Dear Friends and Clients,
In the last newsletter we still felt sorry for our German friends that their double taxation agreement with the UAE was terminated as at the end of the year.
Now we may also pity our Austrian friends and clients, as the island of the blessed has plunged deep into the sea of the tax hunger of the beautiful alpine republic.
As already reported in our special newsletter, we have received a protocol according to which the foreign ministers of Austria and the UAE will submit significant changes to the double taxation agreement to their respective legislative bodies. The main change for Austrians is that the credit method will probably be applied instead of the exemption method from 1 January 2022, which means that Austrian tax residents earning money in the UAE through self-employment, employment, real estate, pension or profit from companies will have to pay tax on this money in Austria. We will be holding webinars on the consequences of the effects of the amendments to the Austrian agreement as well as on tax residence. See below.
These changes can only lead to the conclusion that the tax screw in the European high-income countries must be turned further, as the economic consequences of the Covid 19 measures have probably brought with them drastic holes in the respective budgets. So the money has to come from somewhere. If the companies cannot or do not want to pay any more taxes as a result of the country’s closure for months, the unemployment rate rises accordingly and the social safety net is overburdened, one option left is to close loopholes in which legal tax reduction or avoidance was possible until now in order to increase tax revenues.
As a first consequence of these economic lockdowns, we are already seeing an unbelievable increase in all transport rates and logistics, a shortage of containers and bottlenecks in deliveries. Not only money, gold and transportation is getting more expensive but also the cost of living such as energy, food and services. The inflation rate increases and has reached over 5% in US.
But now is the gold rush time for those entering the new lucrative business sectors such as e-commerce or renewable energy. We have restructured our team accordingly, offering expertise in national and trans-border M&A and energy law.
And if the Western high-tax countries are turning the tax screw, the Far East is going in exactly the opposite direction. Cambodia has already reduced the tax on dividends paid to non-residents from 31.5% to 14% as of 2020. At the end of the year, the new foreign investment law is expected to offer further comprehensive tax relief for investors, namely up to nine years of income tax holidays. We will provide further reports on this shortly.
So not everything is grey in this economic world, there is still light on the horizon. Our task is to show you these horizons. We can provide you with the ship to get there.
Wishing you a successful start into the business – autumn after the relaxing summer.
“Expected amendments to the DTA Austria – UAE”
What to be expected?
What steps to be taken as employer, as employee, as entrepreneur, as shareholder, as property owner?
Date & Time: 24. August 2021, 2 pm GST – Dubai Time (CEST +2)
Spaeker: Dr.Theodor Strohal and Jakob Kisser
Language: German (If there is demand the webinar can be repeated in English)
Please register by email: email@example.com and state your preferred language
“What makes me a tax-resident?”
How can you escape from high taxes by changing your residence?
Date and time: September 7, 2021, 2 pm GST – Dubai Time (CEST +2)
Speaker: Dr.Theodor Strohal
Please register by email: firstname.lastname@example.org
DED fines businesses which failed to register beneficial owner data
The Commercial Compliance and Consumer Protection (CCCP) Sector in Dubai Economy has fined 148 companies in Dubai that did not register their Beneficial Owner data by 30th June 2021 in accordance with the UAE Cabinet Decision No. (58) of 2020. Violators will have to pay a fine of AED 15,000 each. Dubai Economy requires companies to register and provide their Beneficial Owner data on its eServices page https://eservices.dubaided.gov.ae/BeneficiaryOwner or via the call centre +97144455555.
Dubai CommerCity begins operations
Dubai CommerCity has begun commercial operations and has leased 30 per cent of its facilities within only 2 months in the first part of its development phase. Dubai CommerCity is the first dedicated e-commerce freezone in the Middle East, Africa and South Asia. It currently offers investors an “Early Bird Campaign” that runs up to mid-September giving its clients up to 50 per cent discount on setting up their businesses. Some services of the free zone include e-commerce strategy consulting, business set-up, customs support, guidance on e-commerce regulations, and end-to-end logistics solutions inclusive of warehousing and last-mile delivery. The free zone is divided into 3 clusters namely:
1. Business Cluster – with landscape buildings equipped with Grade A premium offices.
2. Logistics Cluster – has multi-client warehouse units with scalable pay-as-you-go pricing models.
3. Social Cluster – consists of restaurants, cafes exhibition halls, and events.
Dubai hosts business events as Expo 2020 approaches
There are more conferences happening in Dubai in the coming months as Expo 2020 is set to take place starting 1st of October and into the rest of 2021, making the emirate one of the first cities to reopen for international meetings. Among the major meetings coming to Dubai in the coming months are the Congress of the Société Internationale d’Urologie, Society of Petroleum Engineers Annual Technical Conference and Exhibition, International Astronautical Congress, World Chambers Congress, LPG Week, Gastech and Africa Oil Week. Meanwhile, major incentive groups visiting the city will include AFC Life Science, Amway, Sunhope, Jeunesse and OMNILIFE. Dubai Business Events (DBE), the city’s official convention bureau, remains to engage with meeting planners internationally highlighting the city’s business events infrastructure and rapidly developing knowledge economy. DBE will host a number of study missions to the city, especially during Expo 2020 Dubai, allowing meeting and event planners to see offerings around the city and experience one of the world’s largest events. Meanwhile, DBE’s global team will also meet planners in their own markets through a series of sales missions, industry events and trade shows.
