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A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

Our Vision, Our Mission

Our Vision
We will be the first choice for companies in their selection of professional advisors

Our Mission
We will provide quality service to our clients by focusing on client-specific needs and providing solutions to business problems, thereby adding value through expertise whilst maintaining integrity, professionalism and independence.

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

From the Managing Partner - U.A.E.

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A belated Eid Mubarak to all - I do hope you all had a peaceful and productive Holy Month of Ramadan and an enjoyable Eid break as we head into the summer period. No doubt many will be actively looking to get projects finished prior to decision makers taking summer breaks.

The recent increase in the Fed rate by 25 basis points has resulted in a similar increase here what with the Dirham-Dollar peg. Whilst this was to be expected, it does not help those already experiencing tight liquidity or limited access to funds. And indeed, the recent issues with the State of Qatar and the resultant asserting of sovereign rights by some GCC states will also likely have an impact on the commercial operations of a few companies this year.

Over the last few months Value-Added Tax (VAT) has been on everyone's lips and I am sure many of you have been to the briefings being given by the Ministry of Finance. Given that only the GCC Framework has been issued but we still await the UAE VAT law and associated implementing regulations, it is understandable that all questions cannot yet be answered. We can, however, provide an insight into how VAT may affect your business (VAT impact) and subsequently assist you with VAT implementation. In this connection we are profiling our Tax Director, Sarika Dhameja in this issue - see page 9. Please feel free to contact her on sdhameja@pkfuae.com.

We are very pleased to interview in this issue, Mr. Mohammad Bin Suwailem, Executive Director, Dubai Airport Free Zone. We also feature some guidance on fair value measurement which may be topical given that we are passing through testing times.

We also have our usual updates from Oman (featuring the Sultanate's budget for 2017) and the free zone world. Please feel free to write (update@pkfuae.com) if you would like to express an opinion on any matter inside.

GRAHAM MARTINS

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

IFRS 13: FAIR VALUE MEASUREMENT

Implementation Guidance

Introduction

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, also referred to as the willing buyer-willing seller principle. It is important to note that fair value is a market-based measurement and not an entity-specific measurement.

This guidance paper expands on the concept of fair value, provides some theoretical information to the valuation techniques prescribed in IFRS 13 Fair Value Measurement and highlights some common misinterpretations of the Standard. This guidance paper should be read with the IFRS Summary – IFRS 13 Fair Value Measurement, which is available on http://www.pkf.com/ifrs or, for PKF member firms, from PKF365.

Effective date and transition

An entity shall apply this Standard for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an entity applies this IFRS for an earlier period, it shall disclose that fact.

This Standard shall be applied prospectively as of the beginning of the annual period in which it is initially applied.

Amendment from Annual Improvements Cycle 2011–2013 issued in December 2013: An entity shall apply that amendment for annual periods beginning on or after 1 July 2014. An entity shall apply that amendment prospectively from the beginning of the annual period in which IFRS 13 Fair Value Measurement was initially applied. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose that fact.

Understanding the fair value concept

When determining fair value of an asset or liability, cognisance must be given to what the market participants would consider when determining an appropriate price to pay or receive for that asset or liability.

Matters that market participants would consider include the condition and location of the asset as well as the restrictions on the sale or use of the asset.

This Standard is very clear that transaction costs should not be included in the fair value of the asset or liability as these costs are not a characteristic of the asset or liability, however the fair value must be adjusted to consider any transport costs.

Generally, the fair value of non-financial assets proves to the be most difficult to determine, given the fact that it may be difficult to determine the correct market as well as the characteristics that market participants would consider when determining an acceptable price. The Standard states that the fair value of non-financial assets must be determined regarding the highest and best use of the asset, even when the counter-party to the transaction will not use the asset in the same manner as the seller. However, the seller's current use of the asset is the highest and best use of the asset.

When performing the fair value calculation, entities must use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. To increase the consistency and comparability in fair value measurements and related disclosures, this Standard established a fair value hierarchy that categorises the inputs to valuation techniques into three levels:

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

This Standard requires entities to apply valuation techniques consistent with any of the following three methods:

Cost Approach

The cost approach reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost).

