March 2023

  • Bulgaria
    • Bulgaria Aims to Boost Budget with Proposed Amendments to Corporate and Indirect Tax Legislation

      The Bulgarian Council of Ministers has presented various proposals to amend tax legislation with the purpose of securing more revenue for the Budget. The Budget, itself, is expected to be presented in April 2023. Whereas, the below-presented resolutions are aimed at reducing the State deficit from its current 6% to 3%.

      Included in the Council of Ministers proposed amendments are: (i) the introduction of a tax on excess profits for legal entities based on the principles laid down in the Regulation on an Emergency Intervention to Address High Energy Prices (2022/1854); (ii) an increase of excise duty on e-cigarettes; and (iii) an increase of toll fees.

      Further, it is expected that the reduced VAT rates for flour, bread, baby products and books will be extended, but the VAT waiver applicable to restaurants and fitness centres will be stopped.

      The key tax measures are summarized as follows:

      • corporate income taxation
        • solidarity contribution of 33% on excess profits generated in the period from 1 July 2023 to 31 December 2023. The taxable base is to be determined, generally, as a difference between the tax profit for the period 1 July – 31 December 2023 minus 50% of the average value of the tax profits during the period 2018-2021 increased by 20%. It is proposed that the contributions would be paid as monthly advance instalments during the period 1 July - 31 December 2023 and a final payment would be made by 1 July 2024.
        • taxation of cryptocurrency, it is suggested that taxable income from the sale or exchange of virtual currencies should be defined as the sum of the profits realized during the year, determined for each specific transaction, less the amount of losses realized during the year, determined for each specific transaction plus 10% costs.
      • indirect taxation
        • it is proposed an amendment to the VAT Act by limiting the scope of application of the reduced 9% VAT rate.
        • it is proposed an amendment to the Excise Duties and Tax Warehouses Act (EDTWA). The main change is the suggested increase of the excise duty rate for electronic cigarette liquid.
  • China
    • Li Qiang, Premier of The State Council: Vigorously develop advanced manufacturing and accelerate the building of a modern industrial system

      On March 21 and 22, Chinese Premier Li Qiang conducted research and presided over a forum on the development of advanced manufacturing industry in Hunan Province.

      He stressed the need to keep the focus of economic development on the real economy, vigorously develop advanced manufacturing, promote high-end manufacturing, and speed up the construction of a modern industrial system.

      At the symposium on the development of advanced manufacturing industry, leaders of eight enterprises from all over the country talked about the situation and suggestions. Li Qiang pointed out that we cannot waver in our determination to stick to the manufacturing industry, and efforts to strengthen the manufacturing industry must be intensified. We should focus on making the manufacturing sector high-end, smart, and green, strengthen strategic planning, promote self-reliance in high-level science and technology, and upgrade traditional manufacturing and foster the development of strategic emerging industries.

    • Two departments: Strengthening comprehensive policy support to strengthen the updating, upgrading and application of energy conservation standards

      On March 17, the National Development and Reform Commission and the State Administration for Market Regulation jointly issued a Notice on Further Strengthening the updating, Upgrading, application and implementation of energy conservation Standards, calling for more comprehensive policy support.

      According to the Circular, the energy efficiency of major products in the industry is generally better than the advanced value of the mandatory energy consumption quota standard or the energy efficiency of major energy-using products and equipment is generally better than the level 1 of the mandatory energy efficiency standard, and priority will be included in the Green Industry Guidance Catalog and the Green Technology Promotion Catalog.

      We will improve the government's green procurement policy and increase support for government procurement of energy-efficient products that meet policy requirements. We will implement favorable tax policies for environmental protection, energy and water conservation, and comprehensive utilization of resources. We will actively develop green finance, increase financial support for projects that meet higher energy efficiency levels, and support eligible enterprises to issue bonds for financing.

    • Hangzhou: Provide financial subsidies of up to 2 million yuan to enterprises for R&D investment

      Recently, Hangzhou Science and Technology Bureau is soliciting public comments on the Implementation Rules of Hangzhou Enterprise R&D Expenditure Financial Subsidies (Draft for Comments). Feedback will be given until April 12, 2023.

      "Implementation Rules" is a continuation of "Hangzhou Technology enterprises Research and development expenses investment financial subsidy fund Management Measures". All kinds of national, provincial and municipal technology-based small and medium-sized (micro) enterprises, high and new technology enterprises, and municipal headquarters enterprises that are registered in Hangzhou according to law and certified as valid by the state, provincial and municipal departments of science and technology can enjoy financial subsidies according to the Implementation Rules. The financial subsidies for enterprises' R&D expenses shall take the form of after-the-fact subsidies. On the basis of fully implementing the policy of pre-tax additional deduction of enterprise R&D expenses, enterprises whose R&D input is larger than that of the previous year will be granted a subsidy of up to 2 million yuan, no more than 20% of the incremental part of R&D input. The detailed rules also specify that the key targets of financial subsidies for R&D expenses of enterprises include small and medium-sized scientific and technological enterprises, high-tech enterprises and municipal headquarters enterprises.

    • 17 Departments: Support the orderly construction of bonded warehouses and other bonded supervision places

      According to the website of the Ministry of Commerce on March 16, 17 departments including the Ministry of Commerce jointly issued a circular on Serving the Construction of New development pattern and Promoting high-quality development of border (cross-border) economic cooperation zones, proposing 15 measures.

      The circular calls for strengthening work guidance on the construction of comprehensive bonded zones in border (cross-border) economic cooperation zones, supporting the orderly construction of bonded warehouses and other bonded supervision sites, and guiding related regions to do a good job in the trials of general VAT taxpayer qualification. In terms of factor supply, the Circular requires the coordination of all kinds of financial resources to support and increase the intensity of financial support.

      We will make full use of existing funds and investment channels such as the Special Fund for foreign economic and trade development to guide and support the high-quality development of border (cross-border) economic cooperation zones. We will support banks in conducting cross-border two-way renminbi loans. We will increase support for primary loans and credit loans to small and micro businesses in accordance with regulations, and reasonably determine interest rates and fee rates.

    • Five departments Standardize the financial management of off-campus training institutions: It is strictly prohibited to recognize income in advance or delay

      The Ministry of Education, together with the Ministry of Finance and other departments, issued interim measures on financial management of off-campus training institutions, which will take effect on March 14, 2023, according to the Ministry's website on March 24.

      The Measures shall apply to the financial management activities of out-of-school training institutions that provide out-of-school training to preschool children and primary and middle school students aged 3 to 6, including the financial management system, fund operation, financial supervision and other nine chapters and 34 articles.

      In terms of fund supervision, the Measures require that institutions shall issue invoices in accordance with regulations when collecting training service fees, and shall not fill out contents inconsistent with the actual transaction, shall not issue payment vouchers by the organizer or other names, and shall not replace payment vouchers with receipt receipts and other "ious". The training service fee collected in advance by the institution shall be managed as liabilities according to regulations, and subsequently recognized as income according to regulations. It is strictly prohibited to recognize income in advance or delay.

    • Five Departments Clarify the Rules for the Access of Software and IC Enterprises to the Preferential Tax Policies

      Five departments including the National Development and Reform Commission ("NDRC"), the Ministry of Industry and Information Technology ("MIIT") and the Ministry of Finance ("MOF") released on March 22, 2023 the Circular on Calling for Effective Work in the Preparation of the List of Integrated Circuit Enterprises, Integrated Circuit Projects and Software Enterprises That Are Eligible for the Preferential Tax Policies in 2023.

      The circular makes clear that the formulation of the list of integrated circuit enterprises or projects and software enterprises that will enjoy preferential tax policies in 2023 will be extended to the formulation process of the list in 2022, and the conditions and project standards of enterprises that will enjoy preferential tax policies. If the enterprises listed in 2022 need to enjoy the New Year's preferential tax policies (except the installment tax policy of import value-added tax), they need to declare again in 2023. The enterprise shall be responsible for the authenticity of the materials and data provided. The Notice applies to the preferential policies of enterprise income tax in 2022 and the import tax policies stipulated in Document 4 of Finance Tariff (2021).

