May 2021

  • Bulgaria
    • Bulgarian GDP Growth Expected to Reach 2.7% in 2021

      Bulgaria has presented to EU it's Convergence Program for the period 2021-2023 with important economic data for this period.

      The document was adopted last week by the Council of Ministers, but has not yet been uploaded on the Finance Ministry's website.

       It is only available on the European Commission's website. It is important to recall that the Convergence Program is a strategic document presenting the main elements of the national fiscal policy in the medium term.

      According to the Convergence Program, the decline in investment will continue in 2021, but at a slower pace.

      Private investment is the component that will recover most slowly from the crisis caused by COVID-19 due to the still uncertain economic environment. In 2021, GDP growth is projected to reach 2.7%.

      Restrictive measures against the spread of COVID-19 will have a negative effect on household consumption in the first quarter of the year, after which it will increase, supported by increased employment.

      In total for the current year consumption growth will be about 2%. As in 2020, government consumption will contribute to economic growth by nearly 1 percentage point. In 2021, exports of goods are expected to grow by 4.1% and almost reach pre-crisis levels.

      The recovery of services will be smoother, predetermined by the much slower resumption of international travel.

      The contribution of net exports to GDP growth will be positive (1.2 percentage points). GDP growth will accelerate to 3.6% in 2022, and in 2023 and 2024 economic growth will slow to 3.4 and 2.7%, respectively. Should be recalled that in the Convergence Program 2020-2023 forecasts were presented only for 2020. Expectations at that time were for a decline in real GDP by 3%.

      In fact, GDP shrank by 4.2%.

      According to estimates by the Ministry of Finance, potential GDP growth in 2020 was 1.7%, so the deviation from potential is negative at 3.1%.

      The main reason for the weaker growth  during the year was the negative contribution of the labor factor. The expected recovery in employment in the coming years will lead to accelerated growth of potential GDP and it will reach 2.3% in 2023.

      The increase in investment will also lead to a more serious contribution of capital to growth in 2023. Total factor productivity (OFP) will contribute 1.2 - 1.3 percentage points for potential growth during the period considered. In 2024, a slight slowdown in growth to 2.2% is expected, which will come both in terms of capital and labor.

      "The further increase of the employment will be limited by the negative demographic processes in the country ", is written in the Convergence Program.

      Source: Novinite

    • Bulgaria: Average Salary Shows Significant Growth Y/Y

      The average salary registered over 10 percent growth year-on- year.On the other hand, the share of remuneration from work in the overall household budgets has shrunk, while the share of incomes from pensions and social benefits has grown.

      Despite the reported growth of the average salary up to BGN 1,500, this does not apply to all sectors of the economy. Traditionally, the highest incomes are in the information and communication technologies and in the health sphere - due to the additional payments to the frontline medics.

      The sectors requiring higher skills continue to push forward. At the same time we see the effect of stagnating sectors, such as hospitality and restaurant businesses which were hit the hardest by the coronavirus crisis and the salaries in these sectors are the lowest, commented Zornitsa Slavova from the Institute of Market Economics.

      The salary is still the largest contribution to a household budget but its share in the overall income is shrinking. For the first time the share of a salary in the households’ earnings reached 55 percent due to the impact of the crisis. At the same time the share of social benefits and aid as well as pensions is growing,” Zornitsa Slavova added.

      Source: Novinite

    • Bulgaria Amends Rules on VAT Refunding to Non-EU Persons

      Bulgaria has introduced amendments to Ordinance № H-10 of 24 August 2006 on the refunding of value added tax (VAT) paid to foreign persons not established in the territory of the European Union. The main amendments are the following:

      • extension of the scope of application for VAT refunds to non-EU persons. As of 1 July 2021, non-EU persons would be able to apply for a refund of VAT incurred in Bulgaria, if they are considered to perform (i) supplies under the non-Union scheme; (ii) intra-EU distance sales of goods and supplies of goods facilitated by electronic interfaces under the Union scheme; and (iii) supplies of goods for which they apply the scheme for distance sales of goods imported from third countries/territories; and
      • non-EU persons having a fixed establishment in Bulgaria would be able to apply for a VAT refund in Bulgaria even if they do not perform supplies using a place of supply in Bulgaria.

      The amendments to the VAT Act have been promulgated in the State Gazette. The official document, issued on 1 May 2021.

  • China
    • China Adjusts Tariff Rates and Scraps Export Rebate Tax for Some Steel Products

      The Customs Tariff Commission of the State Council released the fourth announcement for 2021 on April 28. Starting from May 1, 2021 tariff rates for some iron & steel products will be adjusted.

      The import duty for pig iron, crude steel, recycled iron and steel materials will be provisionally set at zero; export tariff rates on ferrosilicon, ferrochrome and high-purity pig iron should be increased to 25%, 20% and 15%, respectively.

      On the same day the Ministry of Finance and the State Taxation Administration released a separate announcement, saying that export rebate tax for 146 steel products will be scrapped from May 1, 2021. The policy will be implemented from the date of export indicated on the customs declaration document.

    • Two Authorities Release Policies on Refund of Term-End Excess Input VAT Credits in Advanced Manufacturing Industries

      The Ministry of Finance and the State Taxation Administration released on April 28, 2021 the Announcement about Clarifying Policies on the Refund of Term-End Excess Input Value-Added Tax Credits in Advanced Manufacturing Industries.

      According to the announcement, from April 1, 2021 taxpayers in the advanced manufacturing industries that meet five conditions will be eligible to apply for refund of term-end excess input value-added tax credits.

      The scope of taxpayers in the advanced manufacturing industries will be expanded compared to what was stipulated in the No.84 document for 2019. Companies engaged in the production and sale of medicine, chemical fiber, railroad, ship, aerospace & aviation and other transport equipment, electric & mechanical devices as well as instruments & meters are included into the taxpayers in the advanced manufacturing industries.

    • Three Authorities Release Tax Policies for Seed Imports in the Next Five Years

      The Ministry of Finance, the General Administration of Customs and the State Taxation Administration recently issued the Circular about Tax Policies for Seed Imports in the 14th Five-year Plan Period. According to the circular, China will not impose value-added tax on seed imports included in the List of Imported Seeds Eligible for Value-added Tax Exemptions.

      The List was jointly compiled by the Ministry of Agriculture and Rural Affairs, the Ministry of Finance, the General Administration of Customs, the State Taxation Administration and the National Forestry and Grassland Administration, and will be adjusted from time to time according to the development conditions of the agricultural and forestry industries.

