation and steadily encourage high-risk small and medium-sized financial institutions to defuse risks through reform.

  • Focus Africa
    • Africa in Review by the Numbers (July 2023)

      $11 million Equity investment made by African Development Bank in BluePeak Private Capital Fund towards its $155 million target for final close. This financing will provide growth capital for mid-sized companies across different sectors in Africa. (Africa Market Trends) 300 Electric vehicle stations to be launched in Kenya this year by Electric Go Company to boost the e-mobility sector. Better access to charging infrastructure has supported an increase in electric car users to 1500. The government is targeting 200,000 electric cars by 2025, or 5% of all registered vehicles. (ESI Africa) 411 TEUs  Volume of goods carried by the first trans-shipment vessel to berth at Lekki Port in Nigeria. The $1.5 billion deepsea port is equipped with ship-to-shore cranes and other technology to position Nigeria as the preeminent trans-shipment hub in West Africa. (Arise News)

      $6 billion Financing deal signed by United Bank of Africa and Africa Continental Free Trade Area Secretariat to offer support to small and medium-size enterprises (SMEs) across Africa. This three-year partnership will promote development of SMEs under four sectors which are largely import-dependent. (Nigerian Tribune) 3.5%  Proportion of global foreign direct investment (FDI) allocated to Africa in 2022. The $45 billion of FDI was a decline from the record $80 billion delivered in 2021, according to UNCTAD's World Investment Report. Despite accounting for a small slice of overall FDI, the continent is over-represented for large-scale works, and is home to six of the 15 greenfield projects worth over $10 billion announced in 2022. (Africa Business Communities) 50,000 Smallholder farmers in Zambia to benefit from off-grid solar systems as part of a $4.4 million deal from Beyond the Grid Fund for Africa. Financed by Norway, the financing will help to scale the operations of two energy service companies serving farmers and families in rural and peri-rural areas. (ESI Africa) $1.8 billion Estimated untapped value of the manufactured food sector in the African Continental Free Trade Area lost through the export of raw goods, according to a recent UNCTAD report. (African Business) 300 tonnes  Value-added meat from Ugandan company to be exported to Egypt monthly. This move is part of Uganda's strategy in positioning itself to capture a larger share of the Middle Eastern meat market of $100 billion. (Africa Food Business) 48 MW Solar electricity to be produced in Tanzania by 2024 in a bid to meet the growing demand of power supply for increasing development projects. This project will help improve power reliability that is required to promote the economy of the East African country. (Daily News) 3 Food operations owned by Dangote Industries to merge into a single entity, uniting Dangote Rice, Dangote Sugar and salt-maker NASCON Allied Industries. The planned merger comes after BUA Group consolidated its food companies nearly three years ago, creating Nigeria's largest listed consumer goods company by market value. (Premium Times) 27 million litres  Fuel shipped from Kenya to Uganda through the Kisumu oil jetty since it became operational at the beginning of 2023. Landlocked Uganda is increasingly turning to Lake Victoria to import fuel as road transportation costs rise. Kenya hopes the jetty will help fend off competition from Tanzanian fuel supply routes. (Business Daily) $1 billion Exposure exchange agreed between the African Development Bank (AfDB) and its counterpart in Asia to allow the bank provide African countries with additional financing while complying with risk-management obligations. The move is aligned with the G20 Action Plan to optimise multilateral development banks' balance sheets without impacting credit ratings. (Ethiopian Monitor)

    • Rwanda, Government Approves Amendments to Income Tax Law

      On 20 July 2023, the parliament adopted the law amending the law establishing income tax.

      The adopted law will enter into force following its promulgation by the President and its publication in the official gazette.

      The above changes were announced by the parliament through its official Twitter handle.

      Further developments of the adopted law will be reported in detail as they occur.

  • Hong Kong
    • Hong Kong – Interest on Tax Reserve Certificates

      The Government Gazette published today (June 2) contains a Legal Notice to the effect that the Secretary for Financial Services and the Treasury has authorised a change in the rate of interest payable on Tax Reserve Certificates. From June 5, 2023, the new annual rate of interest will be 0.8083 per cent against the current rate of 0.7667 per cent, i.e. the new rate will be $0.0674 per month per $100.

      Tax Reserve Certificates bear simple interest, and interest is calculated monthly (including part of a month) from the date of purchase to the date of payment of tax.

      Interest is only credited when certificates are used to pay tax and no interest is due where the principal value of a certificate is repaid to its holder.

      The rate of interest payable on Tax Reserve Certificates is periodically revised in line with the market trend. Currently, it is reviewed every month based on the average prevailing interest rate for the 12-month time deposit for $100,000 to $499,999 offered by the three note-issuing banks.

      The new rate will apply to all certificates purchased on or after June 5, 2023. Certificates purchased before June 5, 2023, will continue to earn interest at the rates prevailing on their respective purchase dates. Below is a summary of the interest rates for the past periods:

      For certificates purchased on or after October 3, 2022 and before      November 7, 2022: 0.1750 per cent per annum
      For certificates purchased on or after November 7, 2022, and before December  5, 2022:  0.3167 per cent per annum
      For certificates purchased on or after December 5, 2022, and before    January 3, 2023:  0.4000 per cent per annum
      For certificates purchased on or after January 3, 2023, and before          March 6, 2023: 0.5833 per cent per annum
      For certificates purchased on or after March 6, 2023, and before                April 3,  2023: 0.7500 per cent per annum
      For certificates purchased on or after April 3, 2023, and before                  June 5, 2023: 0.7667 per cent per annum
      For certificates purchased on or after June 5, 2023, until further notice:  0.8083 per cent per annum
      This is always subject to the general rule that interest ceases to accrue after 36 complete months.   Source: IRD.gov.hk
    • Government welcomes passage of Stamp Duty (Amendment) (No. 2) Bill 2023

      The Government welcomes the passage of the Stamp Duty (Amendment) (No. 2) Bill 2023 by the Legislative Council today (June 21), which implements a measure to trawl for talent as announced in the 2022 Policy Address by introducing a refund mechanism under the Buyer's Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) regimes to attract talent from around the world to stay in Hong Kong for long-term development, thereby enriching the talent pool of Hong Kong. The Deputy Chief Secretary for Administration, Mr Cheuk Wing-hing, said, "The refund mechanism will bring the overall stamp duty charged on eligible incoming talents on par with that charged on first-time home buyers who are Hong Kong permanent residents (HKPRs), hence reducing the cost of home purchase for those incoming talents who are able and wish to buy residential properties in Hong Kong. We believe that this measure will help incentivise incoming talents to purchase homes and reside in Hong Kong in the long run, which would inject impetus to the growth of Hong Kong." Under the refund mechanism, for an eligible incoming talent who has entered Hong Kong under a designated talent admission scheme, acquired a residential property in Hong Kong on or after October 19, 2022 (i.e. the date of announcement of the 2022 Policy Address), and subsequently becomes an HKPR, he/she can apply for a refund of the BSD and the NRSD paid for the residential property which, at the time it was purchased, was the applicant's only residential property (save for replacing property) and the applicant still holds on the date of the application for refund. The Ad Valorem Stamp Duty at Scale 2 rates (i.e. the rates applicable to first-time home buyers who are HKPRs) will still be payable.