    • Ministry of Finance report: 2023 will improve tax support policies for micro, small and medium-sized enterprises

      On March 20, the website of the Ministry of Finance released the Report on the Implementation of China's Fiscal Policies in 2022, which included six aspects in the fiscal policy outlook.

      It proposed to improve the tax support policy, to ease the difficulties of enterprises. Taking into account fiscal affordability and the need to help enterprises with bailouts, we will, on the basis of implementing policies introduced earlier, further improve tax and fee cuts in light of actual conditions, make them more precise and targeted, give priority to supporting micro, small and medium-sized enterprises, individual industrial and commercial households, and industries in acute poverty, promote the transformation and upgrading of enterprises, enhance their innovation capacity, and add vitality and impetus to enterprises. The report also calls for deepening the reform of the fiscal and taxation systems and upgrading the modernization of fiscal management. Improve the tax system. We will strengthen the management of state assets and capital, strengthen accounting management, and comprehensively modernize financial management.

    • China Extends Super-Deduction for Research and Development Activities

      From 1 January 2023, the special deduction for research and development (R&D) activities conducted by enterprises, which can be claimed in addition to actual expenses, is 100% of the expenses incurred if the R&D activities have not created an intangible asset. Where the R&D activities have resulted in an intangible asset, the amortization base of that intangible will be 200% of the cost incurred. This is promulgated by the Announcement of the Ministry of Finance (MoF) and the State Taxation Administration (STA) [2023] No. 7 following the decision of the State Council under the leadership of the new Chinese premier Qiang Li.

      The super-deduction is not new, however, the new Announcement applies to all enterprises regardless of the size of the enterprises (small or large) and sets no expiration date.

      In respect of the requirements for eligibility and details regarding the implementation of the super-deduction, Circular of the Ministry of Finance (MoF) and the State Taxation Administration (STA) [2015] No. 119 and Circular of the MoF and the STA [2018] No. 64 continue to apply.

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

      $15.3 million Grant secured by animal health company Zoetis from the Bill and Melinda Gates Foundation to expand its work to advance the health and productivity of livestock and aquaculture producers across seven more countries in sub-Saharan Africa. (Business Wire)

      20 million People living in underserved areas to be connected to the internet under a new collaboration between Liquid Intelligent Technologies and Microsoft Corp. As well as an initial focus on DRC, Tanzania and Zambia, the partnership will also increase high-speed connectivity in the farthest parts of South Africa, Nigeria and Kenya. (Africa Business Community)

      14% Increase in net profit recorded by Kenyan carbon dioxide producer Carbacid Investments in the half year period that ended in January on the back of expansion into new regional markets. The firm hopes to conclude its acquisition of industrial gas maker BOC Gases to create the country's largest gases firm. (Business Daily)

      $210 million Investment initiative by EIB and Afreximbank to enhance healthcare and pharmaceutical investment in sub-Saharan Africa. The new financing scheme aims to support the region's health resilience. (Africa Market Trends)

      8 million tonnes Green hydrogen to be produced in Mauritania under a $34 billion agreement between German project developer Conjuncta, Egypt's energy provider Infinity and UAE's Masdar. The first phase of the project is set to come on-line in 2028, producing 400 MW of green power. (Reuters)

      20,000 hectares Zambian farmland to be allocated to Kenyan farmers to grow maize for export to their country. Zambia will also supply Kenya with its surplus maize as short-term measure to boost local supplies and stabilise prices. (Food Business Africa)

      $618 million Investment fund launched by the Nigerian government under the Digital and Creatives Enterprises Program to promote entrepreneurship and innovation in the digital technology and creative industries in the west African country. (Get Funded Africa)

      2,000 tonnes Daily production capacity projected by a new Algerian sugar processor after investment group Madar Holding injected $73.5 million into its newly formed subsidiary specialising in sugar refining, production and marketing. (Food Business Africa)

      300 MW Green ammonia plant to be constructed in Kenya by Australian firm Fortescue Metals to produce fertiliser and boost the East African nation's shift to clean energy. This multi-billion plant will be Kenya's first green ammonia energy production. (Business Daily)

      $55 million Extension of financial facility issued by Afreximbank to Nigeria's Fidelity Bank to scale up and accelerate its activities and programmes in trade activities, bringing the total financing package to $180 million. (Africa Market Trends)

      20,000  Female entrepreneurs targeted by new trading platform aimed at easing market and information access for women traders in East Africa. iSOKO, was launched by TradeMark Africa after receiving $2 million in donor funds. (Business Daily)

      600% Projected growth in avocado exports eyed by Rwanda, totalling about 16,000 tonnes yearly. With 33% of the country's GDP coming from agriculture, more efforts and strategies are being put in place to increase shipping out high-value horticultural goods. (Food Business Africa)

    • Egyptian Tax Authority Issues Guidelines for Non-Resident Digital and Remote Services

      The Egyptian Tax Authority (ETA) has provided detailed guidance to support, design and implement a VAT reform targeting taxable supplies of services from non-resident suppliers. The guidance covers the essential elements of a comprehensive VAT strategy targeting the main types of digital trade and e-commerce, in particular online sales of services (intangible goods) to private consumers by foreign companies and digital platforms that often do not have a physical presence in Egypt (non-resident vendors).

      For non-resident suppliers and electronic distribution platforms (EDPs) selling services to Egyptian consumers at a distance, the Egyptian tax authorities have simplified the VAT registration and compliance framework. This system aims to help non-resident suppliers and EDPs comply with Egyptian VAT requirements.

  • Hong Kong
    • Interest on Tax Reserve Certificates

      The Government Gazette published today (March 3) 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 March 6, 2023, the new annual rate of interest will be 0.7500 per cent against the current rate of 0.5833 per cent, i.e. the new rate will be $0.0625 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 March 6, 2023. Certificates purchased before March 6, 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 June 7, 2021, and before June 6, 2022:   0.0500 per cent per annum
      For certificates purchased on or after June 6, 2022, and before October 3, 2022:   0.1333 per cent per annum
      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, until further notice:   0.7500 per cent per annum
      This is always subject to the general rule that interest ceases to accrue after 36 complete months.
  • India
    • Exploring the Rise of Green Energy in India: Investment Opportunities for a Sustainable Future


      India has witnessed a tremendous rise in energy consumption in recent years, driven by rapid economic growth and a growing population. To address this demand and balance the pillars of profitability and sustainability, India has set ambitious targets to increase the share of renewable energy in its energy mix, with the goal of achieving 450 GW of renewable energy capacity by 2030. Renewable energy capacity in India increased by 250% between 2014 and 2021, with the non-conventional energy sector receiving FDI inflow of US$ 12.57 billion between April 2000-June 2022. This rise of green energy has created significant investment opportunities for businesses and investors looking to tap into the growing demand for green energy solutions in India.

      Sustainability as a way of life is integral to India’s cultural ethos. An eco-conscious global partner gearing to touch the $10-trillion mark by 2035, India is focused on creating a sustainable and inclusive future. The deployment of renewable energy in India is primarily aimed at advancing economic development, enhancing energy security, facilitating access to energy, and mitigating the impact of climate change.

      With some parts of the country receiving over 300 days of sunshine every year, India’s natural location along the equator lends it a strategic advantage in solar energy production. This advantage extends to wind energy projects, with India’s 8,000-kilometre coastline. Additionally, India's vast hydropower potential is estimated at over 100,000 MW. These natural bounties have provided India with a unique opportunity to lead the way in renewable energy production and create a green economy.

      India has a total installed generation capacity of 408.71 GW, of which the share of renewable energy is 42.26%. The 172.72 GW of capacity from non-fossil fuel sources installed in the country includes 119.09 GW RE, 46.85 GW Large Hydro and 6.78 GW Nuclear Power capacity.