    • Makers of Special Products for Injured and Disabled Persons Can Enjoy Corporate Income Tax Exemptions for Three Years

      The Ministry of Finance released on May 12, 2021 the Announcement about Corporate Income Tax Exemptions for Companies Producing and Assembling Special Products for Injured and Disabled Persons.

      From January 1, 2021 to December 31, 2023, resident companies will not have to pay corporate income tax if they meet five conditions. These conditions include that they produce and assemble special products for injured and disabled, and the products are listed in the Catalogue of Special Products for Injured and Disabled Persons in China; they are mainly engaged in the production or sale of these products, and sales revenue of the products (Excluding export revenue) accounts for at least 60% of total revenue. Eligible companies shall make applications to enjoy the preferential tax policies, and keep relevant documents for future examination.

    • China to relax foreign investment rules amid further opening up

      China will relax rules for foreign investment, increasing its market appeal to global investors and signaling its determination to deepen opening up.

      The country's Ministry of Commerce (MOC) has made public its plan for formulating regulations and laws in 2021, putting on agenda the revision of the guideline on foreign strategic investment in Chinese listed firms.

      The revision seeks to "ease restrictions on foreign strategic investment, and introduce innovative supervision approaches for the sector," the MOC said in a recent online statement.

      The move came as the guideline, which was issued 15 years ago, cannot satisfy the current demand of foreign investment attraction given the country's rapid development over the years.

      Wang Jian, a professor at the University of International Business and Economics, said the revision was a signal to the world, indicating that China will continue its reform and opening-up policy, gradually loosen restrictions on foreign investment in listed firms, and foster a more enabling investment environment.

      As the market is waiting for the upgraded guideline, a draft revision unveiled last June offered a glimpse of the upcoming rules.

      The June draft lowered asset requirements for investments. It stipulated that foreign investors should either own at least 50 million U.S. dollars or manage no less than 300 million dollars of assets for market entry, compared with the current thresholds set at 100 million dollars and 500 million dollars, respectively.

      It also reduced the lock-up period for foreign shareholders' stocks from three years to 12 months and removed shareholding limits of foreign strategic investment through listed firms' targeted placements.

      Commenting on the lowered bar for foreign investment, Wang said it meant that apart from productive investment, China also welcomes foreign strategic investment in listed firms with open arms.

      "The changes showed that China is gradually opening its equity market to the world, which is also conducive to the sound and healthy development of its stock market," Wang noted.

      Opening up has been frequently brought up by China's policymakers over the years of its rapid economic growth. Despite a virus-induced economic slowdown across the world, the country's opening-up momentum remains unabated.

      China has taken several major steps to open its door wider since last year: implementing the Foreign Investment Law, trimming the negative list for foreign investment and easing foreign access to the financial market.

      In the country's new development blueprint, the 14th Five-Year Plan, it reiterates the commitment to promoting reform and opening up while pursuing high-quality development.

      With a 4-percent growth in foreign direct investment (FDI) inflows last year, China stood out as the largest recipient of FDI in the world, according to a report from the United Nations Conference on Trade and Development.

      In the first four months of 2021, FDI into the Chinese mainland, in actual use, surged by 38.6 percent year on year, MOC data showed.

       (Source: Xinhuanet)

    • China leads the world in 5G base stations: vice minister

      China has taken a global lead in the development of 5G, with a total of 819,000 5G base stations built so far, accounting for over 70 percent of the world's total, a government official said here Wednesday.

      Liu Liehong, vice minister of industry and information technology, released the figures at the ongoing China International Big Data Industry Expo 2021 in Guiyang, capital of southwest China's Guizhou Province.

      The number of 5G terminal connections in China has exceeded 310 million, accounting for more than 80 percent of the world's total, according to Liu.

      During the 13th Five-Year Plan period (2016-2020), China built the world's largest optical-fiber and 4G network, with over 99 percent of the villages across the country connected to both technologies.

      The three-day big-data industry expo, showcasing cutting-edge scientific and technological innovations and achievements, kicked off on Wednesday. It has attracted 225 enterprises from home and abroad, according to the organizing committee.

      Source: Xinhuanet

    • China to attract multinationals’ regional headquarters to Hainan

      China's commerce ministry on Thursday said it would guide the regional headquarters of multinationals to gather on the southern island province of Hainan to push the construction of the Hainan free trade port (FTP).

      "Existing opening-up measures on fostering investment will be well implemented. Regional headquarters of multinational companies will also be guided to the Hainan FTP," Gao Feng, a spokesperson with the Ministry of Commerce, told a press conference.

      Notable progress has been made since the country released a master plan last June to build the island into a globally influential and high-level free trade port by the middle of the century.

      According to Gao, China has rolled out 28 policies and measures to liberalize and facilitate trade in goods and services at the Hainan FTP. It has also unveiled 22 special measures to widen market access in sectors, including finance, culture, and medical care.

      Earlier this month, Hainan held the first China International Consumer Products Expo. It was the first-ever expo by China to focus on quality consumer goods at the national level, with 2,628 brands of 1,505 enterprises from home and abroad participating in the exhibitions.

      Looking ahead, Chinese authorities will further optimize the regulatory policy environment for imports and exports of goods in specific regions of the Hainan FTP and formulate a negative list for cross-border trade in services in Hainan, Gao said.

        Source: Xinhuanet
  • Focus Africa
    • Africa in Review by the Numbers (May 2021)