      Source: ird.gov.hk

  • India
    • GST Council Recommendations Include Setting 28% GST on Online Gaming, Exemption for Start-ups in Space Sector

      On 11 July 2023, the Goods and Services Tax Council (GST Council), in its 50th meeting, made certain recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining GST compliance. These recommendations will be implemented through circulars/notifications amending the law.

      The recommendations are set out below.

      Tax rates

      • Online gaming and horse racing will be included in schedule III as taxable actionable claims and will be taxed at the uniform rate of 28%. Tax will be imposed on the face value of chips purchased in casinos, on the full value of bets placed with bookmakers/totalizators in the case of horse racing and on the full value of bets placed at online gaming.
      • The GST rate is reduced from 18% to 5% for specified products like uncooked/unfried snack pellets, imitation zari thread or yarn, fish soluble paste and Linz-Donawitz (LD) slag.


      • Specific medicines imported for personal use as well as medicines/food items imported for treatment of rare diseases will be exempt from GST.
      • GST exemption for satellite launch services supplied by the Indian Space Research Organization (ISRO), Antrix Corporation Limited and New Space India Limited (NSIL) will be extended to include services supplied by organizations in the private sector to encourage start-ups.

      Trade facilitation

      • Services supplied by a director of a company to the company in his personal capacity, such as supplying services by way of renting of immovable property to the company or body corporate, are not taxable under the reverse charge mechanism (RCM). Only those services supplied by a director as, or in the capacity of, director of that company or body corporate will be taxable under the RCM in the hands of the company or body corporate.
      • The goods transport agency (GTA), paying GST under forward charge, will not be required to furnish a declaration every year. A declaration once furnished will remain valid until it is cancelled.
      • The value of supplies of goods from duty free shops at arrival terminals in international airports must be included in the value of exempt supplies for the purpose of the reversal of input tax credit.
      • Relevant circulars will be issued to provide clarity on issues such as (i) liability for tax collection at source (TCS) in cases where multiple e-commerce operators (ECOs) are involved in a single transaction for the supply of goods or services or both; and (ii) merely holding securities of a subsidiary company by a holding company cannot be treated as a supply of services and taxed under GST.


      • E-way bill generation will be mandatory for intra-state movement of gold and precious stones.
      • Rules on GST registration will be amended to provide that:
        • bank account details are furnished within 30 days of the grant of registration or before filing of Form GSTR-1/ IFF, whichever is earlier;
        • suspension of GST registration and restriction on filing GST returns on failure to furnish valid bank account details; and
        • physical verification of business premises in the presence of the applicant may not be required except in high risk cases.
      • Exemption from filing the GSTR-9/9A for small taxpayers (with an aggregate annual turnover up to INR 20 million) continues for FY 2022-23.
    • The PLI Scheme: A Game-Changer for India’s Manufacturing Sector

      Production Linked Incentive scheme (PLI) has become a crucial part of Hon’ble Prime Minister’s vision of making India a $ 5 trillion economy. In the post-pandemic scenario, PLI is proving to be a huge catalyst in creating ‘AatmaNirbhar Bharat’.

      Sector-specific Focus:  

      PLI scheme is strengthening India’s manufacturing sector by incentivising domestic and foreign investments and by developing global champions in the manufacturing industry.

      The scheme currently targets 14 sectors of strategic and economic importance for India’s economic growth. By providing targeted incentives and support to sectors like electronics, automobiles, pharmaceuticals and MedTech devices, food, telecom, solar, textiles, drones, the scheme encourages companies to invest in areas where India has the potential to become a global leader.

      Through the PLI scheme, the government is encouraging companies to increase their manufacturing capabilities by spending on plant, machinery, equipment and associated utilities, R&D, and transfer of technology. The government, in turn, is providing incentives for a period up to five years on the increased manufacturing. The percentage of incentives varies for various sectors keeping in mind the specific needs of the industry.

      As a result of the policies, early estimates of the impact of PLI scheme show encouraging trends in some sectors. As per the Economic Survey, the PLI scheme for large-scale electronics manufacturing has attracted an investment of INR 4,784 crore and contributed to a total production of INR 2.04 lakh crore, including exports of INR 80,769 crore (as of September 2022). As per the data released by the Ministry of Electronics and Information Technology, PLI scheme for large scale electronics has emerged as the most successful scheme while generating an employment of 28,636 and leading to a 139 per cent increase in exports of smartphones over the last three years. Similarly, under the scheme, the automobile and auto component industry has attracted proposed investment of INR 74,850 crore over a period of five years.

      According to the Indian Staffing Federation, this massive boost in production due to the PLI scheme has the potential to double the existing workforce across sectors.

      PLI scheme has also been applauded by the industry as Mr Sandip Patani, Director, Microtex Processors Pvt Ltd, in interaction with Invest India, called it “a major boost for the manmade and technical textile sector manufacturing in India” whereas Ms Shuba Nagesh, India Head Supply Chain, Wipro GE Healthcare, termed it “a huge shot in the arm of the medical industry.”

      Future Prospects

      As many other beneficiaries have emphasised, the PLI scheme is emerging as a game-changer for many critical and emerging industries. Hon’ble Prime Minister also highlighted, “Not only is it benefiting the PLI sector for which the scheme is meant, it will greatly benefit the entire ecosystem associated with that sector.”

      The schemes are likely to demonstrate positive results in increasing manufacturing, job creation, and export. For instance, the PLI scheme is likely to facilitate the expansion of food processing capacity by nearly INR 30,000 crores and create additional direct and indirect employment opportunities for about 2.5 lakh persons by the year 2026-27.Similarly, in the pharmaceutical sector, the PLI scheme aims to boost domestic production of critical drugs and reduce dependence on imports.

      The government is actively monitoring the progress of the PLI schemes and making necessary adjustments to enhance its effectiveness. Continuous engagement with industry stakeholders, streamlining of processes, and ensuring ease of doing business are some of the measures taken to facilitate the smooth implementation of the schemes.

      Source: Investindia.gov.in

    • India-Middle East Food Corridor: Exploring The Potential

      Embarking on a journey of flavours and economic cooperation, the India-Middle East food corridor emerges as a transformative initiative that holds the power to revolutionize trade and economic ties between India and the Middle East.

      Bilateral Relations between India and the UAE

      The India-UAE diplomatic ties have strengthened in recent years. Bilateral trade hit record levels in FY 22-23, surging from $ 72.9 Bn (FY 21-22) to $ 84.5 Bn (FY 22-23), with a remarkable 16% year-on-year growth rate. Key sectors include mineral fuels, electrical machinery, gems and jewellery and automobiles.