      A recent report by the Institute for Energy Economics and Financial Analysis revealed that India witnessed a record-high investment in renewable energy in FY22, with a whopping $14.5 billion invested, depicting a significant increase of 125% from the previous year. Furthermore, this represents a 72% increase from the pre-pandemic period of FY 2019-20. The country is poised to attract over $ 20 billion in renewable energy investments in the year 2023 alone.

      Government Policies and Initiatives

      In accordance with the five nectar elements, the ‘Panchamrit’ of India’s climate action, the nation seeks to pursue an inclusive and sustainable growth trajectory by ensuring responsible consumption and sustainable resource management. As chair of the G20, India will discernibly push for the provision of finance and technology as critical enablers for achieving the climate goals set by the Paris Accord.

      India is set to achieve energy independence through clean technology by 2047, given the push from the Make in India initiative that spans a massive renewable capacity addition. Investors are keeping a keen eye on the sectors of battery storage, EVs, and green hydrogen. The Government has permitted foreign direct investment (FDI) up to 100% under the automatic route in the renewable energy sector to shape the global narrative in favour of decarbonisation and encourage green energy.

      The waiving of inter-state transmission system charges for inter-state sale of solar and wind power, and the declaration of a trajectory for renewable purchase obligation up to the year 2029-30 reflect significant strides towards promoting green energy. To facilitate solar project developers to set up projects expeditiously, the initiative for the development of Ultra Mega Renewable Energy Parks has been undertaken. Industry players are bidding for financial incentives offered by the government to expand domestic manufacturing of solar panels and improve supply chain resilience, as part of the production-linked incentive (PLI) scheme.

      The government’s recent approval of the National Green Hydrogen Mission is a step ahead in the vision to make India a global hub for the production, utilisation, and export of Green Hydrogen and its derivatives. Enhancing flexibility for investors, investments in this sector can be made via the Foreign Venture Capital Investor (FVCI) route. Adoption of green hydrogen can enable India to abate 3.6 gigatonnes of CO2 emissions cumulatively between now and 2050  and reduce industrial coal imports by 95 per cent.

      New energy trading platforms specifically for the renewable energy market i.e., Green Term Ahead Market (GTAM) and Green Day Ahead Market (GDAM) have been introduced for selling off the power by the renewable developers in the open market without getting into long term Power Purchase Agreements (PPAs). India, currently, is the only large electricity market in the world to implement a GDAM exclusively for renewable energy. The Indian Energy Exchange (IEX) traded 341 million units (MU) of renewable energy in February 2023 alone.

      India's commitment to sustainable development is demonstrated by the country's gradual decoupling of economic growth from greenhouse gas emissions. The Net Zero Emissions target by Indian Railways alone will curb emissions by 60 million tonnes annually. The UJALA LED bulb campaign is transforming the energy landscape and reducing emissions by a staggering 40 million tonnes annually. The Indian economy is already about 25-28% less emission intensive now, in comparison to the 2005 baseline. Present projections show a roughly 45-50% reduction of emission intensity by 2030, compared to 2005 baseline, in line with the enhanced targets announced at Glasgow. The country's per capita CO2 emissions (1.8 tonnes per capita) are significantly lower than the global average, rendering it a testament to India's sustained efforts to reduce emissions and promote sustainable development.

      India is promoting the outreach and potential of its initiatives in the climate change and disaster risk reduction spheres as envisaged in the International Solar Alliance and Coalition for Disaster Risk Initiative projects. On the domestic front, India has implemented the National Action Plan on Climate Change (NAPCC) which includes eight missions focusing on various sectors such as solar power, energy efficiency, sustainable habitats, and more. These initiatives showcase India's commitment to fighting climate change and promoting sustainable development globally and domestically.

      Recently, the Sweden India Business Council signed a memorandum of understanding (MoU) with the Maharashtra government to collaborate on waste to energy, sustainable infrastructure and transportation, defence manufacturing, and investment. Under the U.S.-India Strategic Clean Energy Partnership (SCEP), both sides have expressed their support for the development and deployment of hydrogen technologies and the launch of a new Energy Storage Task Force. The Indian Minister of Commerce expressed interest in increasing U.S. collaboration in solar power, battery storage, and offshore wind turbines, and is set to welcome the planned Clean Energy and Environmental Technology Business Development Mission to India in 2024.

      The government is, also, targeting its first indigenously designed and built hydrogen train to roll out in December 2023. In the sphere of the Indian semiconductor segment, investments are progressing, with the first few announcements expected in the coming weeks.

      Role of the Private Sector

      Indian power producers are transitioning towards carbon neutrality and investing heavily in renewable energy. Tata Power has pledged to not build new coal-fired projects while JSW Energy is investing in solar, wind, and hydropower plants to become carbon neutral by 2050. Reliance has acquired REC Group of Norway and invested in German solar wafer manufacturer NexWafe GmbH to expand its solar capabilities. Private companies such as Greenko and ReNew Power are offering on-demand energy solutions and storage services. Independent power producers (IPPs) are partnering with companies with technological prowess to develop decarbonisation solutions, presenting opportunities for global strategic investors to collaborate and invest in local players.

      The innovation industry has become an emerging player in the sector. The Government of India has recognized over 4600+ startups under the sustainability sectors as of November 2022. These startups are working in the domains of nuclear energy, solar energy, clean technology, electric vehicles, etc. India has recognized over 2,212 startups in the renewable energy sector, 1903 startups in the green technology sector, and 504 startups in the waste management sector.


      India's commitment to sustainable development is evident in its ambitious goals to increase green energy capacity and decrease greenhouse gas emissions. The country's abundant natural resources, including its potential for solar, wind, and hydropower energy, provide a unique opportunity for India to lead the way in renewable energy production and create a green economy. The government's policies and initiatives demonstrate India's unwavering dedication to promoting decarbonization and encouraging green energy. The recent surge in renewable energy investment in India, a staggering 125% increase from the previous year, underscores the growing demand for green energy solutions in the country. Ultimately, India aims to achieve energy independence through clean technology by 2047, with a strong emphasis on promoting sustainability and inclusivity.

      Source: Invest India

    • Infrastructure Development in India

      An economy's infrastructure is pivotal in propelling its progress and setting the stage for its future development possibilities. Infrastructure development is crucial to achieve the India 2047 vision for a $ 40 trillion economy and be reclassified from a developing economy to a developed economy. In the aftermath of COVID-19 and the digitisation of the world, the focus rests not only on physical infrastructure, but on digital and social infrastructure as well.

      India is undertaking ambitious infrastructure projects such as the Chenab Bridge in the state of Jammu and Kashmir, one of the tallest arch railway bridges in the world, which is built at one of the highest altitudes with a broad-gauge Indian Railway line throughout its entire span. This bridge showcases the immense talent that Indian engineers possess and is proof that with the right leadership, this talent can create innovative and sustainable infrastructure for the growth of India.

      The Indian government focuses on India’s infrastructural needs and has developed various schemes and policies in this regard. The National Infrastructure Pipeline (NIP), introduced in 2019 emphasizes social and infrastructure projects including energy, roads, railways, and urban development projects worth INR 102 lakh crores. The Centre and States have nearly equal contribution (39% and 40%) while the private sector has a 21% share. NIP is complemented by the PM GatiShakti Master Plan which is dedicated to improving India’s logistics network. In India Budget 2023-24, the Indian government emphasized the need for increased spending in the infrastructure sector and nearly trebled its infrastructure spending to 3.3% of GDP compared to its spending in 2019-20. The Budget has allocated INR 75000 crores for 100 projects deemed critical to improving the overall multimodal logistics infrastructure.

      For better coordination between state and centre, the central government has extended the tenure of 50-year interest free loans to state governments to help them undertake infrastructure investments and incentivise complementary policy actions in infrastructure development. The government announced that an Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall to create urban infrastructure in Tier 2 and Tier 3 cities with an outlay of INR 10000 cr per annum. The central government has encouraged state governments to utilize resources from the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF.