      $850 million
      Value of the winning bid in Ethiopia's telecoms auction. The licence was awarded to a consortium led by Kenya’s Safaricom, with Vodafone and Vodacom, as well as the UK's CDC and Japan’s Sumitomo. The consortium has committed to investing $8.5 billion in its network over the 10-year licence period. (Bloomberg)  
      40 MW
      Generation capacity of the Khoumagueli solar project in Guinea, which becomes the country's first grid-connected PV project with the signing of a 25-year power purchase agreement. Developed by InfraCo Africa, Aldwych Africa Developments and Solveo Energie SAS, the agreement highlight's the state's commitment to green energy. (Renewables Now)  
      Fall in business handled by the representative offices of foreign banks in Kenya in 2020. Hit by the disruptions in international trade and investments caused by the Covid-19 pandemic, the nine offices transacted deals worth $3.42 billion, down from $4.67 billion in 2019. (Business Daily)  
      $2 billion
      International Finance Corporation's investment to support small businesses in Africa and boost international trade as part of efforts to bolster the continent's recovery from the pandemic. The financing will be split between direct support to businesses and trade finance facilities. (Reuters)  
      Increase in health sector investment in Egypt. This rise is attributed to financing for outlets that deal with Covid-19 patients, especially the development of 23 lung and chest specialised hospitals, 42 fever specialised hospitals, quarantine units and central laboratories, amongst other investments across the country. (Egypt Today)  
      73,000 acres
      Amount of land allocated to investors in Kenya's Konza Technopolis. Phase one of the Konza project, which sits on 410 acres of land, is distributed into mixed-use (89 acres), university (39 acres), residential (26 acres) and life science (26 acres). (Business Daily)  
      Year-on-year increase in the value of electronic payments made in Nigeria during the first quarter of the year bringing the total to $174 billion. Mobile money operators led the transaction growth, which was driven by Covid-related restrictions on in-person shopping. (Vanguard)  
      $31 billion
      Value of multilateral investment into African infrastructure in 2020, representing a decline from $55 billion in 2019 and $100 billion in 2014. Despite this downward trajectory, a new report finds encouraging signs in changing global patterns of investment and the rising role of DFIs in supporting Africa to address its infrastructure shortfalls. (ESI Africa)  
      123 MW
      Capacity of the Golden Valley Wind Energy project, which reached commercial operations this week. The facility is the largest of four renewable projects undertaken in South Africa by BioTherm Energy, backed by Thebe Investment Corporation. Collectively, the four investments will connect 284 MW to the national grid. (Off-Grid Energy Independence)  
      $6 billion
      European Investment Bank engagement in public and private investment across Africa to transform access to green energy, clean water, private sector growth and COVID-19 resilience. This represented the largest annual EIB engagement in 55 years of operations on the continent. (European Investment Bank)  
      Kenyan sugar imports to be sourced from Uganda after the signing of an agreement which will see Uganda export 90,000 tonnes to its neighbour. According to the Association of Sugar Manufacturers, Uganda has seen stockpiles grow, peaking to 150,000 tonnes in the last two years due to blockades imposed on the commodity. (Daily Monitor)  
      1000 km
      Length of the Ghana-Burkina railway, construction of which is set to begin in January 2022. The project, which will take five years to complete, is expected to preserve Ghana's roads and accelerate the movement from the port of Tema to Ouagadougou. (Ghana Web)  
      $17 billion
      Amount pledged by development banks to support food security in Africa as governments aim to double agricultural production. The commitment to boost productivity, made at an event hosted by the AfDB and IFAD on 29-30 April, will be achieved through the scaling up of agro-technologies, investing in access to markets, and promoting agricultural research and development. (EIN Expresswire)  
      Number of households to be linked to the electricity grid in Mozambique after the government mobilised $280 million to implement its Energy for All programme. This is following the government’s five-year target for the period 2020-2024 set to increase the number of people with electricity in their homes from 34% to 64% of the population (ESI Africa)  
      600 km
      Length of the $1 billion gas pipeline between to be constructed between Mombasa (Kenya) and Dar es Salaam (Tanzania). This project will enhance “energy sufficiency” with Kenya keen on importing gas from Tanzania’s nascent plant. (Ghana Web)   Review by Kili Partners . Powered by Asoko Insight
    • Negotiations Underway for Social Security Agreements Between BRICS Countries

      According to a press release of 13 May 2021, published by the Indian Ministry of Labour & Employment, the BRICS countries (Brazil, China (People's Rep.), India, Russia and South Africa) resolved to enter into discussions with each other leading towards the signing of social security agreements between them, during the 1st BRICS Employment Working Group (EWG) Meeting held virtually from 11 to 12 May 2021. Further developments will be reported as they occur.
    • Tax Authority to Provide Electronic Invoicing Systems to Taxpayers

      Rwandan taxpayers are urged to apply to the Rwanda Revenue Authority (RRA) for the appropriate electronic invoicing system depending on the business of the taxpayer.

      Different electronic invoicing systems will be provided to different taxpayers as follows:

      • an electronic billing machine (EBM) software which is specifically designed for large and medium taxpayers as well as other taxpayers who may apply for it;
      • an EBM mobile system which is available for taxpayers whose turnover does not exceed RWF 20 million; and
      • an online EBM solution for taxpayers in the service industry such as lawyers and consultants whose turnover does not exceed RWF 20 million.

      The RRA will also avail an online sales data controller and a virtual sales data controller to taxpayers with their own electronic invoicing systems.

      The announcement by the RRA was made on 14 May 2021.

    • Africa Tax Administration Forum Sends Revised Pillar One Proposals to Inclusive Framework

      The African Tax Administration Forum (ATAF) has sent revised Pillar One proposals to the OECD Inclusive Framework. The ATAF proposals respond to both the Inclusive Framework blueprint report released for public consultation in October 2020 and the recent US proposals to revise the blueprint proposals.

      ATAF proposals state that the Amount A proposal under Pillar One which is based on a single market revenue threshold for all economies is complex, inequitable and would result in very little reallocation of taxing rights to market jurisdictions, in particular to smaller market jurisdictions.

      To ensure simplicity, ATAF proposes a single global threshold rule for all MNEs generating global sales revenue above a certain amount (irrespective of their business activities) but that the exclusions proposed in the Pillar One Blueprint should still apply.

      To ensure equity, ATAF proposes that the reallocation of profits, which it refers to as "Amount D", be calculated as a portion of the MNE's total profits instead of its residual profit. "The quantum of Amount D would be a return on Market Sales based on the Global Operating Margin of the MNE group using a tiered approach whereby the higher the Global Operating Margin of the MNE the higher Amount D would be''. ATAF adds that Amount D would be allocated to a market jurisdiction to the extent it exceeds the arm's length profits reported in the market jurisdiction for the relevant period.

      ATAF expressed that elements of it proposal are similar to the US proposal as:

      • both proposals bring all business sectors into the scope of Amount A except those excluded in the Pillar One Blueprint;
      • both proposals exclude differentiation in profit allocation between Automated Digital Services (ADS) and Consumer Facing Businesses (CFB); and
      • in both proposals there would be minimal business segmentation.

      ATAF noted that its proposal would address the complexities of the global threshold rule and that with its simplification there appears no reason why the threshold would not be lowered to €250 million'.

      The ATAF proposal also confirms the G-24 working group of developing countries proposal.  The G-24 proposal called for a fractional apportionment allocating part of an in-scope MNE's global profits to market jurisdictions in which it has significant economic presence. Significant economic presence would be tied to a formula based on objective criteria.

      The ATAF Proposal on Pillar One was released on 12 May 2021.

      Note: The ATAF member countries are Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Comoros Islands, Ivory Coast, Egypt, Eritrea, Gabon, Gambia, Ghana, Kenya, Lesotho, Liberia, Madagascar, Mali, Malawi, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.