      UAE is the 7th largest investor in India in terms of FDI, amounting to $ 3.35 Bn in FY 22-23. The Comprehensive Economic Partnership Agreement (CEPA) signed in Feb 2022 is acting as a growth engine for India-UAE bilateral trade and aims to boost trade further, targeting over $ 100 Bn in goods and over $ 15 Bn in services within five years.

      India-Middle East food corridor: Origin 

      UAE has made significant investments in India in past years to build a food corridor and guarantee food security of the Emirates and other Middle Eastern countries. Multiple UAE-based companies including Emaar Group and DP World have been carrying out substantial investments for the construction of food parks and providing supply chain solutions in India.

      On July 14, 2022, the inaugural “I2U2” summit witnessed the coming together of the heads of government from India, Israel, the UAE and the US. This historic event highlighted the concept of food corridor, indicating the formation of a US-sponsored "Middle-East squad." During the summit, the UAE made a significant announcement of $ 2 Bn investment towards the construction of food parks in India that will leverage advanced agritech, clean tech, and renewable energy technologies from Israel and the US.

      Alongside India's collaboration with the UAE, Israel's agritech and clean tech partnerships are playing a pivotal role in supporting India's efforts to achieve its objectives. India has gained from Israeli expertise and technologies in horticulture mechanization, micro-irrigation and post-harvest management. Israeli drip irrigation technologies are now widely utilized in India. Additionally, Israeli companies and experts are contributing their knowledge to enhance dairy farming in India.

      India-Middle East Food Corridor: The Vital Role of India

      During the FY 2022-23, the UAE emerged as the second-largest importer of agricultural products from India, amounting to $ 1.9 Bn (6.9% of India's total agricultural exports during that period). Rice and wheat being the top items amounting to $ 486 Mn and $ 150 Mn respectively.

      The UAE, which is heavily reliant on import of staple food items, has set the objective of achieving food access and supply chain crisis readiness. India, being the second-largest producer of food in the world, is a crucial ally in the UAE's attempts to improve food security. Moreover, given its advantageous location in the Gulf region, the UAE has the potential to serve as the logistical and distribution hub for the corridor.

      By forging a strong alliance with India through this corridor, the UAE can mitigate the risks associated with food supply disruptions. This collaboration not only strengthens bilateral ties but also reinforces the shared commitment towards fostering regional stability and prosperity.

      India’s Agricultural Advancements for Enhanced Food Production

      Alongside the UAE's substantial investment of $ 2 Bn in the development of food parks in India, the Indian government has undertaken proactive measures to establish food parks and enhance trade relations with various nations. The Union Budget 2023-24 announced a substantial investment in Agriculture Accelerator Fund to encourage agri startups.

      • The Ministry of Food Processing Industries has implemented the Mega Food Park Scheme (MFPS) to establish modern infrastructure along the entire value chain from farm to market in the food processing sector. As a part of this initiative, the Ministry granted approval to 41 Mega Food Park projects, out of which 24 are currently operational.
      • Under the PMKSY (Pradhan Mantri Kisan Sampada Yojana), a comprehensive range of initiatives has been implemented across the country including the approval of 41 Mega Food Parks, 376 Cold Chain projects, 79 Agro-Processing Clusters, 482 proposals for the Creation/Expansion of Food Processing & Preservation Capacities (CEFPPC), 61 projects for the Creation of Backward and Forward Linkages, 46 Operation Green projects and 183 approved projects under Food Testing Laboratories out of which 140 projects are completed.
      • In 2022, the Indian Government implemented a range of innovative initiatives like 558 unique identification systems, Kisan drones for crop evaluation, digitisation of land records and nutrient pesticide spraying.

      The Indian agriculture and food processing sector hold immense potential for growth and development. With substantial government support and abundant arable land, the India-Middle East food corridor presents a remarkable opportunity for India to realize its goal of augmenting the value of food production.

      UAE’s agritech sector has shown remarkable growth in recent years. Investments from venture capital firms in AgriTech startups in UAE were expected to exceed $ 500M by 2023. Fostering partnerships with UAE-based agritech startups like RightFarm, Madar Farms etc can also open new avenues for Indian startups to access advanced technologies and investment opportunities.

      In conclusion, the India-Middle East food corridor represents a pivotal alliance between India and the UAE, driven by the shared goal of ensuring food security and fostering economic prosperity. With a rich history of bilateral relations and a pressing need to reduce dependence on food imports, the corridor has emerged as a promising solution. As India continues to invest in infrastructure development and the UAE commits substantial funding for food parks, the stage is set for a transformative collaboration.

      The food corridor not only addresses the immediate challenges of food security but also paves the way for stronger regional ties, sustainable agriculture and a resilient future for both nations. Together, India and the UAE are poised to embark on a remarkable journey of shared growth, mutual prosperity, and a more secure food landscape for generations to come.

      Source: Investindia.gov.in

  • Singapore
    • Singapore: new GST Rate

      As announced in Minister of Finance’s Budget 2022, the GST rate will increase from 8% to 9% on 1 January 2024. The rate change affects any GST-registered business that sells or purchases goods or services that are subject to the standard rate of GST. To ensure a smooth transition, businesses must follow some transactional rules to be prepared for the rate adjustment.

      Update Price Display

      All price displays with effect from 1 Jan 2024 must be inclusive of GST at 9%. This necessitates updating prices across all sales channels. Businesses have the option to present two prices:
      • One applicable before 1 Jan 2024 showing prices inclusive of GST at 8%; and
      • One applicable from 1 Jan 2024 showing prices inclusive of GST at 9%.
      If prices remain unchanged, businesses are not required to revise displayed prices, but they must still account for GST (9/109) on sales from January 1, 2024, onwards. Update Accounting and Billing Systems 

      To comply with the substantial changes associated with the GST rate adjustment, businesses should prepare the invoicing systems to accurately calculate taxes, issue invoices, and file GST returns in accordance with the new requirements.

      Reverse Charge Business

      GST-registered businesses subject to reverse charge (“RC business”), must account for GST at 9% on the services you procure from overseas suppliers (“imported services”) on or after 1 Jan 2024.

      Diacron Assistance for a smooth Transition

      Failure to account for GST on your supplies at the correct rate may attract penalties. Being prepared for GST rate change will help you avoid such increases to your business and compliance costs.

      Diacron expertise can help you understand the implications and guide you through an efficient and effortless update to the new GST requirements, ensuring compliance.

      For further information and assistance please contact us at info@diacrongroup.com

    • Singapore: Documents required for Employment Pass

      When submitting an Employment Pass application, candidates need to upload documents (e.g. candidate’s passport page showing personal particulars).

      Documents required

      • Personal particulars page of candidate’s passport. If the candidate’s name on the passport differs from that on their other documents, also the upload of an explanation letter and supporting documents (e.g. deed poll) is required.
      • Company’s latest business profile or instant information registered with ACRA.
      Other documents may be asked during the application review. For example, documents to prove that the salary declared will be paid. For non-English documents, the candidate must upload the original document together with an English translation as 1 file. The translation can be done by a translation service provider.