      Infrastructure development requires the involvement of multiple stakeholders for the overall growth of the society. Thus, the Indian infrastructure sector primarily utilises the Public-Private Partnership (PPP) approach. As per the Department of Economic Affairs, India has taken a systematic approach to create a robust PPP program for “delivery of high-priority public utilities and infrastructure.” With “close to 2000 PPP projects in various stages of implementation, India’s program is one of the largest in the world according to the World Bank.” Under PPP, infrastructure is developed under the “Build-Operate-Transfer (BOT)” model and the private sector is incentivised to build and maintain the infrastructure effectively so that more and more people use it which would provide revenue to the private sector.

      The government has advised and provided financial resources to over 16 different ministries to create infrastructure under PPP. The goal is to create a seamless supply chain for the movement of goods and services. The National Logistics Policy (NLP) announced in 2022 formalizes this approach and aims to reduce the logistics cost in India to under 10% and be one of the top 25 countries in the world in the Logistics Performance Index ranking. Under NLP, the government has launched the Unified Logistics Interface Platform (ULIP) to provide all digital services related to the transportation sector into a single portal creating a single-access point for all.

      Railways, one of the most important segments of India’s overall infrastructure development, has been allocated INR 2.4 lakh crores for the development of new semi high-speed Vande Bharat trains that are aimed at enhancing connectivity and for the upgradation and maintenance of railway tracks to allow for high-speed travel. This allocation to the railways sector is nearly nine times the allocation compared to a decade ago. The Ministry of Railways is in the process of developing 2 dedicated freight corridors – Eastern Dedicated Freight Corridor (EDFC) and Western Dedicated Freight Corridor (WDFC) with over 1724 km of track commissioned till date at an expenditure of over INR 97000 crores. These freight corridors will connect important sectoral manufacturing hubs like Ludhiana and Mumbai with important ports allowing freight to be transported on these dedicated lines, thus freeing up passenger train network and reducing congestion resulting in improved on-time performance of the railways.

      The government has prioritised transport infrastructure in its overall spending. Alongside Railways, Ministry of Transport and Highways allocation in the Budget increased by 36% over the previous year to develop new expressways. Many new expressways such as Delhi Mumbai expressway—with recent launch of the Dausa-Lalsot section—Bengaluru-Mysuru expressway, Agra-Lucknow expressway have been developed under the Road Connectivity scheme which has allowed for cities to be interconnected with lower travel times.

      Highlighting the role of interconnected infrastructural development, many departments have partnered to launch convergence schemes. One such scheme is KRISHI- UDAN which has been launched to help farmers transport their perishable goods. Airports Authority of India (AAI) provides full waiver of Landing, Parking, Terminal Navigational Landing Charges (TNLC) and Route Navigation Facility Charges (RNFC) for Indian freighters and P2C (Passenger-to-Cargo) Aircraft. Complementing this scheme is the aviation sector-specific RCS-UDAN which incentivises airlines for providing air connectivity to low traffic routes, which were otherwise unserved. The private sector has partnered with the government for construction and operations of newer airports resulting in projected total number of airports to be 200 by end of 2024. These airports are serving upcoming commercial centres in India increasing utilisation of air cargo transport facility and empowering farmers under KRISHI-UDAN.

      Likewise, Ministry of Shipping under the SagarMala scheme is developing inland waterways network throughout the country under the PPP model to promote shipping and facilitate trade. As per the latest progress report Standing Committee on Transport, Tourism and Culture, almost 56 port connectivity projects have been completed and 69 are under implementation along with completion of 33 port-led industrialisation projects.

      The government has also made great strides in implementing progress in digital infrastructure through various schemes such as Digital India scheme and Telecom Technology Development Fund. There has been a 200% increase in rural internet subscriptions between 2015 and 2021 vis-a-vis 158% in urban areas. This is evidence that rural and urban connectivity is catching up. Between 2019-2021, 95.76 million internet subscribers were added in rural areas vis-a-vis 92.81 million in urban areas.

      Cumulatively, the collective development of India’s infrastructure propels India’s economic growth. With increased demand for labour, goods and capital expenditure on infrastructure, there is an increase in industrial growth. Studies by the Reserve Bank of India and the National Institute of Public Finance and Policy estimate that for every rupee spent on infrastructure, there is a 2.5 to 3.5 rupee gain in GDP. Trade benefits as logistics and connectivity improve and the public benefits from a better quality of life with improvement in critical infrastructure and an overall increase in per capita income. India can thus truly realize its vision of becoming a developed nation by 2047.

      Source: Invest India

  • Singapore
    • Singapore – InvoiceNow will become the default e-invoice submission channel for all government vendors

      During a parliamentary session on February 24th, Senior Minister of State Mr. Chee Hong Tat declared that InvoiceNow will become the default e-invoice submission channel for all government vendors within the next few years.

      Implemented by the Singapore government in 2019, InvoiceNow is an extension of the Peppol E-Delivery Network, enabling direct transmission of invoices in a structured digital format from one financial system to another. Singapore was the first non-European country to use the European network to exchange e-invoices between private enterprises.

      Both small and large enterprises stand to benefit from this system, which offers faster payment cycles, lower costs due to the elimination of paper-based invoicing transactions, improved efficiency and security by eliminating manual processes, and reduced complexity. In addition, the system allows for international transactions with other businesses connected to the network.

      As of today, the nationwide e-invoicing initiative has gained significant momentum with over 50,000 businesses now connected. To further accelerate adoption and enable businesses on the network to maximize its benefits, IMDA has introduced a range of financial incentives for users.


      If you wish to receive further information about InvoiceNow, the eligibility criteria and how Diacron can assist you, do not hesitate to contact us at

    • Annouced in Budget 2023: Enterprise Financing Scheme will be extended till 31 March 2024

      Starting from October 29, 2019, Enterprise Singapore merged their current financing schemes into a unified program called the Enterprise Financing Scheme (EFS). This scheme aims to simplify the financing process for Singaporean enterprises and make it easier for them to access funding at different stages of their growth.

      It covers seven areas to address enterprises’ financing need, which are: green, SME Working Capital Loan, SME Fixed Assets Loan, Venture Debt Loan, Trade Loan, Project Loan, Mergers & Acquisitions Loan. Enterprise Singapore will share the loan default risk in the event of enterprise


      Should you require further information about how to qualify for the Enterprise Financing Scheme, the eligibility criteria and how Diacron can assist you, do not hesitate to contact us at

  • Switzerland
    • Svizzera, aumento delle aliquote IVA dal 2024

      A partire dal 1° gennaio 2024 in Svizzera sono applicabili le seguenti aliquote d’imposta:

      • Aliquota normale 8,1 %
      • Aliquota ridotta 2,6 %
      • Aliquota speciale per il settore alberghiero 3,8%

      Dal 1° gennaio 2018 fino al 31 dicembre 2023 in Svizzera sono applicabili le seguenti aliquote d’imposta:

      • Aliquota normale: 7,7 %. Tutte le prestazioni imponibili che non sono imponibili all’aliquota speciale o all’aliquota ridotta, vanno imposte all’aliquota normale.
      • Aliquota ridotta: 2,5 %. L'imposta è riscossa all'aliquota ridotta del 2,5 % sulla controprestazione (e l’importazione) per i beni seguenti:
        • acqua trasportata in condotte (eccezione: il trattamento delle acque di scarico [prestazione di servizi] è imponibile all’aliquota normale);
        • derrate alimentari e additivi (ulteriori informazioni alla cifra 4 dell’info IVA Base di calcolo e aliquote d’imposta);
        • bestiame, pollame;
        • pesci e altri animali per scopi alimentari cereali;
        • sementi, bulbi e cipolle da trapianto, piante vive, talee, innesti, fiori recisi e rami, anche in arrangiamenti, mazzi, corone e simili;
        • alimenti e strame per animali, acidi per l'insilamento;
        • concimi, prodotti fitosanitari, materiali di pacciamatura e altri materiali vegetali di copertura (ulteriori informazioni alla cifra 2.1.1 dell'info IVA Base di calcolo e aliquote d’imposta);
        • medicinali (art. 49 OIVA);
        • giornali, riviste, libri e altri stampati senza carattere pubblicitario (art. 50–51 OIVA; carattere pubblicitario: art. 52 OIVA);