  • Hong Kong
    • Post-Covid Hong Kong: Prospects for Cross-Border E-commerce Logistics

      In the past year, the Covid-19 pandemic has propelled the growth of e-commerce, with the air freight sector emerging as one winner under the ‘new normal’. In this connection, the HKTDC Research conducted a number of interviews in an attempt to find out from operators the reasons for the industry’s growth and how the pandemic can generate business opportunities for local e-commerce operators and related logistics service providers. 

      Soaring Demand for Air Freight

      During the pandemic, e-commerce business has boomed, bringing about a huge surge in demand for logistics services. Unfortunately, the sea freight industry has not benefitted from this growth trend. According to one of our interviewees, in the past various sectors – spanning retail, wholesale, and bulky items such as furniture – mainly used lower-cost marine transport, with e-commerce goods accounting for only a small share of the total. However, with the coronavirus outbreak causing the suspension of retail, catering and other services in many countries, demand for sea freight has fallen dramatically. As a result, the number of sailings has dropped.

      Against this backdrop, the air freight sector has emerged triumphant. At present, e-commerce goods account for the bulk of air freight cargoes and volumes are growing. The reasons are, first of all, that air freight is quicker. By way of illustration, from the time a consumer places an order on an e-commerce platform and receives the product to the time the e-commerce operator collects payment from the platform, the whole process only takes one month. Using sea freight, however, the payment collection period would be extended by one to two months. Because of this, e-commerce operators prefer to pay higher air freight charges in exchange for shorter payment collection times.

      Secondly, if an e-commerce operator uses sea freight, the cost of warehousing in overseas markets must be taken into account. In order to shorten delivery times, e-commerce operators tend to rent overseas warehouses for storing their goods, so that once an order is received the goods can be dispatched directly from the warehouse to the consumer. In other words, while the logistics costs of sea freight are lower, additional storage costs are incurred. Moreover, because e-commerce goods are often lighter in weight, the proportion of logistics costs in relation to overall costs is relatively small. The cost of air freight may not therefore be higher than the cost of sea freight plus overseas warehousing.

      For the reasons cited above, e-commerce relies heavily on air freight and, consequently, traditional air-forwarding and courier service companies are allocating more resources to e-commerce. This has created a strong interdependence, bolstering the share of e-commerce goods in air freight and courier cargoes. However, one interviewee said some e-commerce goods would still benefit from using sea freight for transportation. For example, goods weighing more than two kilograms tend to be shipped by marine transport as the air transport costs would be too high. Moreover, for products which are expected to be popular, e-commerce operators may opt to use sea freight to ship large quantities to the target market and store them in warehouses there in order to lower unit logistics costs. 

      Logistics Costs Spiral During Pandemic

      Under normal circumstances, air freight and courier goods are carried both by passenger aircraft and cargo aircraft. However, as the movement of people around the world has plunged due to Covid-19, the vast majority of passenger aircraft have been grounded and only cargo aircraft continue to fly. During the pandemic, e-commerce has grown markedly and the volume of courier cargoes has increased at a staggering rate. Since the coronavirus first hit, various courier companies have raised their charges. Looking back at the past year, one interviewee used the term “roller coaster” to describe the trend in air freight costs. For instance, during March and April 2020 the rapid spread of the pandemic across the globe exerted great pressure on air cargo capacity; from July to September, when the pandemic eased off temporarily, the rise in air freight costs slowed down; however, by November, with the traditional year-end consumption peak season approaching, courier charges rocketed again, shooting up by 100%. However, despite the fact that the pandemic has pushed up air freight costs considerably, e-commerce operators find it easier than other businesses to control retail prices and profit margins. For example, unlike traditional retailers, e-commerce operators can transfer higher logistics costs to consumers as they serve end-users directly.

      In terms of specific markets, many countries in Europe implemented social distancing and lockdown measures last year, which had a huge impact on logistics in the region. At the time, even if goods managed to arrive in a certain country with no hiccups, often they could not be forwarded to their final destination. One interviewee recalled: “The logistics situation in Spain and Italy was particularly dire, while the UK and Germany were better. As to the US market, although operating costs increased in the last year, logistics operations in the country never really stopped.” 

      Local E-Commerce Solutions Set to Improve

      Compared with mainland China and elsewhere in Asia, including Southeast Asia, Japan and South Korea, Hong Kong lags behind in its e-commerce development. However, respondents said they believe Covid-19 has generated significant opportunities for local e-commerce operators and related logistics service providers.

      Take local e-commerce giant HKTVmall as an example. The average number of orders received by the company daily rose rapidly from 18,700 in December 2019 to 36,300 in December 2020, while the average monthly total transaction value of orders increased from HK$271 million to HK$571 million. (Note: these figures are unaudited.) One interviewee recalled: “In April and May last year when the pandemic all over the world was severe, e-commerce bloomed, with business turnover within a short quarter shooting up to nearly the annual total in past years.” Prior to the pandemic, there were not enough logistics companies in Hong Kong to meet market demand. During the last year, the number of logistics companies has risen sharply, however. Our interviewee said he expected local e-commerce solutions, including payment, delivery and marketing functions, to improve.

      Nevertheless, one interviewee remarked that Hong Kong had already missed the opportunity for developing cross-border logistics. He said: “The size of the mainland market is huge and the volume of e-commerce business is tremendous. In recent years, mainland logistics companies have mushroomed and the entire industry chain has matured. On the contrary, the scale of the Hong Kong market is too small to support the growth of cross-border logistics.”

      In summary, developing cross-border logistics requires enormous offshore resources such as warehousing and distribution networks. Since the number of cross-border e-commerce operators in Hong Kong is small, the advantages of local cross-border e-commerce logistics companies are not apparent.

      Source: HKTDC Research

    • Hong Kong Unveils New Ship Leasing Incentive

      Along a maritime journey of more than 150 years, Hong Kong has established itself as a premier international maritime centre that enjoys competitive advantage in high value-added maritime services. We have a strong cluster of nearly 900 maritime-related companies. The HKSAR government has  introduced a new concessionary tax measures for qualifying ship lessors (QSL) and qualifying ship leasing managers (QSM) to further enhance the city’s position as a global financial and maritime hub.