      Changes to verification requirement

      With the implementation of COMPASS, post-secondary diploma and above qualifications declared to MOM will have to be supported with a verification proof. This requirement applies to new EP applications from 1 September 2023, and renewals from 1 September 2024.

      Employers who need points from these qualifications in COMPASS have to declare them in the EP application. Otherwise, there is no need to declare qualifications.

      Verification proof requirements

      Employers must ensure that their candidates’ qualifications are authentic and were awarded by accredited institutions.

      If the qualification's You need to provide verification proof for
      Awarding institution cannot be found in application dropdown list Both:
      • Authenticity of the qualification
      • Accreditation status of the institution
      Awarding institution can be found in dropdown list
      • Authenticity of the qualification

      Authenticity checks confirm that the candidate was awarded the qualification. Accreditation checks confirm the qualification is recognised by the local government authority.

      Only verification proof from the sources listed below will be accepted:

      A variable fee will be charged for the verification check purposes by these listed companies. 

      List of acceptable institutions is available here 

      Source: mom.gov.sg

  • Switzerland
    • Federal Council Launches Consultation on Longer Loss Carry Forward Period

      On 28 June 2003, the Swiss Federal Council opened the consultation process on legal amendments providing for an extended loss carry forward period.

      The Swiss parliament passed motion 21.3001 in June 2022 extending the loss carry forward period from 7 years to 10 years in the Federal Direct Tax Act (DBG) and the Federal Act on the Harmonization of Direct Taxes of the Cantons and Municipalities (StHG). With the measure, the parliament aims to facilitate the recovery of companies affected by the Covid-19 pandemic, but it should also benefit all companies and should apply to losses from 2020 onwards. For companies that suffered severely during the Covid-19 pandemic, the extended loss offset may facilitate the reconstruction of the business under certain circumstances. The measure is also likely to benefit start-ups that need a longer build-up period before they can generate profits.

      The consultation period runs until 19 October 2023.

  • United Arab Emirates
    • DMCC Maintains Year-On-Year Peak Performance, Breaks 23,000 Companies In H1 2023

      DMCC – the world’s flagship free zone and Government of Dubai Authority on commodities trade and enterprise – welcomed 1,456 new member companies to its business district in the first half of 2023, recording a near identical 6-month performance since its record-breaking first half in 2022 when it registered 1,469 new companies.

      The strong performance continues to be driven by the unique offering provided by DMCC in line with its commitment to continuously enhance the ease of doing business. It also means that today DMCC is home to over 23,000 member companies from across the globe.

      Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer, DMCC, said: “We are proud of our remarkable journey and registering strong achievements across every sector we operate in. Today, we stand at an unprecedented 23,000 companies while also contributing over 11% to Dubai’s FDI. After such an exceptional half year performance and with many exciting plans still in the pipeline, we look forward to another successful second half and to unlocking new opportunities for companies to do business and connect with the world.”

      Feryal Ahmadi, Chief Operating Officer, DMCC, added: “Our performance in H1 2023 is a testament to our relentless efforts in driving innovation and embracing the dynamic needs of businesses worldwide. We have created an ecosystem where the ease of doing business attracts and enables record-breaking numbers of companies from around the world to settle in Dubai and succeed. By facilitating trade, attracting foreign direct investment and cultivating strategic partnerships, DMCC is propelling the evolution of Dubai as a thriving hub for business. We remain dedicated to supporting the growth and success of all our member companies.”

      Strengthening Position as the Business District of Choice

      Despite the challenging global economic environment, DMCC continued to attract a broad range of multinationals, SMEs and entrepreneurs from all around the world through its unique value proposition.

      Building on the record-breaking performance achieved in 2022, during which more than 3,000 companies joined the free zone, DMCC saw strong growth from key target markets including Israel, China and India.

      Promoting Trade and Attracting FDI to Dubai

      With DMCC worth approximately 11% of all foreign direct investment (FDI) to Dubai, the free zone continued to promote Dubai as a prime destination for FDI and a gateway to global trade, hosting its flagship Made for Trade Live roadshows in a number of key target markets, including Spain, South Korea, China, India and the United Kingdom.

      Designed to educate the market about its world-class infrastructure, unique industry-specific offering, wide range of services and seamless business support, DMCC hosted 187 webinars and physical events in the first half of 2023, attracting over 17,929 attendees.

      Following the successful roadshow across Mumbai, Surat and Jaipur in May, DMCC partnered with business services firm PP Shah and Associates to open a representative office in Mumbai. Providing a one-stop solution for Indian businesses looking to expand through Dubai, the new office will further boost the bilateral relationship in support of the UAE-India Comprehensive Economic Partnership Agreement (CEPA) signed last year.

      In support of the similarly growing commercial ties between the UAE and China, DMCC hosted over 200 Chinese business leaders during a dedicated China Business Day to boost the USD 200 billion China-UAE bilateral trade growth by 2030. More than 600 business leaders also attended DMCC’s roadshows in Shanghai, Guangzhou and Chongqing.

      In June, DMCC signed an agreement with the Administrative Committee of Beijing Daxing International Airport Economic Zone to achieve greater strategic collaboration on business and trade and a Memorandum of Understanding (MoU) with the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone to cooperate in areas such as innovation, commerce, logistics and trade.

      Driving Global Commodities Trade

      DMCC continued to facilitate trade across a wide range of important commodities, including gold, diamonds, precious metals and stones as well as agricultural produce such as tea and coffee, supporting the advancement of the global commodities market and cementing the position of Dubai as a leading hub for commodities trade.

      To further strengthen the position of Dubai as a global hub for diamond trade, DMCC announced the establishment of the Tender Best Practice Forum Code of Conduct under the Dubai Diamond Exchange (DDE), representing the first bourse-led initiative to advance industry best practice in the world.

      DMCC also supported the leading international Jewellery, Gem & Technology Dubai (JGT Dubai) tradeshow as the official partner of its second edition which was held in February 2023. Building on the success of the diamond story, DMCC will host the world’s first Lab-grown Diamond Symposium in July 2023, bringing together growers, manufacturers, retailers and financial institutions to identify opportunities and challenges to help shape the future of the LGD industry.

      As a result of these extensive efforts, the Ministry of Economy issued a resolution to confirm that the DDE is now included in the official list of the organisations that represent rough diamond traders and regulate their trade in accordance with the rules and regulations of the World Federation of Diamond Bourses and the World Diamond Council. This is a significant step towards industry self-regulation, testament that DDE operates in accordance with global standards and contributes to the responsible and transparent trade of diamonds.

      DMCC also supported the advancement of the coloured gemstones industry, which forms an integral part of its long-term growth plan. Held under the theme ‘The Future of Coloured Gemstones’, DMCC hosted the International Coloured Gemstone Association (ICA) Congress 2023 in February, convening key players and industry stakeholders to advance the global trade of coloured gemstones.