From the perspective of a market participant seller, the price that would be received for the asset is based on the cost to a market participant buyer to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. That is because a market participant buyer would not pay more for an asset than the amount for which it could replace the service capacity of that asset.

Obsolescence encompasses physical deterioration, functional (technological) obsolescence and economic (external) obsolescence and is broader than depreciation for financial reporting purposes (an allocation of historical cost) or tax purposes (using specified service lives). In many cases the current replacement cost method is used to measure the fair value of tangible assets that are used in combination with other assets or with other assets and liabilities.

Market Approach

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities, such as a business.

For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might be in range selection of the appropriate multiple within the range requires judgement, considering qualitative and quantitative factors specific to the measurement.

Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value some types of financial instruments, such as debt securities, without relying exclusively on quoted prices for the specific securities, but rather relying on the securities' relationship to other benchmark quoted securities.

Income Approach

The income approach converts future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount. When the income approach is used, the fair value measurement reflects current market expectations about those future amounts.

Those valuation techniques include, for example, the following:

  • present value techniques;
  • option pricing models, such as the Black-Scholes-Merton formula or a binomial model (i.e. a lattice model), that incorporate present value techniques and reflect both the time value and the intrinsic value of an option; and
  • the multi-period excess earnings method, which is used to measure the fair value of some intangible assets.

Practical Guidance

Determining the fair value of a financial asset or liability can be a complicated process. The following illustrations highlight some of the more common misinterpretations when applying the requirements of IFRS 13, especially regarding categorisation into the fair value hierarchy. They address aspects of IFRS 13 but are not intended to provide interpretative guidance.

Intangible Assets

Generally, intangible assets cannot be traded in an active market. An active market is defined as a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Based on this, the sale (and purchase) of intangible assets should be at the very least categorised as a level 2 fair value measurement. Further to this, the disclosure required will most likely only be included on the acquisition date as subsequent to purchase, the asset would be measured at cost (less accumulated amortisation and impairment).

Debt Instruments
Debt issuers must consider the extent of actively trading in an active market; if trade is not active, it is incorrect to classify their own debt instruments as being with the level 1 hierarchy.

Investment Properties

The inputs used to determine fair value of investment properties are often not observable, in which case they cannot be included in the level 2 hierarchy. Observable inputs are defined as inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability.

Operational financial instruments

Operational financial instruments, such as trade receivables and trade payables, finance leases, loans receivable and loans payable, cannot be included in the level 2 hierarchy due to the inputs not being observable.

Interim financial statements

Entities that are required to prepare interim statements in accordance with IAS 34 Interim Financial Reporting are reminded that the disclosure requirements contained in IFRS 13 Fair Value Measurement are also required in the interim statements, where items are measured at fair value and the fair values of those items were also determined at the interim period.

Conclusion

IFRS 13 Fair Value Measurement is a single source of fair value measurement guidance that clarifies the definition of fair value, provides a clear framework for measuring fair value and enhances the disclosures about fair value measurements. It is also the result of the efforts of the IASB and the FASB to ensure that fair value has the same meaning in IFRSs and in US GAAP and that their respective fair value measurement and disclosure requirements are the same (except for minor differences in wording and style). IFRS 13 Fair Value Measurement applies to IFRSs that require or permit fair value measurements or disclosures. It does not introduce new fair value measurements, nor does it eliminate practicability exceptions to fair value measurements.

In other words, IFRS 13 Fair Value Measurement specifies how an entity should measure fair value and disclose information about fair value measurements. It does not specify when an entity should measure an asset, a liability or its own equity instrument at fair value.

(IMPORTANT DISCLAIMER: This publication should not be regarded as offering a complete explanation of the accounting matters that are contained herein. This publication has been distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.)

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

INTERVIEW

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Mohammad Bin Suwailem is the Executive Director of Relationship Management and Government Services Division at Dubai Airport Freezone. He has been an integral part of Dafza since 1998. Gifted with cross-functional knowledge, he has a proven track record of leadership, with around 20 years of experience in senior management positions. In his previous role as Director of Sales, he spearheaded efforts in the accomplishment of business targets and maximized market penetration through independent relationship development with key clients across various countries and nationalities. In his current role, Mr. Suwailem does what he is best at, managing relationships between multi-cultural clients and DAFZA, among other key portfolios.

