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

VOL 20, Issue 3 July 2018

 

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 20, Issue 3 July 2018

From the Managing Partner - U.A.E.

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Three recent announcements have got people talking. The first was that of allowing 100% foreign ownership for mainland companies and of issuing ten-year residence visas for certain categories of residents. This was accompanied by the possibility of a five-year visa (ten years if they excelled) for students studying in the UAE. The second announcement was that of the AED 50 billion Abu Dhabi Government spending package over the next three years. And the third was the announcement from Dubai Government of fine waivers, government fee reductions and freeze on school fees. With respect to the foreign ownership of mainland companies, this will be welcome in many sectors and reflects the country's continued opening up of its economy. The five and ten year visas will also be very welcome, providing people with an increased level of security if they are investing in the country. We are yet to see any detail but there could be wide ranging implications for companies and individuals already in situ.

The AED 50 billion spending package announced by the Abu Dhabi Government covered a multitude of initiatives such as public private partnerships, Emirati job creation, SME support, dual licences for Abu Dhabi free zone companies, exemption from workspace requirements, instant licensing, settlement of debts and reviewing building regulations. The Dubai Government announcement across sectors is also expected to bring relief to many in times of rising costs.

All of these initiatives are designed to increase private sector investment in the country and provide more security to those invested here..

We feature in this issue an interview with Mr. Adel Al Taheri, Acting General Manager of the Abu Dhabi Airport Free Zone. We also have an article on the threat posed, and the opportunity available, on account of digital disruption. The article on IFRS 9: Financial Instruments discusses the wide-ranging changes in the accounting rules relating to financial instruments.

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 20, Issue 3 July 2018

 

Digital Disruption

What Does it mean for Accounting?

There is a vague feeling of loss each time computers learn to perform a skill better than we can. Experts at the abacus no doubt felt it when calculators made their knowledge obsolete. Interestingly the first calculator, invented in 1645 by a supervisor of taxes in Rouen, was created to try to reduce tedious calculations required. That seems remarkably prescient for what we are about to discuss.

In 2017 Google's AI subsidiary "DeepMind" was fed with 100,000 datasets of previous games. It went on to beat the human Go masters, with the world's best Go champion at the time saying that the performance was "godlike". Just one year later in 2018, DeepMind was given only the rules of Go - learning the game from scratch instead. After just 3-days of self-learning, the 2018 platform beat the 2017 version by 100 games to zero. In case you are wondering, the number of permutations of possible legal moves on a 19-by-19 Go board is a dizzying 2x10170. To put that into perspective there are an estimated 1080 atoms in the observable universe. Not bad at all.

The evolution of computing power means that its growth is exponential even while the price of its availability is similarly reduced. In one study featured in AI Impacts, it was estimated that "computing power available per dollar has probably increased by a factor of ten roughly every four years over the last quarter of a century". With quantum computing just around the virtual corner, that value is likely to accelerate further. For business, this inexorable rise is taking on a more urgent character, as survival itself is at stake.

At this point, a definition of Digital Disruption is useful. It is "the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services". In other words, it has both a threat (a la the much-cited Nokia) and opportunity (a la Apple). The more entrenched and dominant one is (a la Nokia), the harder it is to give up that position by disrupting oneself and the easier it is for an upstart (a la Apple at the time) to present such significant value to the consumers that a shift rapidly occurs. The more computing power we have and more connected we are, the more rapidly those disruptions will occur. Interestingly the disrupters of these traditional services are often technology companies - Apple, Uber, Airbnb, Netflix, Amazon, Google, Facebook, and the list will carry on.

Accountants have been performing double-entry bookkeeping since a Franciscan Monk in Milan, Luca Pacioli, first described it in 1494. Is the accounting industry "entrenched, traditional and dominant", leaving it wide open for disruption? Earlier this year Forbes Magazine stated: "We expect that by 2020, accounting tasks - but also tax, payroll, audits, banking... - will be fully automated using AI-based technologies, which will disrupt the accounting industry in a way it never was for the last 500 years." This leaves a frighteningly short period of time for its prediction to come true.