ADDED reduced requirements for setting-up a new business
The Abu Dhabi Department of Economic Development (ADDED) announced that the Abu Dhabi Government reduced the requirements for starting a new commercial business by 71 %. This new offer is made possible by the efforts of more than 20 government entities and private sectors as a task force launched by ADDED for the Investor Journey Program. The Abu Dhabi government was able to remove duplicate requirements and modified existing requirements to facilitate the process of starting a business without compromising public safety and security. ADDED is also working closely with Abu Dhabi Digital Authority to improve commercial licensing services on the TAMM-Abu Dhabi Government Services website.
Doctors in UAE to get golden residency
The Federal Authority for Identity and Citizenship, through the directives of the Ruler of Dubai, has launched a series of Golden Residency services to grant golden visas to doctors residing in the UAE. The ICA is collaborating with the Ministry of Health and Prevention (MoHAP) and other concerned authorities to implement the decision by organizing the procedures for registered doctors to obtain the golden visa. Doctors and their families will get 10-year residency visas in line with UAE’s vision to enhance the country’s healthcare ecosystem, provide innovative services, competitiveness as a preferred destination for work, living and study, and as an incubator of talent and academic excellence.
Temporary lease of warehouses in AFZ
The Ajman Free Zone now has temporary leasing warehouses that can be rented for periods as short as 1 day. New and existing clients can avail the new offer for just AED65/sqm and it includes utilities and flexible payment terms. AFZ launched this new product to cater to the growing demand of exporters and importers.
Austria and UAE signs comprehensive strategic partnership
His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces visited Austria together with Sebastian Kurtz, Federal Chancellor of the Republic of Austria attended the signing of the Comprehensive Strategic Partnership between the UAE and Austria. United Arab Emirates and the Republic of Austria agrees to advance their cooperation in fields of mutual strategic interest, including in the areas of Political, Diplomatic, Security and International Cooperation, Economy, Trade, the Establishment of a Direct Investment and Business-to-Business Partnership, Industry, Infrastructure, Science, Science-to-Business Partnership and Advanced Technology, Energy, Hydrogen, Food Security, Tourism, Education and Culture.
Government urged to reform outdated laws
In Thailand, the government is urged to reform outdated laws and regulations that hinder business activities and public services within six months to increase Thailand’s competitiveness. Bangkok Bank’s senior executive vice-president said his sub-committee under the Urgent Law Reform Committee is working on the guidelines for the study by Thailand Development Research Institute (TDRI). TDRI found that 1,026 procedures could be amended or abolished which will give private sectors a total of 134 billion baht savings per year. The Urgent Law Reform Committee had submitted the following proposals to improve the law:
· speed up amending regulations related to hotels, spas, and massage businesses
· allow building construction permits to be extended automatically for as many as 3 years, up from one year now
· increase foreign ownership quotas for condominiums from 49% to 70-80% percent and allowing expatriates who have salary payslips to borrow from domestic financial institutions to purchase condos
· expand property leasehold rights for foreigners from 30 years to 50 years to attract longer stays in Thailand
· evoke an existing requirement for companies promoted by the Board of Investment to hire four Thai nationals for every one foreign expert.
In 2020 a new cracker on text on income was introduced by the Cambodian government.
The key change that was introduced was that corporations who benefited from the tax on income Extinction, when it came time to distribute dividends to the shareholders, they would no longer be a callback of the tax on income. Therefore this benefit becomes a permanent exemption from the 20% income tax and reduced the tax burden from 31.5% to merely 14% withholding tax.
Just last month the council of ministers gave the green lights to the new investment law , which has to be approved further by the National Assembly and the Senate and finally promulgates by the King. It is expected to be in force by beginning of 2022.
We will report about the details in one of our next newsletters.
Three draft laws on trade to take effect before the end of 2021
Three major draft laws in Cambodia on trade are expected to take effect before the end of 2021. These are the draft laws on the ratification of the Regional Comprehensive Economic Partnership (RCEP) agreement and the bilateral Cambodia-China Free Trade Agreement (CCFTA), as well as the draft law on competition. The government officials believe that the draft laws will boost the country’s economic status, maintain stability, attract more investments and increase investor confidence.