Q. The UAE is home to nearly 40 free zones. With the tough competition, what steps has the DAFZA leadership taken to ensure that DAFZA is set apart from the others?

A. One of our key priorities at DAFZA is to provide unique services within an equally unique environment. All our facilities, processes and services always come with attractive value-added elements. Another major competitive factor is our strategic location near one of the world's busiest airports and just a few minutes away from the center of Dubai, the region's commercial hub. Moreover, as an active supporter of Dubai's economy, DAFZA aligns all its incentives, investments and innovative solutions with the emirate's overarching economic diversification agenda.

Our business model, which focuses on efficient operational management and flexibility to the business and investment needs of the local and global markets and those of our hosted enterprises, also sets us apart from the rest.

And of course, we continue to draw in investors and organizations from all over the world to our numerous incentives such as 100 per cent exemptions on corporate, personal income, and import and export taxes; zero currency restrictions; dedicated logistics services and support; sophisticated infrastructure; and host of innovative smart solutions and capabilities complementing Dubai's transformation into one of the world's smartest cities.

Q. Amid the buzz that other free zones create, DAFZA quietly keeps growing at an even pace without raising an eyebrow. Is the low-profile a strategy in itself? Tell us the story behind DAFZA's continued success?

A. DAFZA is a customer-centric organization that prefers to direct the spotlight on its hosted businesses through exceptional levels of collaboration, cooperation and partnership. We prefer that any buzz we generate is beneficial first and foremost to our clients. We are not really making a conscious effort to be low-key, we just want all our actions to be about our customers.

Our desire to keep the attention focused on our customers has led several Fortune 500 companies to the free zone. We reward their patronage with the highest levels of innovation, service quality, and business and investment opportunities. Our sharp focus on our customers and their diverse and evolving needs has always been the key to our sustained success.

Q. You already have the advantage of a superbly strategic location. What are the other offerings from DAFZA that are sustaining its growth within the free zone industry?

A. We promise our customers an environment where they are free to grow, which we complement with continued expansion. Just recently we completed the DAFZA Industrial Park, a premier distribution platform representing our first expansion project outside of the free zone's geographic periphery. It is a 16,000 square metres plot conveniently located near to the Al Qusais Industrial Area which will facilitate in-bound logistics, warehousing and distribution. Our customers there will be provided with light industrial units that can support a broad range of industries.

DAFZA also focuses sharply on comprehensive diversification and nurtures new sectors such as the Islamic economy which we are fully supporting to complement Dubai's efforts to become the Capital of the Global Islamic Economy.

Innovation - one of DAFZA's core business values - is another focal area that we capitalize on to guarantee sustained growth. To ensure our transformation into one of the world's most innovative free zones, we are implementing the DAFZA Innovation Strategy to put various innovation-driven protocols, procedures, capabilities and services in place. We have our Innovation Unit dedicated to achieving the goals of this strategy and establishing innovation as a fundamental pillar of the free zone's development structure.

Another remarkable milestone is our smart app that enable our customers to efficiently, swiftly and safely perform important transactions such as license registration via advanced electronic platforms. Such initiatives have helped us boost the level of customer happiness in our service centers by a remarkable 83.5 per cent.

Our philosophy is that if we want our customers to spread their wings, then we should constantly come up with new and innovative facilities and offerings to accommodate their development.

Q. You have nearly two decades of experience in the free zone industry. Does this help in understanding the current needs and demands of the Dubai business community?

A. They say that experience is the best teacher, which is very true in our case. Our almost two decades of exposure to the industry has provided us with valuable insights on how to best meet the needs of our customers and the market we operate in and how to leverage challenges and turn them to opportunities.

DAFZA's good pulse of Dubai's business and investment dynamics enables us to assist in local commercial and investment growth. We keep up with the latest trends and best practices to continue attracting leading multinational companies and investors and in the process, help maintain the vibrancy of the local business landscape.

Q. What is your vision for the future of DAFZA in particular and Dubai in general?

A. During the first quarter of this year we rolled out our Strategic Plan for 2017 to 2021 which will guide us in further boosting our key contributions to Dubai's economic diversification and development. Our vision is to cement our position as a premier hub for foreign investors and leading multinational companies from all over the world. We will achieve this through a comprehensive diversification strategy involving the establishment of new sectors, the inclusion of companies specializing in the Islamic economy, and the development of more expansion projects along the vein of our new DAFZA industrial Park.