Should accountants be frightened? No, we need simply act. Computers will be faster, more accurate, more secure and more organised than humans at every type of repetitive, predictable task, particularly those centred around mathematics and processes. They can already collect and scan receipts, verify data, organise spreadsheets, do our taxes, read contracts, make quantitative analyses, detect errors, and make predictions about a company's performance - all cheaply and, by the way, in far less time than it took you to read this sentence.

Successful adaptation involves rethinking the role and function of the accountant. Computers can do the calculations, but this does not mean that accountants will no longer be necessary. On the contrary, the time saved by computers can instead be used to provide other, higher level value-added services. The accountant of the future can use his computer assistant to his or her advantage, using the data it produces to provide current and continuous strategic advice for their clients.

When seen through this lens, the benefits for all parties become apparent. Accountants will no longer need to spend their days on the endless stream of data entry, document verification, formal report writing or other such duties. Their new responsibilities will be far more open-ended and intellectually engaging, involving analysis of current vs alternative scenarios, real-time advisory services, management of outcomes rather than processes, investigation of new business opportunities, and creative research to discover data patterns not detected by the artificial intelligence system. What are considered premium services today will become the norm tomorrow.

Even as the accountant's tasks become more personally satisfying, the rise in efficiency, improvement in accuracy, and extra dimension of service that artificial intelligence allows will all redound to the benefit of the client.

Moreover, this new, more holistic conception of the accountant's role will lead to greater specialisation. Future accountants will require high levels of literacy in technology and data analysis, as well as creative skills in problem solving and strategic planning.

One technology that will be crucial to the new era of business and to the future of our own industry is "Blockchain". As with any tool, blockchain technology can be used for good or ill - but its potential in shaping the future is profound and unmistakable. Some dismiss it as nothing more than an over-hyped fad because it is the technology that underpins some of the bad-boys on the block (as it were) using crypto-currencies for ill-gotten gains. A more fitting analogy, however, is to the World Wide Web. There are certainly some silly web pages out there - particularly the ones that were created first with the technology - but the organisational foundation of the Web has proven itself to be world-changing.

So, it is with blockchain. Blockchain is an example of Distributed Ledger Technology where alterations are instantly and automatically verified by all interested parties through encrypted channels and cannot be undone. Because a shared ledger is used, blockchain encryption allows information to be bundled together and processed efficiently. Certificates and other paperwork can easily be integrated with digital inventories, streamlining transactions with reliable 'virtual' paper trails.

As we have read often lately, the future of Audit is in question with Blockchain. Instead of looking at financial performance for what has already past with rear-view dim red lights, Blockchain offers the possibility of 100% real-time data which is inherently correct as it was already added to the ledger. This creates an opportunity to switch on front-facing full-beams to produce useful insight and predictions for what is coming. We might call this advisory rather than audit. Again, it is rewarding work for us and very valuable for the client - a "want to do" as opposed to a "have to do".

So soon we will find that the collection of validated financial data marks not the end of our duties, but rather the beginning. Companies will expect their financial advisers to run individualised, advanced comparative simulations for various potential business plans, relying heavily on industry knowledge and data analytics.

The speed of change will quickly separate the innovators from the companies whose only goal is not to fall too far behind. The latter will have the regrettable experience of seeing their customers migrate to the former. Digital Disruption is as much a skills-shift as it is a technology shift.

We began this article by noting that the very best human game players are, now and forever more, doomed to lose to their computer counterparts. That is certainly true, but a closer look reveals the crucial detail - humans built the AI, after all - that it is the unique partnership of humans and technology that made the difference. The way forward is neither to reject technology nor to turn our backs on human skill altogether. Rather, it is to use the talents of each world wisely and fully, with each side complementing the best of the other. Will it be the accountants armed with technology, or the technology companies armed with accounting? Timing will play a part in the answer. If we take too much time and let outside forces disrupt ourselves, it is more likely to be the latter.

(This article is written by Mr. Andrew McBean, CEO of PKF Holdings in Thailand who has 26 years of experience gained in the technology industry.)