      The new tax regime applies to revenue earned on or after 1 April 2020:

      Tax Concession for QSL

      • 0 percent
      • Capital gain exemption on ship disposal after leasing the ship for a continuous period of three years

      Tax Concession for QSM

      • 0 percent for associated companies and 8.25 percent for non-associated companies

      Reliable Financing Options 

      Backed by a sophisticated financial market, the city is set to tap the fast growing shipping market in Mainland China. With enhanced integration between Hong Kong and other Guangdong-Hong Kong-Macao Greater Bay (GBA) cities, Hong Kong port is likely to gain a new lease of life as being part of the major Southern China port cluster.  Under the GBA plan, it pledged to consolidate and enhance Hong Kong’s status as an international maritime centre and support Hong Kong’s development of high-end maritime services such as ship management and leasing, ship finance and dispute resolution services.

      To further strengthen the port cluster’s global competitiveness, China’s Ministry of Transport signed an agreement with the maritime authorities of Hong Kong and Macao to establish a collaborative mechanism to promote water transportation safety and green shipping development in the GBA.

      In addition, Hong Kong is a leading international ship finance centre in Asia. Shipping loans and advances in Hong Kong have grown significantly by 9.8 percent per annum over the past decade, amounting to around HK$126 billion as of September 2020. In view of the business opportunities, seven of the world’s top 10 bookrunners on syndicated marine finance loans have set up offices in Hong Kong.  More than 70 of the world’s top 100 banks operate in the city, including those with prominent ship finance business.

      Source: Invest HK

  • Switzerland
    • New Investment Record for the Biotech Industry

      The Swiss biotech industry achieved great things again in 2020. For the tenth year in succession, it secured top spot in the Global Innovation Index. Moreover, the latest Swiss Biotech Report shows that capital investment in Swiss biotech firms increased almost threefold versus 2019. A review of the Swiss biotech sector for 2020 shows that the industry could hardly be in better shape. As the Swiss Biotech Report 2021 entitled “Agility, leadership and innovation in the time of COVID-19” reveals, the industry achieved top scores for nearly every category. Swiss biotech firms made valuable contributions to combatting the COVID-19 pandemic, an accompanying press release issued by the Swiss Biotech Association states. In this context, the report underlines Switzerland's role in basic research, vaccine production and component delivery, as well as in therapeutics.

      Biotech creates jobs

      Research carried out by the country’s biotech firms led to an 8 percent increase in jobs. At present, these companies employ 16,300 people. Moreover, they were involved in a series of mergers and acquisitions. The Swiss biotech industry generated sales of 4.5 billion Swiss francs in 2020, slightly down on the 4.8 billion Swiss francs recorded in the prior year. This sales decline can above all be attributed to advantageous non-recurring events in 2019. Nevertheless, biotech firms continued to increase their revenues from marketed products and services.

      Top spot for innovation

      In the Global Innovation Index, Switzerland claimed top spot in 2020 for the tenth year in a row. Capital investment in Swiss biotech companies hit a record level: In comparison with the previous year, this nearly tripled to stand at 3.4 billion Swiss francs. Investment in research and development alone rose by 10 percent to 2.2 billion Swiss francs. “While the pandemic highlighted the importance of the biotech and pharmaceutical sectors, a note of caution may be warranted as many companies suffered significant delays in their R&D pipeline”, warns Michael Altorfer, CEO Swiss Biotech Association, in the press release. He adds: “Nonetheless, we are confident that the sector will continue its impressive expansion”. The Swiss Biotech Report is jointly produced by ten Swiss companies and organizations.   Source: Switzerland Global Enterprise
    • Switzerland and United States Sign Competent Authority Arrangement on Dividends Withholding Exemption for Pensions Under Tax Treaty

      According to an update of 20 May 2021, published by the Swiss Federal Tax Administration, Switzerland and the United States have signed a competent authority arrangement (2021) regarding certain American and Swiss pensions or other retirement arrangements, including individual retirement savings plans, that may be eligible for benefits under paragraph 3 of article 10 (Dividends) of the Switzerland - United States Income Tax Treaty (1996), as amended by the 2009 protocol. The arrangement was signed by Switzerland on 16 April 2021 and by the United States on 6 May 2021.

      The mutual arrangement is entered into under paragraph 3 of article 25 (Mutual Agreement Procedure) of the treaty and supersedes the competent authority arrangement of 10 December 2004, I.R.B. 2004-146. It is effective for dividends paid on or after 1 January 2020.

  • United Arab Emirates
    • Dubai Economy issues 15,475 new licenses during Q1 2021, a growth of 19% over Q1 2020

      The Business Registration & Licensing (BRL) sector of Dubai Economy reports that 15,475 new licenses have been issued during the first quarter of 2021, a growth of 19% compared to Q1 2020, when 13,027 licences were issued. This highlights the resilience of the business environment of Dubai and the emirate’s economic competitiveness and ability to attract businesses to across various sectors. Of the new licenses issued in Q1 2021, 58% were professional (8,935), followed by 41% commercial activities (6,290), and the rest distributed among the tourism and industrial activities. In terms of distribution of the new licenses according to location, Bur Dubai accounts for the largest share (8,220), followed by Deira (7,236), and Hatta (19). The top sub-regions were: Al Fahidi, Burj Khalifa, Al Khabaisi, Port Saeed, Trade Centre 1, Al Marar, Al Barsha 1, Naif, and Riggat Al Buteen. During the first quarter of the year, 99,887 business registration and licensing transactions were completed, a growth of 8% compared to 92,325 in Q1 2020, demonstrating the vital role of Dubai Economy in delivering value-added services to the public in Dubai. License Renewal accounted for 38,090 transactions during Q1 2021, a 4% growth compared to Q1 2020 (36,484). This underlines the benefits from the economic stimulus package launched by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, which allows renewal of commercial licenses without lease contract. Auto Renewal via text messages during Q1 2021 accounted for 20,923, 16% growth compared to Q1 2020 (18,061). The number of Trade Name Reservation was 17,397, Initial Approvals reached 13,914, and the total number of Commercial Permits was 3,077. Dubai Economy highlighted the importance of collaborative work by the government and private sectors. The private sector supports economic development by launching competitive and value-added projects under the wise leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. You can obtain any trade license or launch a business in a matter of minutes through ‘Invest in Dubai,’ the first integrated digital business set-up platform, which simplifies the business journey without the need to visit service centres. The platform provides initial approval, reservation of a trade name, issuance of instant licences, Dubai SME licences, Intelaq licences, DED Trader licences, in addition to electronic Memorandum of Association, and the renewal of commercial licences.   Source: Government of Dubai - Media Office
    • Tax Authority Extends VAT Registration Obligations for Sole Establishments

      The UAE Federal Tax Authority (FTA) has extended the VAT registration of sole establishments to legal persons. The FTA confirmed that a legal or natural person owning a number of sole establishments needs to obtain only one VAT registration for all its sole establishments and that the FTA does not require separate VAT registrations for such establishments.