      L’aliquota ridotta è inoltre applicabile alle:

        • giornali, riviste e libri elettronici senza carattere pubblicitario (art. 51a e 52 OIVA);
        • prestazioni di servizi delle società di radio e televisione, tranne quelle aventi carattere commerciale (p. es. pubblicità);
        • prestazioni nel settore dell'agricoltura consistenti nella lavorazione diretta del suolo in relazione con la produzione di prodotti naturali, imponibili all'aliquota ridotta (p. es. seminare, arare, erpicare, concimare, spruzzare piante da frutta, viti o verdure) che servono a loro volta principalmente all'alimentazione umana o come alimenti e strame per animali, nonché alla lavorazione di simili prodotti del suolo (p. es. fienagione, mietitura e raccolta di verdure, ortaggi e frutti);
        • prestazioni (cifre d’affari) escluse dall’imposta giusta l’articolo 21 capoverso 2 numeri 14–16 LIVA, a condizione che si sia optato per la loro imposizione in conformità dell’articolo 22 LIVA.

      In caso di opzione, gli agricoltori, i selvicoltori e gli orticoltori impongono le forniture dei prodotti della propria azienda all’aliquota d’imposta determinante. Lo stesso vale per i commercianti di bestiame per le vendite di bestiame e per i centri di raccolta di latte per le forniture di latte alle aziende di trasformazione.

      • Aliquota speciale per il settore alberghiero: 3,7%. L’aliquota speciale del 3,7 % per le prestazioni del settore alberghiero è applicabile alle prestazioni d’alloggio con prima colazione, anche se questa è fatturata separatamente.
  • United Arab Emirates
    • Federal Tax Administration Clarifies Criteria and Conditions for E-Commerce Supplies in UAE Declarations

      The Federal Tax Authority (FTA) has clarified the criteria and conditions for the electronic filing of UAE tax returns by qualified taxpayers.

      Criteria and conditions for electronic commerce supplies

      According to article 2 of Clarification VATP033 No. 26 of 2023, a supply of goods or services will be deemed to be made by electronic means if all the following criteria and conditions are met:

      • the goods and services are listed or advertised in an electronic commerce medium;
      • the goods and services are ordered through an electronic commerce medium, whether or not payment is made online;
      • in the case of the supply of goods, the goods are delivered to a location specified by the customer and which is not owned or operated by the supplier; and
      • in the case of a supply of services, the services are provided or the right to receive the services is granted to the customer with minimal or no human intervention.

      According to the clarification, "e-commerce" is defined as "the process of selling goods or services through electronic means, an electronic platform, a social media shop or electronic applications, in accordance with the criteria and conditions established by the Minister of Finance". Support for e-commerce covers a wide range of concepts, such as metaverse shops, intelligent kiosks, robotic devices, etc.

      Amendments to the UAE Declaration for E-commerce Supplies by Qualified Registrants

      Qualified registrants are required to declare taxable supplies made through e-commerce in box 1 of the VAT return according to the emirate in which the goods or services are received by the customer, and to keep the relevant supporting documents. However, the FTA will accept the customer's place of residence as the default factor.

      Qualifying registrants are defined as taxable persons supplying goods and services via e-commerce and whose turnover exceeds AED 100 million in a calendar year.

      Once a registrant has been classified as a Qualifying Registrant and is subject to the relevant reporting obligations, it will be required to comply with the reporting mechanism clarified above for the following period(s):

      • 18 months from the first fiscal period beginning on or after 1 July 2023 for registrants that exceeded the AED 100 million threshold in calendar year 2022; and
      • 2 years from the first tax period of the calendar year beginning after the date on which the registrant exceeded the AED 100 million threshold for any year after 2022.
    • Federal Tax Authority Details Individuals’ Tax Residence Requirements

      The Federal Tax Authority (FTA) has issued a Cabinet decision (the Decision), which clarifies and provides details on the tax residency rules for individual taxpayers.

      State of usual or primary residence

      The state of usual or primary residence of a natural person is the country in which the natural person habitually or normally resides. It is the country in which the individual spends most of his or her time, as compared with any other country, as part of the individual's settled routine.

      Centre of financial and personal interests in the state

      The centre of financial and personal interests of a natural person in the country is the jurisdiction where the personal and economic interests of the natural person are closest or most significant. Factors to be considered in determining the country of the centre of financial and personal interests include:

      • the place of employment of the natural person;
      • the family and social relationships;
      • cultural or other activities;
      • the place of business; and
      • the place from which the property of the natural person is managed.

      Permanent residence

      According to article 5 of the Decision, a permanent residence is a furnished house, apartment, room, or any other form of accommodation that is permanently available to the individual. The permanent residence shall be considered as available to the natural person if the natural person has the continuous right to always occupy it and on a regular basis with a certain degree of permanence and stability and not only occasionally or for the purpose of a short stay. Ownership of the property is not a necessary condition. It may be rented or otherwise occupied by the individual as a dwelling.


      A natural person shall be deemed to be gainfully employed in the country in either of the following two cases:

      • if he is party to a contract with an employer, incorporated or otherwise established or recognized in the country, under which the natural person undertakes to render a service to the employer under his management or supervision for a promised remuneration paid by the employer in the country; and
      • if he is in a continuing relationship in which all or substantially all his income for his work is derived from one party, whereby the income received by him constitutes remuneration for his work performed in the country.

      The nature of the employment may be temporary or permanent, and the work may be performed on a full-time or part-time basis.

      Calculation of period spent in the state

      The Decision provides that the period spent in the country corresponds to all the days or parts of a day on which a natural person is physically present in the country in relation to the total number of days in which he is present in the country during a relevant consecutive 12-month period. The days in which the natural person has been physically present in the country need not be consecutive for the purpose of determining whether the 183-day or 90-day period has been met during the relevant consecutive 12-month period.

      The number of days during which the individual was present in the country would not be considered in determining whether the 183-day or 90-day period has been met. An exceptional circumstance is an event or situation beyond the individual's control, which occurs while the individual is already in the country, which the individual could not reasonably have foreseen or prevented, and which prevents the individual from leaving the country as originally planned.

    • Federal Tax Authority Publishes Guide to Clarify Allocation of Input VAT

      The Federal Tax Authority (FTA) has clarified the general rules and special methods available for the allocation of input VAT, as well as the procedure for applying for these methods, by updating the guide on the allocation of input VAT.

      Input VAT incurred in respect of goods or services that are used partly for making supplies that allow for VAT recovery and partly for other purposes for which VAT is not recoverable is referred to as "residual input tax". Residual input tax must be apportioned between those activities. Recovery will be restricted to the portion relating to supplies that allow for VAT recovery. At the end of the tax year, the taxable person proceeds to an annual wash-up to determine the annual wash-up adjustment.

      If the taxable person considers that the standard method does not give a reasonable result, it has the possibility to apply one of the following special methods of apportionment depending on the nature of his activities:

      • the outputs-based method;
      • the transaction count method;
      • the floorspace method; or
      • the sectoral method.

      The request form must be submitted to the FTA if the following conditions are met:

      • the applicant has been registered for VAT for at least 6 months;
      • the applicant makes both taxable supplies and exempt supplies / carries on non-taxable activities; and
      • the standard method of input tax apportionment does not give a fair and reasonable result for the applicant's input tax recovery.

      The guide provides a diagram showing which special method is most appropriate for each type of activity.