      The different agricultural commodities supported by DMCC also saw strong growth in H1 2023. DMCC signed an MoU with the Bharat Subcontinent Agri Foundation (BSAF) that will see the two entities collaborate to advance the global agri commodities by partnering in FoodTech and AgriTech projects, sharing prospective business opportunities, and transferring knowledge through exhibitions and conferences.

      Hosted by the DMCC Tea Centre under the theme of “Unpacking the Future of Tea: From Consumer Trends to New Market Opportunities”, the Global Dubai Tea Forum 2023 welcomed over 300 industry experts and professionals including traders, producers, suppliers, buyers and governments from across the globe. Seeking to encourage meaningful dialogue on the most critical challenges as well as growth opportunities within the tea industry, GDTF plays a major role in shaping the future of the industry and facilitating its growth.

      DMCC Tradeflow, a fully digital registry for the possession and ownership of commodities stored in UAE-based facilities, saw strong growth across a number of key areas. The platform handled approximately 250 kg of gold bars and managed 6.3 million carats of rough diamonds in H1 2023. With over 78,800 Shariah-complaint transactions processed, it recorded a total value of AED 1.02 trillion in Islamic Finance transactions, a 37% increase over H1 2022. The first half of the year also saw Warrant Souq, a seamless marketplace for trading commodities, being introduced on DMCC Tradeflow.

      Pioneering Innovation and Crypto Technologies

      DMCC Crypto Centre continued to supplement its comprehensive offering by forming a number of strategic partnerships and agreements throughout the first half of the year. This included a partnership with the global crypto giant Bybit, in which the exchange will provide financial support totalling AED 500,000 for new crypto businesses as well as become the official listing partner for the DMCC Crypto Centre. Similarly, Enya Labs was introduced as the technology and ecosystem partner, utilising Boba Network to offer access and provide technical support to members interested in scaling their businesses.

      Launched in support of the increasingly growing global and regional video gaming industry, the DMCC Gaming Centre has become one of the leading clusters of gaming and esports businesses in the MENA region with over 70 members. The Centre offers a comprehensive ecosystem that provides everything gaming and esports businesses need to scale their operations globally, providing a home to any type and size of gaming businesses.

      DMCC also launched a special edition of its flagship Future of Trade report titled ‘Gaming in the Middle East and North Africa (MENA): Geared for growth’. The report gathered contributions from industry influentials to establish the critical drivers of the accelerated growth of the industry in the region and beyond, expecting revenues to almost double by 2027 from 2021 in the MENA region and reach USD 6 billion.

      Home to over 290 companies in the e-commerce space including Deliveroo, Instashop, Cafu, Class Pass and JUSTLIFE, DMCC also launched the DMCC E-Commerce Ecosystem to capitalise on burgeoning demand in the sector and accelerate its growth across the region. Launched in partnership with the largest self-storage provider in the Middle East, The Box, companies will have access to an accelerator programme and tailored business packages.

      Redefining Dubai’s Urban Landscape

      DMCC achieved significant progress with its much-awaited Uptown Dubai district, with the flagship 81-storey skyscraper Uptown Tower nearing completion. In March 2023, the ‘SO/ Uptown Dubai Residences’ branded units by Ennismore were launched, including 227 signature residences on the top 28 floors of the tower. Mace Group, the renowned global consultancy and construction firm, has been appointed as the building operations management entity to ensure the delivery of industry-leading services.

      DMCC also entered a strategic partnership with Brewer Smith Brewer Group (BSBG) that will see the global architecture, design and engineering firm deliver the second phase of the thriving district – two mid-rise towers of 28 and 21 storeys featuring a total of approximately 67,500 square metres of commercial space and 5,000 square metres for retail and F&B.

      As the master developer of Jumeirah Lakes Towers (JLT), DMCC continued to work on further enhancing the community. This included forming a partnership with Ellington Properties to develop Upper House, a residential development valued at AED 1.2 billion; another with Danube Properties to re-define luxury living through Viewz, twin high-rise towers of apartments and sky villas with Aston Martin furnished interior common areas and amenities that are valued at over AED 1.4 billion; and with Sobha Realty to develop Verde by Sobha, its first project in JLT which is estimated to generate sales revenue of AED 1.6 billion once completed.

      Source: Media Office - Government of Dubai

    • United Arab Emirates clarifies rules relating to Corporate Tax Groups

      The Ministry of finance has clarified the following rules regarding related tax grouping for corporate tax purposes.

      Ownership requirements

      The conditions specified under the law shall be met continuously throughout the relevant tax period. Besides, the definition of share capital shall include the nominal issued and paid-up share capital, or membership or partnership capital of each subsidiary, as applicable.


      The parent company, as well as the subsidiary or subsidiaries, must be resident persons that are not considered residents for tax purposes in another jurisdiction under a relevant international agreement in force in the UAE. Where a member of a tax group becomes a resident for tax purposes in another country or foreign territory, the relevant member shall be treated as leaving the tax group from the beginning of the tax period in which it became a resident for tax purposes in such another country or foreign territory.

      Transactions prior to forming or joining a tax group

      Transactions between members of a tax group shall not be eliminated insofar as a member has recognized a deductible loss in a tax period in respect of those transactions prior to joining or forming the tax group until such deductible loss is reversed in full. If the transaction is not eliminated, the tax group shall include any income in relation to that transaction in determining the taxable income of the tax group for the tax period in which that income arises up to the amount of the deductible loss that was previously deducted prior to joining or forming the tax group.

      Date of formation or joining of a tax group

      The application to form a tax group or to join an existing tax group must be submitted to the authority before the end of the tax period within which the formation or joining of a tax group is requested.

      Assets, liabilities, financial positions of members of a tax group

      Transactions between the Parent Company and each Subsidiary that is a member of the Tax Group shall include:

      • transactions between two or more subsidiaries that are members of the same tax group; and
      • valuation adjustments and provisions in relation to transactions between two or more members of the same tax group.

      Relief for pre-grouping tax losses

      The amount of pre-Grouping Tax Losses of a Subsidiary that can be used to offset the Taxable Income of the Tax Group in a Tax Period shall be the lesser of the following two amounts:

      • the taxable income of the tax group that is attributable to that subsidiary; or
      • the tax loss that can be used to reduce the taxable income of the tax group in the relevant tax period under clause (2) of article (37) of the corporate tax law.

      Ministerial Decision No. 125 of 2023 on tax group for corporate tax purposes was published on the official website on 22 May 2023.

    • Hamdan bin Mohammed reviews report outlining Dubai’s economic progress in H1 2023

      His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council, said Dubai continues to reinforce its position as a major global economic hub, guided by the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

      Driven by HH Sheikh Mohammed’s visionary strategy to enhance sustainable economic growth and raise global competitiveness, Dubai has emerged as one of the world’s safest and most attractive cities to live, visit and work.