      The VAT registration should be obtained ideally in the name of the natural person owning the sole establishments. However, if a natural person, owning multiple sole establishments, wishes to obtain the VAT registration in the name of one of its sole establishments, the person may apply to the FTA accordingly. The value of supplies made by the natural person and all its sole establishments must be aggregated to assess whether the VAT registration threshold has been exceeded.

      The FTA further provides that it will review such VAT registrations in certain cases and inform the relevant taxable persons of the corrective steps they should take, if any.

      It should be noted that, for VAT purposes, a one-person company LLC or other similar entities are not considered sole establishments, and are seen as a distinct and separate legal person from their owner unless the relevant applicable legislation states otherwise.

      The FTA published the extension on VAT registration of 'Sole Establishments" in public clarification No. VATP026 on 5 May 2021. The public clarification No.VATP026 replaces the clarification No. VATP021 which limited the VAT registration to sole establishments owned by a natural person.

  • United Kingdom
    • Queen Addresses Key Speech to Parliament on National Recovery from COVID-19 Pandemic

      On 11 May 2021, the Queen delivered a speech to the House of Lords and the House of Commons, addressing all the economic, social and tax measures the British government is planning to adopt towards alleviating the socio-economic and financial impact from the ongoing COVID-29 pandemic and preparing for a national recovery that will bring prosperity to the United Kingdom (UK).

      Towards this purpose, a number of significant tax measures have been announced, as follows:

      • the National Insurance Contributions Bill, in the context of which eight new Freeports will be established creating hubs for trade and helping regenerate communities by bringing investment, trade and jobs. More specifically, the National Insurance Contributions Bill will be built on the basis of two pillars: (i) it will provide national insurance contributions relief for employers of veterans, for employers in Freeports and for the self-employed individuals who receive NHS test and trace payments, and (ii) it will strengthen the fight against attempts to avoid tax and national insurance contributions.
      • the Subsidy Control Bill that envisages to replace the European Union (EU) State aid regulatory regime post-BREXIT. More specifically, the Subsidy Control Bill will implement a domestic UK subsidy control regime that will reflect the UK's strategic interests and special national circumstances and provide a legal framework within which public authorities will form subsidy decisions. The main elements of the Bill will, among others, include the creation of a consistent set of UK-wide rules and principles that public authorities should follow when granting subsidies, as well as the establishment of an independent subsidy control body to oversee the UK's envisaged modern subsidy control system; and
      • the Building Safety Bill that will ensure that the tragedies of the past will never be repeated. More specifically, the Building Safety Bill will strengthen the regulatory system for building safety, changing the industry culture and introducing strict safety standards for construction products and a clearer path for homeowners. The main purpose of the Bill is to change the regulations and standards for the construction of high-risk buildings in order to ensure accountability and responsibility by making fundamental changes to the regulatory framework for higher-risk buildings and ensuring that products used in the construction of buildings will comply with strict safety standards.

      Further information on the aforementioned can be accessed here (as a PDF).

    • Brexit: European Union Ratifies EU-UK Trade and Cooperation Agreement

      The Council of the European Union has concluded the EU-UK Trade and Cooperation Agreement. The decision to conclude the agreement, adopted on 29 April 2021 after the European Parliament granted its consent, is the last step for the European Union in the ratification of the agreement.

      The agreement establishes a Free Trade Agreement, a close partnership on citizens' security and an overarching governance framework to regulate the relationship between the United Kingdom and the European Union. It aims at ensuring a level playing field in areas such as VAT, customs, social security coordination, State aid, tax transparency and anti-avoidance. The agreement has been provisionally applied as of 1 January 2021.

      As next steps, the United Kingdom will be notified of the finalization of the internal EU procedures and the agreement will be published in the Official Journal of the European Union before the end of the month. The agreement will enter into force on 1 May 2021.

  • United States
    • Biden Seeks To Narrow USD 7 Trillion Tax Gap with Tax Compliance Reform

      President Biden aspires to shrink the nation's "tax gap" (i.e. the difference between taxes owed and actually paid) with his tax compliance initiatives that include a new reporting regime. The US Treasury Department (Treasury) issued a report on President Biden's proposed tax compliance measures and a related Press Release, dated 20 May 2021.

      According to the Press Release, the total gap amounted to nearly USD 600 billion in 2019 and will rise to approximately USD 7 trillion over the next decade if left unaddressed. The tax gap disproportionately benefits taxpayers with substantial income from non-labour sources where misreporting is common.

      President Biden's tax compliance proposals, which are part of his "American Families Plan," would provide the US Internal Revenue Service (IRS) with resources and information it needs to address tax evasion and to improve taxpayer service.

      Specifically, President Biden's tax compliance proposals would:

      • provide the IRS with nearly USD 80 billion in additional resources over the next decade so that the IRS would grow manageably (up to 10% annually), modernize information technology, improve data analytic approaches, and hire and train agents dedicated to complex enforcement activities;
      • provide the IRS with more complete information by introducing a new reporting regime that would:
        • build on the current framework of IRS Form 1099-INT (Interest Income), which taxpayers already receive from financial institutions when they earn more than USD 10 in interest;
        • require financial institutions to report additional information on IRS Form 1099-INT with regard to gross inflows and outflows on all business and personal accounts that they house, including bank, loan and investment accounts, with exceptions for accounts below a de-minimis gross flow threshold;
        • require payment settlement entities to report gross receipts and purchases;
        • cover foreign financial institutions;
        • cover cryptocurrencies and cryptoasset exchange and payment service accounts that accept cryptocurrencies; and
        • require reporting on businesses that receive cryptoassets with a fair market value of more than USD 10,000, as with cash transactions;
      • overhaul outdated technology to help the IRS identify tax evasion, improve tax service, and meet threats to the security of the tax system, including 1.4 billion cyberattacks that the IRS experiences annually; and
      • regulate paid tax preparers, increase penalties for tax preparers who commit and abet tax evasion, and impose additional sanctions on "ghost preparers" who fail to identify themselves on the tax returns that they prepare.

      The Treasury expects the proposed compliance initiatives to raise USD 700 billion in additional tax collections over the next decade net of investments, which would reduce the tax gap by 10%, and then to raise USD 1.6 trillion in tax revenue in the second decade.

    • LDP: i rischi legati alla mancata applicazione


      La Legge Federale sulla Protezione dei Dati (LPD) è entrata in vigore il 1luglio 1993. A seguito del susseguirsi di numerose modificazioni e adeguamenti all’evoluzione tecnologica e sociale dell’era digitale, il 15 settembre 2017 il Consiglio Federale accoglie il messaggio relativo alla revisione totale della legge sulla protezione dei dati e il 25 settembre 2020 viene approvata in votazione finale dalle Camere Federali.