As for Dubai, we envision the emirate soon emerging as one of the world's leading business, investment and lifestyle destinations under the wise leadership of H.H. Sheikh Mohamed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The upcoming 2020 Dubai World Expo will draw global attention to Dubai as a city of vast opportunities that significantly grows day by day, and will be an important platform for securing Dubai's international prominence. We are currently preparing to support this major event and help attract more investors and multinational companies.

Q. You've been with DAFZA for 20 years! That is nearly a generation in today's world of millennials. What has sustained your enthusiasm and drive to be with DAFZA?

A. It gives me a great degree of satisfaction and fulfillment to be able to help maintain a stimulating and nurturing workplace for highly talented people. Although there have been many challenges throughout those two decades, they have all been instrumental to my successful professional growth. Plus, I have been blessed with the tireless support and encouragement of DAFZA's inspiring management, which I appreciate very much.

It is an honor and a privilege for me to be part of DAFZA's distinguished team as I firmly believe in the exceptional role that the free zone will play in forging a bright future for Dubai and the entire country.

Q. You are and have been part of a score of business councils in the UAE. What message do you wish to give to established and upcoming businessmen in the region?

A. I would like to convey to the region's seasoned and up-and-coming businessmen that the UAE and Dubai continue to be exemplary business and investment destinations that the world looks up to as key gateways between the East and the West. The necessary facilities, infrastructure, manpower and policies are all here for entrepreneurs and enterprises of all sizes and forms to achieve unprecedented and sustained growth.

We are particularly proud of how DAFZA has grown into the region's premier free zone, and given the chance I would invite as many members of the region's business and investment communities as I can to take advantage of our high-caliber facilities, services and incentives to achieve greater success.

Q. What does a Director at one of the busiest free zones in UAE do for work-life balance? What are your other interests / passions?

A. Striking a good work-life balance is already difficult for a professional, so it is of course hard to achieve this while working at one of the world's most dynamic free zones. While it is highly challenging, it is not impossible, though. I am constantly aware of the need to shift my focus on certain aspects of my professional and personal life whenever and wherever needed; I do not allow myself to get stuck in one place and lose my center. I manage my time as best as I can, I set my priorities at the start of the day, and I carefully go through my schedule. The key is to work smarter, and not just harder.

I try to squeeze in some rest and relaxation as much as I can through quality time and vacations with my family, attending equestrian events, and occasional get-togethers with friends. I also exercise regularly and eat a nutritious diet to sustain my energy and good health.

Q. What does the future hold for a modest yet dynamic representative of the Dubai Future Leaders Program?

I am very proud to be a representative of the Dubai Future Leaders Program which was launched by the Vice President and Prime Minister of the UAE and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum. It gives me the opportunity to participate in the grooming of future leaders with the vision to take Dubai to new heights while staying true to its roots and core values. I am learning a lot through my involvement in helping government entities meet their strategic objectives and in collaborating with leading scientific institutions to reinforce national capacities. As a representative of this inspiring program, I am learning more about how to polish my own leadership skills and transfer my knowledge to the next generation to ensure greater success for Dubai.

Q. What does the future hold for a modest yet dynamic representative of the Dubai Future Leaders Program?

I am very proud to be a representative of the Dubai Future Leaders Program which was launched by no less than the Vice President and Prime Minister of the UAE and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum. It gives me the opportunity to participate in the grooming of future leaders with the vision to take Dubai to new heights while staying true to its roots and core values. I am learning a lot through my involvement in helping government entities meet their strategic objectives and in collaborating with leading scientific institutions to reinforce national capacities. As a representative of this inspiring program, I am learning more about how to polish my own leadership skills and transfer my knowledge to the next generation to ensure greater success for Dubai.


A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

PKF INTERNATIONAL

GROWTH IN US COVERAGE

The PKFI network welcomes the following two new members:

  • EKS&H, with over 70 partners and 700 team members, based in Denver and San Francisco. EKS&H bring a vast array of expertise which enhances capabilities within the region.
  • JLK Rosenberger, with offices in Glendale, Los Angeles and Dallas, a full-service accounting, tax and advisory firm with specialist Insurance sector knowledge.