      Reviewing a report on Dubai’s economic progress in the first half of 2023, HH Sheikh Hamdan bin Mohammed said: “Our economic accomplishments, as well as our future goals, have been shaped by rigorous strategic planning, the exemplary efforts of our institutions, and our remarkable resilience and adeptness in navigating global challenges and the rapidly evolving economic environment. Such accomplishments are testament to the trust placed by major investors, international institutions and business leaders in Dubai.

      “Dubai’s economic performance indicators for the first half of 2023 have exceeded expectations. These exceptional results bolster our outlook for record results in the coming months. We look forward to a new, strong beginning in 2024, during which we seek to further enhance the business environment and accelerate economic growth in order to contribute to the goals of Dubai Economic Agenda D33,” he added.

      “Dubai further consolidated its status as the world’s leading tourist destination in the first half of 2023. We welcomed more than 8.5 million international visitors in the first six months of the year while Dubai Financial Market (DFM)-listed companies recorded a total market value of AED652 billion. Dubai also strengthened its status as one of the world’s top three hubs for wealth owners, and one of the fastest-recovering cities since the COVID-19 pandemic. We are very proud of what we have achieved so far this year, and the confidence that we have inspired in the global community,” he further said.

      Global role model Dubai’s economy recorded strong growth across various sectors in the first half of 2023, supporting the objectives of the Dubai Economic Agenda D33 and HH Sheikh Mohammed bin Rashid’s vision to make Dubai a global role model for economic resilience, growth, diversification and prosperity. Leading the charts for the second year running, Dubai was named the world’s top-ranked destination in Tripadvisor’s Travellers' Choice Awards 2023, further contributing to the D33 goal of making Dubai one of the world’s three top destinations for tourism and business.

      More than 8.5 million international visitors Proving its ability to overcome challenges brought by global changes and the renewed momentum of its tourism sector, Dubai welcomed more than 8.5 million international visitors during the first six months of 2023.

      Wealth magnet Dubai also emerged as one of the world’s three most attractive cities for the wealthy and one of the cities that have recovered the fastest from the COVID-19 pandemic thanks to its strategic location, robust infrastructure and economic growth.

      The emirate’s growing attractiveness for wealth owners supports the goal of the Dubai Economic Agenda D33 to increase foreign direct investment inflows to an annual average of AED60 billion over the next decade, supported by efforts to nurture investor confidence and further enhance regulatory and legislative frameworks.

      Outstanding financial market performance The Dubai Financial Market was one of the best-performing stock markets in the first half of 2023, with its index rising 14% to close at 3,792 points. The market value of listed companies increased by AED71 billion to reach AED652 billion, while trading volumes rose to over AED46 billion. Institutional trading in DFM rose to 57% of trading value while foreign trading grew to 48%.  Nasdaq Dubai also recorded strong growth in 2023, with the value of listed Sukuk rising to $75 billion, making it one of the world’s leading hub for Sukuk listings. These results further support D33’s objective of making Dubai one of the world’s top four financial centres.

      Robust real estate performance Dubai’s real estate sector continued to experience demand growth in the first half of 2023, with total transactions reaching AED285 billion. This robust performance supports the objectives of D33 to create a highly competitive environment and infrastructure and make Dubai the world’s best place to live, visit and work.

      Source: mediaoffice.ae

  • United Kingdom
    • United Kingdom Sets Out Draft Tax Legislation for Next Finance Bill

      The UK Treasury has announced the tax measures (noted below) that are likely to be included in the next Finance Bill. Advance notice of the legislation is in accordance with the Tax Policy Making Framework, although the final contents of the Bill will be a decision for the Chancellor of the Exchequer. Early publication of the proposals allows time for technical consultation and warns taxpayers of future tax policy changes.

      The United Kingdom's tax authority, His Majesty's Revenue and Customs (HMRC), has published draft legislation and associated documents relating to the following areas and topics.

      Individual income tax

      • Extending the time limit to notify a grant of options under the enterprise management incentive scheme.
      • Abolishing the pensions lifetime allowance.
      • Making amendments to tax relief at source for pension contributions.

      Corporation tax

      • Additional tax reliefs for research and development (R&D) intensive small and medium-sized enterprises and potential merged R&D schemes.
      • Administrative changes to creative industry tax reliefs.
      • Clarifications of the rules for cultural tax reliefs.
      • Reform of audiovisual creative tax reliefs to expenditure credits.
      • Increasing the capital allowance limits for leasing into tonnage tax.
      • Tonnage tax elections to include third party ship managers.
      • Tax exemption for corporate recipients of compensation payments under the Post Office compensation schemes.
      • Further amendments to the real estate investment trust regime.

      Inheritance tax

      • Changes to the geographical scope of agricultural property relief and woodlands relief.

      Vehicle excise duty

      • Exemption for Ukrainian vehicles in the United Kingdom.


      • Change to data HMRC collects from customers.
      • Dealing with promoters of tax avoidance.
      • Increasing the maximum prison term for tax fraud from 5 to 7 years.
      • Multinational top-up tax: adoption of the undertaxed profits rule and other amendments.

      If enacted, most of the legislative measures will come into force from January or April 2024. Consultation on the draft legislation ends on 12 September 2023.

    • UK – Enhanced R&D Tax Relief Claims: Additional Information Required from 1 August 2023


      Research and Development (R&D) tax relief aims to support innovative projects in science and technology, fostering economic growth in the UK.

      R&D Tax Relief Schemes

      HMRC administers two R&D tax relief schemes - one for small and medium-sized enterprises (SMEs) and the other for large companies and ineligible SMEs (RDEC). The number of R&D claims has been increasing over the years.

      Qualification for R&D Tax Relief

      To be eligible for R&D tax relief, the work must be part of a specific project to make an advance in science or technology. Claims cannot be made for projects in arts, humanities, or social sciences. The work must be related to the company's trade and seek to resolve a scientific or technological uncertainty.

      Government Action on Non-Compliance

      Concern over abuse and boundary-pushing involving R&D tax reliefs has grown in recent years, particularly amongst SMEs. The government launched a review of the R&D tax relief schemes in 2021, aiming to ensure effective use of taxpayer money and maintain the UK's competitiveness in cutting-edge research.

      Operational Changes

      HMRC has increased efforts to combat non-compliance, doubling the number of staff working on R&D compliance and creating an R&D Anti-Abuse Unit. Additional measures, including payment identification controls, aim to expedite legitimate claims.

      Policy Changes

      The government has announced new policy measures to counter non-compliance, some already in place with others taking effect from August 2023. These measures include requiring digital claims, additional information for higher-risk claims, and limiting relief for offshore companies. Proactive outreach to new customers and limited opportunities sectors is also planned.

      Changes from August 2023

      HMRC will risk assess all claims, receiving more data on individual claims. Claimants or their R&D advisers will complete an additional information form to help HMRC assess the claim's validity and the expertise level of any R&D agent used in preparation.