      La nuova LPD, probabilmente in vigore dal 2022, introduce una serie di importanti novità al passo con i tempi e in linea con la nuova regolamentazione UE (GDPR) imponendo nuovi adempimenti alle aziende in conformità ai principi sui quali essa si fonda, ovvero maggiore trasparenza dei trattamenti dei dati e miglior controllo da parte degli interessati sugli stessi. La revisione della legge federale consentirà così alla Svizzera di richiedere non solo il riconoscimento dell'adeguatezza alla Commissione Europea ma, una volta conformato il diritto nazionale svizzero agli sviluppi del panorama europeo, permetterà la continuazione dello scambio di dati perfettamente regolamentato tra le imprese svizzere e quelle dell’Unione Europea.


      Essere compliant alla LPD significa attenersi ad una serie di regole al fine di tutelare i dati degli interessati al trattamento. A titolo di esempio, in conformità con il principio di integrità e riservatezza, i dati devono essere sempre trattati in modo da garantirne una sicurezza adeguata al rischio, e per ottenerla la LPD introdurrà alcune misure aggiuntive, quali ad esempio:
      • l'introduzione del principio della profilazione ad alto rischio, concetto che garantisce una maggiore protezione per i cittadini elvetici contro alcuni tipi di trattamento automatizzato di dati personali con elevati rischi per la personalità o i diritti fondamentali;
      • la necessità di ottenere un espresso consenso dell'interessato per quanto concerne specifici trattamenti quali:
        • dati degni di particolare attenzione;
        • la profilazione a rischio elevato effettuata da soggetti privati;
        • la profilazione effettuata da un organo federale.
      Un’altra regola fondamentale, espressa dalla LPD, è la garanzia, mediante provvedimenti tecnico-amministrativi, che la sicurezza sia adeguata al rischio, al fine di evitare violazioni della sicurezza dei dati (data breach); in questo caso l’ambito di competenza è del Titolare e il Responsabile del trattamento. Sempre in riferimento alle principali disposizioni in materia, non si può prescindere dal rispetto del diritto alla portabilità dei dati per gli interessati, ovvero il diritto di ottenere informazioni sulla raccolta dati, per esempio l’identità del Titolare, lo scopo del trattamento, l’origine dati, la durata della conservazione, l’esistenza di scelte automatizzate e la logica utilizzata.


      Secondo la revisione della LPD, le persone fisiche, all’interno delle organizzazioni aziendali (tendenzialmente i soggetti apicali), possono ora essere multate fino a CHF 250'000.- (in precedenza al massimo CHF 10'000.-), in particolare in caso di violazione intenzionale degli obblighi di informazione e comunicazione e di violazione intenzionale degli obblighi di diligenza (ai sensi dell’articolo 50 LPD). In futuro, la mancanza di rispetto della normativa di protezione dei dati non comporterà quindi solo rischi di reputazione per le aziende, ma potrebbe avere conseguenze penali di vasta portata per collaboratori manchevoli. Tutte le altre azioni promosse a causa di lesioni della personalità sono di competenza del giudice civile conformemente all'articolo 15 LPD nell'ambito della consueta procedura di diritto civile. Per quanto concerne invece il tema sulle Contravvenzioni commesse da parte di persone giuridiche, ai sensi dell’art.53 LPD si può prescindere dalla determinazione delle persone punibili e condannare in loro vece l’azienda al pagamento della multa, se quest’ultima non supera i 100.000 franchi e se la determinazione delle persone punibili secondo l’articolo 6 della legge federale del 22 marzo 1974 sul diritto penale amministrativo esige provvedimenti d’inchiesta sproporzionati all’entità della pena. Secondo l’art. 34 della LPD invece sono punite, a querela di parte, con la multa le persone private che:
      1. contravvengono agli obblighi previsti dagli articoli 8–10 e 14 fornendo intenzionalmente informazioni inesatte o incomplete;
      2. omettono intenzionalmente:
        • di informare la persona interessata conformemente all’articolo 14 capoverso 1, oppure
        • di fornire alla persona interessata le informazioni previste dall’articolo 14.
      Sono punite con la multa le persone private che intenzionalmente:
      1. omettono di informare l’Incaricato conformemente all’articolo 6 capoverso 3 o di notificare le loro collezioni di dati secondo l’articolo 11a o, in tal ambito, forniscono informazioni inesatte;
      2. forniscono all’Incaricato, in occasione dell’accertamento dei fatti (art. 29), informazioni inesatte o rifiutano di collaborare.
      Diacron Suisse SA in collaborazione con AB Innovation Consulting
  • India
    • India Sets Thresholds for Significant Economic Presence of Non-Residents

      The Central Board of Direct Taxes (CBDT) has specified the thresholds in determining significant economic presence (SEP) of a non-resident in India under section 9(1)(i) of the Income Tax Act (ITA) for the purpose of attributing income in India.

      The thresholds, which will apply beginning 1 April 2022, are set as follows:

      • payment threshold: transactions involving goods, services or property carried out by a non-resident with any person in India, including data or software downloads in India, equivalent to INR 20 million or more of the prior year's total payments; or
      • user threshold: systematic and continuous soliciting of business activities or engaging in interaction with 300,000 or more users in India.

      Under the ITA, the SEP of a non-resident constitutes a business connection in India, which in turn determines the non-resident's taxable income in India.

      The thresholds are issued in Notification No. 41/2021 of 3 May 2021.

    • COVID-19 Pandemic: India Extends Certain Compliance Deadlines

      In light of the COVID-19 pandemic, the government has extended various deadlines, including for filing of appeals, objections, tax returns and payment of tax deducted at source, among other things, to ease the compliance burden for affected taxpayers.

      Under the Income Tax Act (ITA), the deadlines for the following actions have been extended until 31 May 2021, unless specified otherwise:

      • an appeal to the Commissioner (Appeals) under chapter XX of the ITA for which the last day of filing is 1 April 2021 or thereafter (the deadline is the prescribed deadline under the ITA or 31 May 2021, whichever is later);
      • an objection to the Dispute Resolution Panel under section 144C Of the ITA for which the last day of filing is 1 April 2021 or thereafter (the deadline is the prescribed deadline under the ITA or 31 May 2021, whichever is later);
      • filing of an income tax return in response to a notice under section 148 of the ITA for which the last day of filing is 1 April 2021 or thereafter (the deadline is the prescribed deadline in the notice or 31 May 2021, whichever is later);
      • filing of a belated return under section 139(4) of the ITA and revised return under section 139(5) of the ITA for the assessment year 2020-21 for which the last day of filing is 31 March 2021;
      • payment of tax deducted at source under section 194-IA (purchase of immovable property), section 194-IB (rent paid by certain persons) and section 194M (certain payments made by certain persons) of the ITA and filing of the challan-cum-statement for such tax deducted, which are required to be paid and furnished by 30 April 2021; and
      • a statement in Form No. 61, containing particulars of declarations received in Form No. 60, which is due to be furnished by 30 April 2021.