INTERNATIONAL MEETS

North America
The inaugural PKF North America conference had over 40 delegates with representatives from all firms in the region. Exciting plans are taking shape and many joint initiatives were identified across service lines and sectors.

Latin America
2017 saw the largest ever LatAm conference with representatives across the region coming together in Miami. Regional elections were also held to vote for the new board and Hector Guzman (Senior Partner, PKF Dominican Republic) was re-elected as Regional Chairman for a further term.

Europe-Middle East-India
Another first was the UK & Ireland holding their first conference at Mercedes Benz World in London, attended by over 80 delegates. Eleven breakout groups discussed joint plans to collaborate and share best-practice to help each other to develop and grow locally.

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

Meet Our Staff Member

Sarika Dhameja has recently joined PKF Dubai office as Director – Tax Services. A commerce graduate from Delhi University, India, and a Chartered Accountant and member of The Institute of Chartered Accountants of India, she has an Advanced Diploma in International Taxation from the Chartered Institute of Taxation (CIOT), UK.

She worked for Deloitte, India, for around 15 years before relocating to Dubai and joining PKF.Sarika has 18 years of rich experience in taxation including indirect taxes, inbound and outbound tax planning, optimization of taxes in global contracts, acquisition, structuring and transfer pricing.

She actively handled implementation of Service-Tax (similar to VAT) in India, and several other tax related implementations such as Fringe Benefit Tax, General Anti-Avoidance Rules, BEPS projects, etc. She has led structuring for several clients (including MNCs) for tax planning. She has also represented clients in high profile tax audits and litigation proceedings before various tax authorities/forums.

Sarika has authored various articles in international publications and has also presented many tax technical topics in public forums.

 

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

OMAN UPDATE

BUDGET 2017

The Oman Budget 2017 has continued with the cautious approach adopted in the past two years due to unprecedented low oil prices, and has focused on diversification, privatisation and revitalising of the Oman economy. The budget proposes measures to enhance the non-oil revenues through raising of corporate taxes, limiting tax exemptions, strengthening tax collection procedures, effective monitoring of custom duty compliance and exemptions, and revision in power tariffs. Whilst the austerity measures will continue and subsidies would be further reviewed and gradually reduced, the funding would only be channelled into projects critical for Oman's non-oil sectors. The authorities in Oman have shown maturity in cutting off unproductive expenditures only and for choosing to fund the deficit mainly through borrowings in international markets, so as to keep the economic momentum going rather than stopping the vital infrastructure projects. The government authorities have also launched the massive 'Tanfeedh' programme for enhancing economic diversification, boosting capital investment and economic growth, and providing employment opportunities for citizens. Tanfeedh has initially identified three major thrust areas viz., Tourism, Logistics and Manufacturing.

The total Budgetary revenues are estimated to marginally increase to OMR 8.7 billion, of which oil and gas revenues constitute 70%. Despite the significant constraints on budget revenues, the budget expenditures have only been marginally reduced by 2% to 11.7 billion. The Budget focuses on curtailing non-essential expenditures and rationalising costs, to ensure that the cuts in welfare costs like Health, Education, Housing, Social Security are limited, and funding to critical development and diversification projects continue. The outlays on defence and security at OMR 3.3 billion, and ministries and government units at OMR 2.2 billion constitute almost 28% and 19% respectively of total budgeted expenditure. The expenditure of OMR 1.89 billion on oil and gas production constitutes about 36% of oil and gas revenues. Recruitment in the public sector would be very limited, and private sector is expected to create job opportunities for Omani citizens in investment projects. The Budget focuses on enhancing public private partnerships and privatisation programmes to implement more investment projects and increase private sector initiatives. Development expenditure has been marginally increased from 2016 levels, to OMR 1.35 billion, in spite of revenue constraints.

The Budget deficit projected at OMR 3 billion is substantially lower than the actual deficit of about OMR 5.3 billion for 2016, and constitutes 35% of budget revenues and about 12% of estimated Gross Domestic Product (GDP). The Budget deficit is planned to be financed 84% through foreign and domestic borrowings, and balance by drawing from strategic reserves. Consequently, the government debt is expected to further increase from the present 29% of GDP (approximately), resulting in substantial increase in the interest burden in 2017. The Tanfeedh change programme, by bringing together the government ministers, officials, private corporates and SMEs on one platform, is critical to diversifying the Oman economy from oil and gas, and assisting the country to tide over the challenges posed by low oil prices.