      Full report available here: HMRC’s approach to Research and Development tax reliefs

    • New plans to boost health in the workplace to keep people in work

      • Ministers are urging employers to do more to keep workers healthy and reduce the numbers out of work due to long-term sickness
      • Consultation launching on measures to increase employer uptake and widen reach of Occupational Health
      • Plans include a new standard for businesses to adopt to boost health in the workplace
      • Better workplace support expected to grow the economy and tackle inactivity by improving productivity and preventing health-related job losses

      The Department for Work and Pensions (DWP) and Department of Health and Social Care (DHSC) have published a consultation on ways to increase uptake of Occupational Health provision.

      Employers will be encouraged to take up Occupational Health offers to help employees access vital mental and physical health support at work, particularly for those working in small and medium-sized enterprises.

      These proposals include introducing a national “health at work” standard for all employers to provide a baseline for quality Occupational Health provision, which includes guidance, an option to pursue accreditation, and additional government support services – for example outreach workers to support SMEs to meet the standards.

      It also seeks views on developing longer-term workforce capacity to help meet any increased demand for Occupational Health services in the future by:

      • Encouraging NHS leavers or those who are considering a career change to pivot towards the Occupational Health specialism
      • Developing a longer-term, multi-disciplinary workforce to provide Occupational Health services

      The consultation will also ask employers to share their examples of good Occupational Health provision to help inform other businesses and encourage them to provide the same.

      Secretary of State for Work and Pensions, Mel Stride MP, said:

      This Government is investing billions in getting people back to work and growing the economy. We need employers to keep playing their part too.

      Healthy businesses need healthy workers – employers will benefit from higher retention rates, more productive workers, and fewer work days lost due to sickness. Improving health in the workplace is a vital piece of the puzzle in our drive to increase employment.

      Minister for Disabled People, Health and Work, Tom Pursglove MP, said:

      Long-term sickness is a huge contributor to economic inactivity, and while of course some people are unable to work, better accommodation of health problems in the workplace will open up a wider workforce to employers and support employees with a range of needs.

      Many small and medium-sized business owners already invest significantly in the health and wellbeing of their workforce, but this will be a gamechanger in identifying and removing obstacles to people with health conditions starting, staying and succeeding in work.

      To also help keep people in work, the government will today also publish a separate consultation looking at options to increase investment in Occupational Health services by UK wide employers through the tax system. This follows its announcement at the Spring Budget where it committed to consult on incentivising greater provision of Occupational Health through the tax system.

      The government wants to explore the case for providing additional tax relief to businesses on their Occupational Health costs. In particular, the consultation asks respondents for their experiences of providing Occupational Health, including what services they provide and any barriers they experience. It also asks for evidence on the effectiveness of existing tax incentives and asks respondents for their views on the merits of expanding the existing Benefit-in-Kind relief, and thoughts on any alternative tax incentives.

      Tax reliefs on Benefits-in-Kind are already available for certain occupational health services. This consultation will test if expanding these reliefs or introducing new ones could be an effective lever to achieve greater Occupational Health provision, as well as thoughts on any alternative tax incentives. The consultation will determine if expanding tax incentives is an appropriate measure to boost Occupational Health provision.

      This is all a key component of the measures in the 2023 Spring Budget to grow labour market participation, reduce economic inactivity and get more people into work. The Department is helping millions to return to work with inactivity falling by 360,000 since the peak of the pandemic.

      Long-term sickness is currently the main reason people of working-age give for being economically inactive, but just under half of workers have access to Occupational Health services. Over 90% of large employers offer Occupational Health support, compared to under a fifth of small ones.

      Occupational Health provision can help employers provide work-based support to manage their employees’ health conditions, leading to better retention and return-to-work prospects, and improving business productivity, which can be adversely impacted by sickness absence.

      Secretary of State for Health and Social Care, Steve Barclay said:

      High quality Occupational Health support in more workplaces would not only help to reduce economic inactivity, but it can lead to a healthier, happier workforce.

      The individual health benefits are clear and by focusing on preventative measures, we can reduce the burden on the NHS and help to bring waiting lists down, which is one of the government’s top priorities.

      Angela Rowntree, Occupational Health Physician for the John Lewis Partnership, said:

      At John Lewis Partnership we are moving away from reactively managing sickness to proactively supporting our Partners’ health and wellbeing at work.

      Our founder, Spedan Lewis understood this when he launched an in-house health service for all Partners in 1929 – nearly 20 years before the NHS was established – and we’re proud to be part of his legacy today, providing advice and support to help our Partners achieve their potential in the workplace.

      We welcome this new focus on ensuring other businesses and their employees are able to access better workplace health.

      The Occupational Health consultation will run until 23:59 on Thursday 12 October 2023.

      Source: Gov.uk

    • United Kingdom Amends Accounting Rules to Comply with Pillar Two Rules

      The UK Endorsement Board (UKEB) has announced that it adopted amendments to the international accounting standard, IAS 12 International Tax Reform: Pillar Two Model Rules.

      These changes were announced by the International Accounting Standards Board (IASB) in May. The UKEB published an adoption statement and the text of the amendments, which are the following:

      • a temporary exception from having to recognize and disclose deferred taxes arising from legislation implementing OECD Pillar Two model rules;
      • a requirement to disclose use of the above exception;
      • a requirement to disclose current tax expense related to the Pillar Two income taxes; and
      • a requirement to disclose information regarding exposure to Pillar Two income taxes arising before the legislation comes into force.

      The first two points above are effective immediately and the last two apply to annual reporting periods beginning on or after 1 January 2023.

      The implementation of the rules will continue to be monitored by the IASB, including on whether to remove the temporary exception or make it permanent.

      The amendments will be consolidated into IAS 12 in March 2024.

  • United States
    • Certain Non-Qualified Research Activities Are Eligible for Research Credit, According to IRS Technical Advice Memorandum

      Businesses can benefit from the business credit for increasing research activities, even if the research activities were performed for both qualified and non-qualified purposes under Internal Revenue Code (IRC) section 41(d)(3), according to a recent released technical advice memorandum (TAM) (202327015), issued by the Internal Revenue Service (IRS).

      Section 41 provides a research credit to businesses that includes 20% of the excess (if any) of their qualified research expenses over a base amount. Qualified research must, in part, be:

      • research undertaken for the purpose of discovering information and the application of which is intended to be useful in the development of a new or improved business component; and
      • experimentation research activities conducted for a new or improved function, performance, reliability or quality (i.e. the experimentation test).

      However, the statute explicitly excludes from the definition of qualified purposes research related to style, taste, cosmetic or seasonal design factors.

      In the present case, the Internal Revenue Service (IRS) initially disallowed a taxpayer's claimed research credits for a business component, in part, because all of the taxpayer's development activities for the business component were considered non-qualified activities undertaken for purposes of style, taste, cosmetics or season design factors.