      The FTA's clarification was published as a guide (VATGIT1) on 22 March 2023
    • Jafza records 30% growth in new customer registrations in 2022

      DP World’s Jebel Ali Free Zone (Jafza) witnessed the highest customer registrations in a decade, marking a 30 per cent year-on-year growth, and taking the total number of companies to over 9,500 in 2022. The Free Zone zone has created unparalleled opportunities in a variety of sectors through end-to-end logistics solutions, digital trade platforms and access to DP World’s global portfolio offering trade enablement support at every step of the supply chain.

      An ideal business hub for diverse industries

      During the past 10 years, Jafza has seen a 13-fold increase in logistics customers, while the vehicle and transport segment saw a compound annual growth rate of 26 per cent. The increased reliance on manufacturing, logistics and e-commerce opened new market opportunities for retailers and general traders and created a demand for logistics and transport companies to handle the movement of goods through the Free Zone.

      Strengthening ties with key trade markets

      China and India remain key trade and economic partners for the Free Zone. The number of newly registered Chinese companies in Jafza saw a 4X increase in 2022, indicating a post-pandemic, healthy demand from the Far East. In recent years, the UAE and China have strengthened their relationship through initiatives such as the Belt and Road Initiative and the UAE-China Economic Partnership.

      The total number of new registrations of Indian companies increased by 30 per cent from 2021. DP World’s India-UAE Trade Bridge, and economic partnerships like the UAE-India CEPA (Comprehensive Economic Partnership Agreement) have increased customers’ confidence in expanding their reach through Jebel Ali.

      Abdulla Bin Damithan, CEO and Managing Director, DP World UAE and Jafza said: "At Jafza, we have aligned our efforts with the vision of the leadership of the UAE, in diversifying the country’s economy and increasingly relying on alternate industries. Last year, the UAE’s non-oil foreign trade reached a record AED 2.23 trillion, increasing more than 17 per cent year-on-year. We can proudly say that we have played a significant role in enabling this achievement. With trade facilitated through our Jebel Ali hub increasing considerably in 2022, Jafza continues to take the lead in achieving national goals.”

      “The notable increase in newly registered Chinese and Indian companies in the Free Zone has undoubtedly played a vital role in UAE-China trade, valued at AED 264.5 billion, and that of UAE-India trade at AED 180.9 billion, in 2022. Initiatives such as trade bridges, alongside multimodal connectivity and access to DP World’s global portfolio for end-to-end logistics and supply chain solutions have only enhanced the attractiveness of Jafza to business owners and allowed them to stay ahead of the curve,” Bin Damithan added.

      In addition to its multimodal connectivity via sea, air, and land, Jafza’s proposition is strengthened by its strategic location, connecting its customers with international markets and clients around the world. These advantages, coupled with the Free Zone’s range of services such as 100 per cent foreign ownership, no corporate and income taxes, and easy access to state-of-the-art facilities, make it an ideal destination for doing business, expanding reach, and strengthening global competitiveness.

      Source: Media Office - Government of Dubai

    • CBUAE Central Bank Digital Currency strategy launched

       The Central Bank of UAE (CBUAE) jointly held a signing ceremony with G42 Cloud and R3 to mark the implementation of the CBUAE Central Bank Digital Currency (CBDC) Strategy, one of the nine initiatives of the CBUAE’s Financial Infrastructure Transformation (FIT) Programme.

      The CBUAE has engaged with G42 Cloud and R3 as the infrastructure and technology providers respectively for its CBDC implementation.

      Following several successful CBDC initiatives including Project “Aber” with the Saudi Central Bank in 2020, which confirmed the possibility of using a digital currency issued by two central banks to settle cross borders payments and was awarded the Global Impact Award by Central Banking Magazine, in addition to the first real-value cross-border CBDC pilot under the “mBridge” Project with the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China and the Bank for International Settlements in 2022, the CBUAE is now ready for entering into the next major milestone of the CBDC journey and implementing its CBDC Strategy.

      The first phase of CBUAE’s CBDC Strategy, which is expected to complete over the next 12 to 15 months; comprises three major pillars, the soft launch of mBridge to facilitate real-value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, one of the UAE’s top trading partners and finally, proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.

      CBDC is a risk-free form of digital money issued and guaranteed by the central bank and serves as a secure, cost-effective and efficient form of payment and a store of value.

      As part of the UAE's digital transformation, CBDC will help address the pain points of domestic and cross-border payments, enhance financial inclusion and the move towards a cashless society.

      It will further strengthen the UAE's payment infrastructure, providing additional robust payment channels and ensuring a resilient and reliable financial system. More importantly, the CBUAE aims to ensure the readiness of the UAE to integrate the payment infrastructures with the future potential tokenisation world, the tokenisation of financial and non-financial activities.

      Khaled Mohamed Balama, the Governor of the CBUAE, said, “CBDC is one of the initiatives as part of the CBUAE’s FIT programme, which will further position and solidify the UAE as a leading global financial hub. The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. CBDC will accelerate our digitalisation journey and promote financial inclusion. We look forward to exploring the opportunities that CBDC will bring to the wider economy and society.”

      Source: Emirates News Agency - WAM 

  • United Kingdom
    • UK Spring Budget 2023: Cutting & Simplifying Tax for Businesses to Invest and Grow

      At Spring Budget 2023, the Chancellor Jeremy Hunt set out his vision to ensure that the UK’s tax system fosters the right conditions for enterprise by being one of the most competitive in the world.

      To do this, the Chancellor transformed capital allowances to boost investment, increased support for R&D, and simplified the tax system for SMEs.

      Two major capital allowances

      • The UK has the lowest corporation tax rate in the G7, even after April’s rate rise.
      • With the super-deduction coming to an end on 31 March 2023, the Chancellor announced a policy package at Spring Budget 2023 that goes further and ensures the UK’s capital allowances regime continues to be the joint most competitive in the G7 and OECD.
      • Capital allowances let businesses write off the cost of certain capital spending against taxable profits, thus cutting their overall tax bill.
      • The Spring Budget 2023 confirmed two major capital allowances, together worth £27 billion over the next three years. An effective £9 billion a year corporation tax cut for UK businesses.

      Full Expensing (FE)

      • This lets taxpayers deduct 100% of the cost of certain plant and machinery from their profits before tax. It is effective from 1 April 2023 to 31 March 2026.
      • It applies to spending on main rate equipment, which includes but is not limited to, warehousing equipment such as forklift trucks, tools such as ladders and drills, construction equipment such as bulldozers and excavators, machines such as computers and printers, vehicles such as tractors, lorries and vans, office equipment such as chairs and desks, and some fixtures such as kitchen and bathroom fittings and fire alarm systems.
      • FE means that companies can deduct 100% of the cost from their profits straight away – rather than more slowly over the life of the asset.
      • Similar to the super-deduction, FE also results in a 25p tax saving for every £1 invested (19% x 130% super-deduction rate = 25%).
      • Before the super-deduction and with the 19% Corporation Tax rate, companies investing £10m in main rate assets received a £342,000 tax saving in year 1. Under full expensing, on a £10m investment, a company will receive a £2.5 million tax saving in year 1.
      • As part of his commitment to maintain a stable economy, the Chancellor’s long-term ambition is to make full expensing permanent.

      The 50% first-year allowance (FYA)

      • This lets taxpayers deduct 50% of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase. This includes long life assets such as solar panels and thermal insulation on buildings.
      • The 50% FYA was introduced alongside the super-deduction and was due to end on 31 March 2023. We are extending it by three years to 31 March 2026. For each year following the first year, 6% of the remaining cost will be written off via Writing Down Allowances (WDAs).
      • 50% FYA allows for faster relief than under the default WDAs-only regime, which is worth 6% each year, including year one.
      • As part of his commitment to maintain a stable economy, the Chancellor’s long-term ambition is to make 50% FYA permanent.