(This article is compiled by Mr. Zarir Patwa, a Partner in PKF L.L.C., the PKF member firm in the Sultanate of Oman)

 

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

OFFSHORE & FREE ZONE UPDATE

PKF UPDATE Rumblings from the Offshore World

With CRS compliance deadlines looming world-wide, the Offshore World as we know it is preparing to tighten its belt and soldier through with a slew of planned regulations coming into place. Tectonic rumblings from popular jurisdictions are discussed below in brief:

BVI's Beneficial Ownership Database

The British Virgin Islands' beneficial ownership database has been officially launched. The "Beneficial Ownership Secure Search system" (BOSS) is a searchable platform, which provides the territory's law enforcement authorities with direct and immediate access to verified beneficial ownership information on the ownership of companies in the territory. The platform also meets the international standards of the Financial Action Task Force (FATF), the global body tasked with combatting money laundering and countering the financing of terrorism. The database, was rolled out so that the BVI could comply with its obligations under the Exchange of Notes agreement entered into with the UK in April 2016 (UK Exchange of Notes).

Under the BOSS system, registered agents, though not other BVI institutions, must record basic information about certain UBOs of the BVI companies they administer in the BOSS database. In turn, law enforcement officials in the BVI, in accordance with the UK Exchange of Notes and applicable legislative safeguards, may search that system for the UBO information in order to exchange it with the UK. Each registered agent in the BVI will maintain its own database. Information maintained on each database will be confidential to the registered agent and will be accessible externally only by specially designated BVI law enforcement officials.

Access to BOSS is permissible only from a physical location in the BVI and only following a formal request from the BVI competent authorities: the BVI Financial Investigation Agency, the BVI Financial Services Commission, the BVI International Tax Authority and the BVI's Attorney General's Chambers. The identity of each designated person competent to search the BOSS database will be publicly gazetted in secondary legislation in due course. The BVI competent authorities may request the designated person to search BOSS solely in order to assist the BVI in complying with its obligations under the UK Exchange of Notes.

This would mean that a request would need to originate from the UK authorities before a search of BOSS can take place in the BVI.

IOM Regulator Issues Beneficial Ownership Guidance

The Isle of Man's financial services regulator, the Isle of Man Financial Services Authority, has published guidance on the Beneficial Ownership Act 2017, which requires the identification of the beneficial owners of the island's corporate and legal entities. The Act, and a central database of beneficial ownership that went live on July 1, 2017, were developed following the island's commitment to the UK last year to enhance the sharing of information about the ownership of Isle of Man-based entities.

Information held on the central database will not be public and will only be accessible by a small number of designated officials in a limited number of Isle of Man authorities and, on request to the island's Financial Intelligence Unit, by the intelligence and law enforcement agencies of countries with which the Isle of Man has a beneficial ownership sharing agreement (currently only the UK).

A "beneficial owner" is defined as a natural person who ultimately owns or controls more than 25 percent of a legal entity, in whole or in part, through direct or indirect ownership or control of shares, voting rights, or other ownership interests in that entity, or who exercises control via other means.

The Act requires details of any registrable beneficial owner to be submitted electronically to the Isle of Man's central database of beneficial ownership by an entity's nominated officer or relevant corporate service provider. Access to the database is restricted.

Seychelles toes the line

The Seychelles International Business Companies Bill, 2016 was passed by the Legislature of Seychelles in October 2016 to reform and modernize Seychelles International Business companies law as per best international standards, FATF and OECD.

The International Business Companies Act, 2016 came into operation on 1st December 2016 to keep its Register of Directors at its Registered Office in Seychelles and file a copy of such register with the Registrar of Companies as well. Under the IBC Act, the new IBCs which incorporate on or after the Commencement Date are required to file a copy of the Register of Directors with the Registrar of Companies within 30 days of the appointment of the First Directors. Any subsequent change shall be filed with the Registrar within 30 days of the change. For the pre-existing companies incorporated prior to the Commencement Date, a copy of the Register of Directors shall be filed within 12 months of the Commencement Date, i.e. by 1 December 2017.