      Under the Central Goods and Services Tax Act (CGSTA), read in conjunction with the Integrated Goods and Services Tax Act and Union Territory Goods and Services Tax Act:

      • the filing/furnishing deadlines for the following GST forms have been extended as follows:
        • Form GSTR-1 and IFF for April 2021 (additional 15 days);
        • Form GSTR-4 for financial year 2020-21 (31 May 2021); and
        • Form ITC-04 for January to March 2021 (31 May 2021);
      • for the completion or compliance of any action prescribed under the CGSTA, such as the passing of orders and notices, filing of appeals and furnishing of reports and returns, by any authority or by any person, which falls during the period 15 April 2021 to 30 May 2021, the deadline has been extended until 31 May 2021. If the completion or compliance of any action prescribed under rule 9 of the Central Goods and Services Tax Rule falls within the period 1 May 2021 to 31 May 2021, the deadline has been extended until 15 June 2021; and
      • where a notice has been issued for the rejection of a refund claim and where the time limit for the issuance of an order falls during the period 15 April 2021 and 30 May 2021, the deadline for the issuance of such order has been extended by 15 days after the receipt of the reply to the notice from the registered person or 31 May 2021, whichever is later.

      The government also reduced the interest rate from 18% to 0%/9% for delayed GST payments and waived late payment fees for March and April 2021.

    • COVID-19 Pandemic: India Extends Compliance Deadlines under Income Tax Act

      The government has extended various deadlines under the Income Tax Act, including the filing of tax returns and furnishing of statements, among other things, on account of the COVID-19 pandemic.

      The extensions apply to the following statements/forms/returns:

      • statement of financial transactions for the financial year (FY) 2020-21: from 31 May 2021 to 30 June 2021;
      • statement of reportable accounts for 2020: from 31 May 2021 to 30 June 2021;
      • statement of deduction of tax for the last quarter of FY 2020-21: from 31 May 2021 to 30 June 2021;
      • certificate of tax deducted at source (Form No. 16): from 15 June 2021 to 15 July 2021;
      • TDS/TCS book adjustment statement (Form No. 24G) for May 2021: from 15 June 2021 to 30 June 2021;
      • statement of deduction of tax from contributions paid by trustees of an approved superannuation fund for FY 2020-21: from 31 May to 30 June 2021;
      • statement of income paid or credited (Form No. 64D) by an investment fund to its unit holder for the previous year (PY) 2020-21: from 15 June 2021 to 30 June 2021;
      • statement of income paid or credited (Form No. 64C) by an investment fund to its unit holder for PY 2020-21: from 30 June 2021 to 15 July 2021;
      • income tax return for the assessment year (AY) 2021-22:
        • due on 31 July 2021: 30 September 2021;
        • due on 31 October 2021: 30 November 2021; and
        • due on 30 November 2021: 31 December 2021;
      • belated/revised income tax return for AY 2021-22 due on 31 December 2021: 31 January 2022;
      • report of audit for PY 2020-21: from 30 September 2021 to 31 October 2021; and
      • report from an accountant for persons entering international transactions or specified domestic transactions for PY 2020-21: from 31 October 2021 to 30 November 2021.
    • Negotiations Underway for Social Security Agreements Between BRICS Countries

      According to a press release of 13 May 2021, published by the Indian Ministry of Labour & Employment, the BRICS countries (Brazil, China (People's Rep.), India, Russia and South Africa) resolved to enter into discussions with each other leading towards the signing of social security agreements between them, during the 1st BRICS Employment Working Group (EWG) Meeting held virtually from 11 to 12 May 2021. Further developments will be reported as they occur.
    • India sees highest ever FDI in FY21, Gujarat tops inflows among states

      Gujarat has emerged as the top FDI destination, accounting for 37 per cent of the total inflows out of all states in the country. Maharashtra (27 per cent) and Karnataka (13 per cent) were second and third in terms of investment received.

      India saw its highest-ever inflow of foreign direct investment (FDI) of $81.72 billion during the financial year 2020-21. It is a 10 per cent rise on a year-on-year basis, as per the latest data provided by the commerce and industry ministry.

      Out of all states in the country, Gujarat has emerged as the top FDI destination, accounting for 37 per cent of the total inflows. Maharashtra (27 per cent) and Karnataka (13 per cent) were second and third in terms of inflows received.

      It may be noted that Gujarat has bagged the top spot for the fourth consecutive year in a row. The state saw total FDI inflow of $30.23 billion in the last financial year.

      Almost 94 per cent of the investment that trickled into the state was in the computer hardware and software sector, said the state in a statement. The state accounts for 78 per cent of the country’s total FDI inflow in this sector.

      Gujarat tops FDI inflows

      The latest data available on the promotion of industry and internal trade (DPIIT) for the April-December 2020 period shows Gujarat received the biggest share of Rs 1.77 crore FDI.

      Meanwhile, Maharashtra managed to get Rs 1.53 lakh crore FDI and Karnataka came in third, bagging FDI worth Rs 78,160 crore. Delhi occupied the fourth spot after bagging investments worth Rs 59,830 crore during the April-December period.

      Tamil Nadu and Jharkhand occupied the seventh and eighth sports, attracting investments worth Rs 19,734 crore and Rs 19,200 crore, respectively. Other states that added over Rs 10,000 crore FDI were Haryana (Rs 13,661 crore) and Telangana (Rs 11,332 crore). West Bengal and Uttar Pradesh managed to saw FDI inflows of over Rs 4,000 crore during the period.

      It may be noted that data for the January-March quarter is not yet available on the DPIIT website.

      Top Investors and Sectors

      The top investors who contributed to India’s high FDI inflow in FY21 include Singapore (29 per cent), followed by the US (23 per cent) and Mauritius (9 per cent).

      Construction activity (infrastructure), computer software and hardware, rubber goods, retail trading, drugs and pharmaceuticals and electrical equipment have registered more than 100 per cent jump in equity during FY21 as compared to the previous year.

        Source: India Today