      However, the IRS Independent Office of Appeals concluded that the mere fact that a taxpayer engaged in non-qualified purpose activities with respect to the business component does not preclude the taxpayer from satisfying the experimentation test, provided that substantially all of the activities for business component constitute elements of a process of experimentation.

      Note: The IRS will occasionally release a TAM, which is drawn up by the IRS Office of Chief Counsel in the Washington National Office to answer a technical or procedural question posed by an IRS director or an area director. These TAMs are similar to Private Letter Rulings (PLRs) in that they are provided to the public to help guide and advise tax practitioners on applicable rules and procedures through the eyes of the IRS. Like PLRs, TAMs should not be used or cited as precedent.

    • IRS Will No Longer Apply Mitigation Provisions for Non-Willful FBAR Violations Following Landmark Supreme Court Ruling

      On 11 July 2023, the Internal Revenue Service (IRS) issued interim guidance on FBAR examination procedures as a result of the Bittner case, in which the United States Supreme Court held that the penalty for non-willful FBAR violations applies on a per form, rather than a per account, basis. The interim guidance takes effect immediately and will be incorporated into the Internal Revenue Manual (IRM) within 2 years.

      According to the interim guidance, the IRS is no longer considering mitigation provisions in calculating penalties for non-willful violations of the Report of Foreign Bank and Financial Accounts (FBAR) requirement, following the Supreme Court's landmark decision in Bittner v. United States.

      Under previous guidance, the IRS could mitigate penalties for non-willful FBAR violations to:

      • USD 500 per non-willful violation (with total non-willful penalties not exceeding USD 5,000 per year), if the maximum aggregate balance for all accounts to which the violations relate did not exceed USD 50,000 at any time during the calendar year;
      • USD 5,000 per non-willful violation, if the maximum aggregate balance for all accounts to which the violations relate exceeds USD 50,000 but not USD 250,000 at any time during the calendar year; or
      • the statutory maximum per non-willful violation, if the maximum aggregate balance for all accounts to which the violations relate exceeds USD 250,000 at any time during the calendar year.

      While the IRS eliminated the above mitigation provisions and amended the IRM provisions related to non-willful FBAR violations to be consistent with the Bittner decision, the IRS guidance highlights that penalties for willful reporting violations still apply on a per-account basis and that the IRM guidance regarding the calculation of such penalties remains unchanged.

    • IRS Memo Clarifies Tax-Exempt Bond Conversion Rules for Special 90-Day Certificates

      Changing tax-exempt government securities to special 90-day certificates of debt doesn't violate the rule for keeping enough money invested for long-term expenses, if certain conditions are met, according to a recent released Office of Chief Council (OCC) memorandum (202326019), issued by the Internal Revenue Service (IRS).

      Conversions of these government securities - issued pursuant to the Demand Deposit State and Local Government Series program (i.e. demand deposit SLGS) - to special 90-day certificates of indebtedness (i.e. special 90-day C of I) are governed under Treasury Regulation (Treas. Reg.) section 1.148-1(c)(4)(ii)(C).

      Additionally, the OCC memorandum clarified that after such a conversion, an issuer's investment in demand deposit SLGS does not lose its status as a tax exempt bond under Treas. Reg. section 1.150-1(b) if the special 90-day C of I are reinvested in demand deposit SLGS when the issuance of demand deposit SLGS resumes.

      Internal Revenue Code (IRC) section 103(a) says that interest earned from state or local bonds is generally not taxable. However, this exemption does not apply to interest earned from arbitrage bonds (as defined under IRC section 148), which are bonds issued with the intention of using the money to invest in higher-yielding investments. A safe harbor rule (under Treas. Reg. 1.148-1(c)(4)(ii)(C)) requires any money invested in eligible tax-exempt bonds (such as demand deposit SLGS) to be continuously invested.

      If the money is held for up to 30 days before being reinvested in eligible tax-exempt bonds, it's still considered invested. However, if the money is held for longer than 30 days, the IRS Commissioner can allow an extension under certain circumstances (under Treas. Reg. section 1.148-10(g)).

      Conversion of demand deposit SLGS to special 90-day certificates of indebtedness (C of I)

      When demand deposit SGLS - meeting the requirements of the Treas. Reg. 1.148-1(c)(4)(ii)(C) safe harbor - were converted, the money that was available for investment was no longer invested in tax-exempt bonds. However, according to the OCC memorandum, the Commissioner could decide to treat the special 90-day C of I as demand deposit SLGS during the period when the issuance of demand deposit SLGS was suspended.

      Conversion of demand deposit SLGS to special 90-day C of I replacement funds

      Similarly, if replacement funds were invested in demand deposit SLGS to avoid investing in higher-yielding investments, and then converted to special 90-day C of I, the Commissioner could also treat the C of I as demand deposit SLGS during the period when the issuance of demand deposit SLGS was suspended.

      Note: The IRS will occasionally release internal memoranda to request information between associate counsel and the IRS Office of Chief Counsel. These memoranda are similar to Private Letter Rulings (PLRs) in that they are provided to the public to help guide and advise tax practitioners on applicable rules and procedures through the eyes of the IRS. Like PLRs, internal memoranda should not be used or cited as precedent.

    • IRS Advises on Consolidated Federal Tax Return Election Filing

      The Internal Revenue Service (IRS) has released a Private Letter Ruling (PLR-122641-22, 202326015) which allowed a common parent of an affiliated group of corporations to file a consolidated federal tax return election under Treasury Regulation (Treas. Reg.) section 1.1502-75(a)(1) even though the election was not timely made.

      The benefit of a consolidated return is that it allows related corporations to file a single return versus a return for each entity as well as combining income and losses of each member of an affiliated group into a single income. Through filing multiple entities on a single consolidated return, a compliance and administrative burden is mitigated considering most corporations have multiple related entities.

      The election is made by filing a timely consolidated return as of the filing deadline, including extensions, for the parent. When corporations fail to make a timely election, they must request an extension of time, provided under Treas. Reg. section 301.9100-3, which may be granted if the taxpayer provides satisfactory evidence to the IRS Commissioner that demonstrates the taxpayer acted reasonably and in good faith and granting the relief would not prejudice government interests.

      In the PLR, the IRS granted the corporation an extension to file a consolidated return after receiving information, affidavits, and representations by the parent, company official, and the tax professional that demonstrated the taxpayer acted reasonably and in good faith because, as provided under section 301.9100-3, the request for relief was filed before the failure to make the election was discovered by the IRS.

      Note 1: A PLR is a written response to a taxpayer's question(s) by the IRS national office located in Washington DC. In order to obtain a PLR, the taxpayer must pay a fee and provide the facts the taxpayer wishes the IRS to address. While a PLR can only be used by the taxpayer requesting it as precedent and other taxpayers cannot, they do help guide and advise tax practitioners on applicable rules and procedures through the eyes of the IRS. PLR procedures and user fees are published annually which are provided in the first revenue procedure of the calendar year. Revenue Procedure 2023-1 provides guidance on 2023 procedures and fees.