Except for listed IBCs and their subsidiaries, all IBCs are also required to keep a Beneficial Owners Register at its registered office address.

This is just the beginning and it is anticipated that to fall in line with the global trend to try and ensure 100% transparency, the age-old concept of offshore 'secrecy' will soon be a thing of the past. The rumblings across the offshore world are meant to create a tectonic shift in the way the world sees 'tax havens' and definitely pave the way for a brave new world where shady business dealings and opaque structures and holdings will be relegated to being just unproved urban legends.

(Compiled by Chaitanya G. Kirtikar Senior Manager Offshore and Free Zone Department )

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

Range of Services

Audit and Management Assurance Services

  • External audit
  • Internal audit
  • Internal audit - compliance with the requirements of the Dubai Financial Services Authorityy
  • Organisation reviews and system studies
  • Due diligence reviews
  • Forensic and other investigations
  • Training and consulting on IFRS - Back office support services – accounting and payroll
  • Outsourced accounting and payroll services for companies registered in the Dubai International Financial Centre
  • Management information systems

Management Advisory Services

  • Business practices (process) assessment
  • Business risk identification
  • Accounting and procedure manuals
  • Market analysis and feasibility studies
  • Financial projections
  • Information memoranda
  • Business and share valuations
  • Identification and valuation of intangible assets on a business acquisition
  • Impairment reviews
  • Corporate structuring, acquisitions and disposals
  • Joint ventures and strategic alliances
  • Advice on partner/shareholder entry/exit
  • Fund raising

Offshore and Free Zone Services

  • Entry strategy
  • Free zone and offshore company formation
  • Company secretarial services
  • Company secretarial services for companies registered in the Dubai International Financial Centre
  • Registered agents services
  • Taxation

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 1 April 2017

 

Publications

  • Practice Profile
  • Doing Business in the UAE
  • Credentials
  • Free Zones in the UAE

A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd. network

VOL 19, Issue 3 July 2017

 

OFFICES/CONTACTS IN THE UAE AND OMAN

DUBAI/JEBEL ALI
G.Martins
S.D. Pereira
Tel: (971-4) 3888900
Fax: (971-4) 3552070
e-mail:dubai@pkfuae.com

DUBAI INTERNET CITY
G.Martins
Tel: (971-4) 4495430
Fax: (971-4) 3908836
e-mail:dic@pkfuae.com

DIFC
G.Martins
Tel: (971-4) 3857285
Fax: (971-4) 3257294
e-mail:difc@pkfuae.com

SHARJAH/HAMRIYA FREE ZONE
G.Martins
Tel: (971-6) 5740888
Fax: (971-6) 5740808
e-mail:sharjah@pkfuae.com

ABU DHABI
B.R.Sudhir
Tel: (971-2) 6261715
Fax: (971-2) 6261716
e-mail:abudhabi@pkfuae.com

SULTANATE OF OMAN - MUSCAT
P. R. Bhaya
Z.J. Patwa
Tel: (968) 24 563195 / 6 / 7
Fax: (968) 24 563194
e-mail: muscat@pkfoman.com




This document has been prepared as a general guide. It is not a substitute for professional advice. Neither PKF UAE nor its partners or employees accept any responsibility for loss or damage incurred as a result of acting or refraining from acting upon anything contained in or omitted from this document. If you wish to be included on the regular mailing list for this newsletter, forward your request and a mailing address to Mr. K.R.C. Pillai, P O Box 13094, Dubai, UAE, E-Mail: cpillai@pkfuae.com

PKF Publications

Practice Profile

Practice ProfileA profile of PKF International with emphasis on the Middle East region and the UAE in particular.

Doing Business In The UAE

Doing Business In The UAE A guide to the UAE including economic and social background, the regulatory environment, basic business structures, grants and incentives (including free zones), taxation and employment.

Free Zones in the UAE

Free Zones in the UAE A guide to the major Free Zones in the United Arab Emirates including the salient features and costs.


PKF Update
A quarterly newsletter detailing news from PKF UAE with matters of interest in the region.
If you would like to be placed on our mailing list for this document, please contact us.

Statement of Credentials.
Details of the firm, clients, services and the team.
If you wish to receive a copy of this document, please contact us.

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