      Research & Development

      • At Spring Budget 2023, the Chancellor announced a new R&D scheme for 20,000 SMEs in the UK - coming in from 1 April 2023 and worth around £500 million per year.
      • These changes are a key part of the Chancellor’s plan to get the economy growing and make the UK the best place in the world to start and grow a business by promoting the conditions for enterprise to succeed.
      • At Autumn Statement 2022, as part of the review into the R&D tax reliefs, the Chancellor committed to considering the case for further support for R&D intensive SMEs. Following engagement with industry, the Chancellor is now acting to provide that support.
      • The scheme is targeted specifically at loss making R&D intensive SMEs. Focusing support towards those most impacted by the rate changes introduced at Autumn Statement 2022.
      • A company is considered R&D intensive where its qualifying R&D expenditure is worth 40% or more of its total expenditure.
      • Eligible loss-making companies will be able to claim £27 from HMRC for every £100 of R&D investment, instead of £18.60 for non R&D intensive loss makers.
      • Around 1,000 claiming companies will come from the pharmaceutical and life sciences industry. This will support the development of life saving medicines.
      • Around 4,000 digital SMEs will be from the computer programming, consultancy, and related activities sector. This will support the development of AI, machine learning and other digital based technologies.
      • Around 3,000 other manufacturing firms, and another 3,000 professional, scientific, and technical activities firms will also qualify for the enhanced support.
      • This builds on previously announced changes to support modern research methods by expanding the scope of qualifying expenditure for R&D reliefs to include data & cloud computing costs.
      • The permanent increase from 13% to 20% for the R&D Expenditure Credit rate announced at Autumn Statement 2022 also means the UK now has the joint highest uncapped headline rate of tax relief in the G7 for large companies.
      • Combining the government’s spending on R&D with the support from tax reliefs, total UK R&D support as a proportion of GDP is forecast to increase to approximately 1.0% in 2024/25, up from approximately 0.9% in 2019. The latest 2019 OECD average is 0.7% of GDP.

      A Simpler Tax System for Small Businesses

      • At Spring Budget 2023, the Chancellor announced a series of admin changes to the simplify the tax system to make it easier for small businesses to interact with.
      • A simpler tax system frees up time and money for the UK’s 5.5 million small businesses to grow. With an estimated turnover of £2.3 trillion, they make up 52% of the private sector.
      • The simplification package includes:
        • Changes to the Enterprise Management Incentives (EMI) scheme from April 2023 to simplify the process to grant options and reduce the administrative burden on participating companies. This includes, from 6 April 2023, removing requirements to signs a working time declaration and setting out details of share restrictions in option agreements.
        • Delivery of IT systems to enable tax agents to payroll benefits in kind on behalf of their clients – allowing agents to better support their clients and reducing burdens on employers.
        • Consulting to the Help to Save scheme.
        • Measures to simplify the customs import and export processes, including improvements to the Simplified Customs Declaration Process, and the Modernising Authorisations project.
      • The Chancellor also announced a number of consultations to pave the way for future reform, including:
        • A commitment from HMRC to deliver a systematic review of guidance and forms for small businesses.
        • A consultation to simplify calculating income tax for smaller, growing sole traders.
      • This Budget package marks the first stage of a continuous programme of work on tax simplification. Officials will continue to engage businesses directly and prioritise this as part of all tax policymaking.
    • Jobs and investment boost for Thames region as Freeport gets green light

      Thames Freeport has received final government sign off, unlocking new high-quality jobs and much-needed investment.

      New high-quality jobs and much-needed investment for the Thames Estuary region will be unlocked, as the Thames Freeport receives final government sign off.

      The Freeport will now receive up to £25 million seed funding from government and potentially hundreds of millions in locally retained business rates to drive growth in the UK’s advanced manufacturing, biomanufacturing, logistics, and low carbon industries.

      It will help drive investment into sectors including automated and electric vehicles, renewable energy and battery storage, generating thousands of jobs and boosting the local economy.

      Levelling Up Minister Dehenna Davison said:

      We’re delivering on our mission to grow the economy and level up right across the UK.

      Thames Freeport is up and running and will bring high quality jobs, investment and trading opportunities for businesses in the region.

      Taking full advantage of the freedoms of leaving the EU, businesses in Freeports are offered generous tax incentives and a simplified customs procedure, unlocking much-needed investment and high-quality jobs.

      Robin Mortimer, Maritime UK Chair said:

      This latest wave of Freeport approvals is a major boost for UK maritime and the wider levelling-up agenda. Business, and the wider communities, will now be able to benefit from the wave of investment, development and jobs that Freeports are projected to generate.

      Thames Freeport estimates that it will generate over 12,000 new jobs, and as a gateway to London, its hubs are well placed to provide global shipping routes for exporting UK produced goods and importing vital products for supply chains.

      The hub includes three tax sites located at:

      • London Gateway – the UK’s most integrated logistics hub and one of the world’s fastest growing container ports, connecting over 130 ports and 65 countries and handling almost 2 million 20-foot equivalent units (TEU) annually
      • Tilbury – London’s major port, with a throughput of 16 million tonnes per annum with an estimated value of £8.7 billion
      • Ford’s world-class Dagenham Engine Plant – London’s largest manufacturing location for over 90 years

      The government’s Freeport programmes is moving at pace, with five sites now fully operational in England, already creating thousands of jobs. In January the Government confirmed two new Green Freeports will be established in Inverness and Cromarty Firth and Firth of Forth.

      Freeports are central to unleashing economic growth across the entire United Kingdom and will drive the UK’s shift to a dynamic, low-carbon economy, helping businesses to collaborate, innovate, and develop the technologies and supply chains that will underpin our journey to Net Zero.


  • United States
    • Treasury and IRS Propose Regulations on CHIPS Act’s Advanced Manufacturing Investment Credit

      On 21 March 2023, the Department of Treasury and the Internal Revenue Service (IRS) proposed regulations to implement the advanced manufacturing investment credit created by the Chips and Science Act of 2022, which aims to boost the semiconductor manufacturing industry in the US. The proposed regulations will appear in the 23 March 2023 issue of the Federal Register.

      The tax credit is generally equal to 25% of an eligible taxpayer's qualified investment in a facility with the primary purpose of manufacturing semiconductors or semiconductor manufacturing equipment. In general, it is available for qualified property that began construction after 9 August 2022 and placed in service after 31 December 2022. The CHIPS Act, however, prohibits foreign entities of concern from claiming the tax credit.

      The proposed regulations seek to address the following:

      1. eligibility for the credits;
      2. an election to be treated as making a payment of tax (including overpayment of tax) or to receive an elective payment (for eligible partnerships or S corporations), rather than claiming a credit; and
      3. a special recapture rule that applies if there is a significant transaction involving the material expansion of semiconductor manufacturing capacity in a foreign country of concern.

      The Department and the IRS request public comments on the proposed regulations, including the definition of the term "semiconductor" by 22 May 2023.

    • USTR Releases President Biden’s 2023 Trade Policy Agenda and 2022 Annual Report

      WASHINGTON – The Office of the United States Trade Representative released President Biden’s 2023 Trade Policy Agenda and 2022 Annual Report to Congress.  This report details USTR’s work to advance President Biden’s trade agenda over the last two years, as well as its priorities for 2023 and beyond.

      “USTR’s worker-centered trade agenda is realizing President Biden’s vision to grow the American economy from the bottom up and the middle out,” Ambassador Katherine Tai said.  “The 2023 Trade Policy Agenda and 2022 Annual Report details the key accomplishments from the first two years of the Biden Administration and our priorities for the year ahead.  From enforcing the USMCA to creating innovative trade arrangements with our allies and partners, we will continue to pursue an agenda that will deliver sustainable and inclusive economic prosperity for all.”

      In 2022, USTR put the Biden Administration’s vision into practice by launching and negotiating historic trade arrangements with our partners in the European Union and Kenya, as well as:
      • The Indo-Pacific Economic Framework for Prosperity: USTR and the Department of Commerce are negotiating an innovative trade framework with 13 countries in the Indo-Pacific region that, combined with the United States, represent 40% of global GDP.  The IPEF will tackle 21st century challenges, particularly those exposed during the COVID-19 pandemic and Russia’s invasion of Ukraine.
      • U.S.-Taiwan 21st Century Trade Initiative: The United States and Taiwan, under the auspices of the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the United States (TECRO), are negotiating an ambitious new trade framework that will deepen our longstanding economic and cultural ties.
      • Americas Partnership for Economic Prosperity: Announced in June 2022, the Americas Partnership includes 11 other countries that represent about 90% of the Western Hemisphere’s GDP and nearly two-thirds of its people.  This initiative will drive the region’s economic growth and broadly shared prosperity, tackle the core issues that will define the coming decades, and galvanize greater economic cooperation in our hemisphere.

      Under Ambassador Tai’s leadership, USTR delivered important wins for domestic agricultural stakeholders, including farmers, producers, and processors, as U.S. agricultural exports expanded to a record $202 billion.

      The United States – Mexico – Canada Agreement (USMCA) brought concrete outcomes that leveled the playing field for workers and defended the interests of U.S. energy and agricultural producers.  In particular, Ambassador Tai worked with labor representatives in Mexico to invoke the Agreement’s Rapid Response Mechanism to resolve multiple violations of workers’ rights, which included securing reinstatement and backpay to workers who were allegedly terminated for participating in union activity.  Strong cooperation with Mexico and Canada to enforce the USMCA will raise labor standards across North America and drive a race to the top.

      In keeping with President Biden’s promise that America will once again lead on the world stage, USTR strengthened and deepened existing partnerships with our allies, while forging new relationships in key regions and emphasizing the United States’ commitment to multilateral institutions.  In 2022, Ambassador Tai helped achieve the first concrete outcomes from a WTO ministerial in nine years, including a modification of intellectual property protections for COVID vaccines to facilitate getting more safe and effective vaccines to those in need; an extension of the moratorium on customs duties on electronic transmissions that reduces trade costs and provides opportunities for small- and medium-sized businesses; a multilateral agreement that, for fishing overfished stocks, prohibits subsidies to those engaged in illegal, unreported, and unregulated fishing; and a Ministerial Declaration on food insecurity.

      In 2023, USTR will deliver for U.S. workers and businesses, and for a global trading system that is more resilient, sustainable and equitable.  We expect progress on our ongoing trade negotiations, and we look forward to hosting the Asia-Pacific Economic Cooperation (APEC) Ministers Responsible for Trade meetings in Detroit, Michigan in May 2023 as part of the United States’ APEC host year.


    • IRS Issues Corrections to Regulations Authorizing Recapture of Excess Employment Tax Credits

      On 8 March 2023, the Internal Revenue Service (IRS) issued an updated Treasury Decision correcting its Temporary Regulations (TD 9953 (Corrected)) authorizing the assessment of erroneous refunds of certain COVID-19-related employment tax credits under Internal Revenue Code (IRC) sections 31313132, and 3134 added by the American Rescue Plan Act of 2001 (ARP).

      The ARP added sections 3131 through 3133 to the IRC extending the refundable payroll tax credits for paid leave to non-governmental employers with fewer than 500 employees, and certain governmental entities without regard to the number of employees, that provide paid sick and family leave for specified reasons related to COVID-19 with respect to periods of leave beginning on 1 April 2021 through 30 September 2021.

      The ARP further established IRC section 3134 to provide a COVID-19 employee retention credit for qualified wages paid after 30 June 2021 and before 1 January 2022, available to any employer carrying on a trade or business during a calendar quarter that meets the requirements to be an eligible employer under the statute.

      As originally issued, TD 9953 addressed how the agency would recapture erroneous refunds of tax credits issued, treating them as underpayments of taxes subject to assessment and collection. These temporary regulations authorize the IRS to assess any credits erroneously credited, paid, or refunded in excess of the amount allowed as if those amounts were taxes imposed under the relevant code sections, subject to assessment and administrative collection procedures.

      The corrections to Treasury Regulation sections 31.3131-1T(c)31.3132-1T(c), and 31.3134-1T(c) replace references to IRC section 3121(a) which incorrectly define wages for purposes of the credit, and replace it with 3221(a), addressing the applied payroll tax rate in effect used to calculate the taxes as intended in the regulations.

      The corrections are effective on 9 March 2023 and applicable retroactively to the original issuance of T.D. 9953 on 10 September 2021.

    • Intergovernmental Anti-Money Laundering Task Force Blacklists Russia, Graylists South Africa, Nigeria

      The Financial Action Task Force (FATF) (see Note 1) has suspended Russia's membership and updated its list of jurisdictions with strategic Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and Countering the Financing of Proliferation of Weapons of Mass Destruction (CPF) deficiencies, according to a news release issued by the Financial Crimes Enforcement Network (FinCEN) of the US Department of Treasury last week.

      In addition, the FinCEN announced that on 24 February 2023, the FATF removed Cambodia and Morocco from its list of Jurisdictions under Increased Monitoring and added South Africa and Nigeria to the list. Meanwhile, the FATF's list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with:

      • Iran and the Democratic People's Republic of Korea (DPRK) still subject to FATF's countermeasures; and
      • Myanmar still subject to enhanced due diligence, not countermeasures.

      "Jurisdictions under Increased Monitoring" refers to jurisdictions with strategic deficiencies that have committed to address those deficiencies in an agreed upon timeline. "High-Risk Jurisdictions Subject to a Call for Action" refers to the most serious cases needing countermeasures to protect the international financial system.

      The FinCEN reminded US financial institutions to consider the "FATF's stance toward these jurisdictions when reviewing their obligations and risk-based policies, procedures, and practices" and to comply with the extensive US restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions.

      Note 1: The Financial Action Task Force (FATF) is an intergovernmental body that establishes international standards for:

      • enhancing anti-money laundering procedures;
      • countering the financing of terrorism; and
      • countering the financing of proliferation of weapons of mass destruction.

      Note 2: The FinCEN's mission is to safeguard the financial system from:

      • illicit use;
      • combatting money laundering and its related crimes including terrorism; and
      • promoting national security through the strategic use of financial authorities and the collection, analysis and dissemination of financial intelligence.
    • IRS to Require CFC Shareholders Filing Schedule Q to Report Loss Allocation

      The Internal Revenue Service (IRS) will now require shareholders of controlled foreign corporations (CFCs) that report a CFC's income, deductions, taxes and assets by "CFC income groups" for purposes of sections 960(a) and (d) of the Internal Revenue Code (IRC) to report loss allocation when filing Schedule Q. The IRS issued updated instructions highlighting changes for filing the Information Return of US Persons with Respect to Certain Foreign Corporations (Form 5471) and its accompanying schedules.

      Beginning tax year 2020, taxpayers use Schedule Q to report the CFC's income in each CFC income group to the US shareholders of the CFC. Previously, the IRS did not require shareholders to report loss allocation on Schedule Q.

      According to the updated instructions, the IRS added columns for reporting of loss allocations to reflect Treasury Regulations section 1.861-20(e), which provide that in determining foreign taxable income in each statutory grouping, or the residual grouping, foreign gross income in each grouping is reduced by deducting any expenses, losses or other amounts that are deductible under foreign law that are specifically allocable to the items of foreign gross income in the grouping under the laws of that foreign country.

      In addition, the IRS added a new question pertaining to the US person's pro rata share of subpart F income or tested items from a CFC and revised certain wordings for clarity. More specifically, the IRS amended the wording of questions pertaining to claiming a foreign-derived intangible income deduction with respect to any transactions with the foreign corporation to reflect the final regulations under IRC section 250 (T.D. 9901, 85 FR 43042, 15 July 2020, as amended by 85 FR 68249, 28 October 2020 and T.D. 9956, 86 FR 52971, 24 September 2021).