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

VOL 20, Issue 3 July 2018

Interview

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Adel Al Taheri is the Acting General Manager of Abu Dhabi Airport Free Zone (ADAFZ). He joined ADAFZ in March 2007 taking on the responsibility of being a Sales Executive at the Company. In November 2016, Mr. Al Taheri assumed charge as the acting General Manager. Prior to joining ADAFZ, he gained valuable experience working with Dubai Airport Free Zone (DAFZA) that has significantly added to his knowledge from holding a Master's Degree in Business Administration.

Q. Could you update our readers on where ADAFZ stands presently in terms of development, facilities and registrations, etc?

A. ADAFZ started its operations towards the end of 2012 and has succeeded in attracting 220 companies to the Free Zone. The Company's first project was the Logistics Park that comprises of 100 warehouses. Today the Park is home to many renowned companies such as FedEx, DHL, TNT, and others. In 2013, our second project was ready for operations, a Business Center where we provide our customers with furnished facilities equipped to facilitate start-ups to set-up and commence their business very quickly. Following the Business Center came our first Grade-A commercial building in the year 2015. In addition to these office buildings, ADAFZ offers hangars and "Musataha" which is the long-term leasing of land plots to investors to be able to build their own facility. Other than that, ADAFZ has a number of projects in motion including the Cargo Village development, Al Ghazal Golf Club enhancement project, Business Park Phase 2 and many other infrastructure-related expansions to satisfy the Company's present and potential customers.

Q. What were the major developments which happened over the past one year and what developments are planned up to 2020?

A. ADAFZ is in a growth trajectory and through our focus on the business requirements, we were able to plan for multiple new projects. These projects include two new commercial buildings, each with a net leasable area of 6000 m2 and a Logistics Park (warehouses) at Al Ain Airport, all expected to be completed in 2020.

Q. What can investors look forward to when they invest in ADAFZ?

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A. ADAFZ is spread across three of Abu Dhabi's main airports, Abu Dhabi International Airport, Al Bateen Executive Airport, and Al Ain International Airport. Operating at these three geographical locations with a single Free Zone entity is a unique offering to our customers by being within close proximity of the airports. Additionally, ADAFZ is able to provide its customers with different types of licenses which include services, trading, and light manufacturing.

Q. One key issue confronting free zone investors is they cannot transact business with the oil & gas sector which is still a very significant sector in Abu Dhabi. Is ADAFZ taking any initiatives in this respect and what is the present status?

A. The oil and gas industry is of strategic importance to the Emirate of Abu Dhabi and there are certain rules that have been put in place for doing business with this industry. ADAFZ does business within the Oil & Gas Industry but does not enter into direct tenders.

Q. What distinguishes ADAFZ from other free zones in Abu Dhabi? How do these differences benefit prospective investors?

A. All the free zones in the Emirate of Abu Dhabi complement one another where the business expertise of each is different, providing the much-needed support to the customers in their individual field of business. Adding to that, ADAFZ is the only airport based free zone that can license all types of aviation related business and provide the necessary support required from the regulating authority of such an activity. This, of course, is in addition to licensing other types of business such as trading, services and light manufacturing.

Q. What is your leadership's vision for ADAFZ? Where do they/ you see ADAFZ in the next few decades?

A. ADAFZ intends to create a niche for the free zone by promoting the concept of the customer comes first and focusing the developments around the customer needs. The Free Zone also has the unique advantage of having a landmass of over 40km2 that allows for a planned development that caters to the changes in the business environment.

Q. Would you like to tell our readers something about yourself and your journey so far?

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A. The past 11 years were quite challenging where we began at a time when there were no free zones in Abu Dhabi. With the sanction of the visionary leaders of the country, we have been able to reach the point we are at now. Our journey does not stop here and with our robust base, one that has been created with hard work, a successful launch of our next set of initiatives is ensured.


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

VOL 20, Issue 3 July 2018

 

PKF International

NEW CHAIRPERSON AT PKF SOUTH AFRICA

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PKF South Africa announced the appointment (with effect from 1 June 2018) of Theo Vermaak (see photo below) as chairman, replacing incumbent Kevin Gertenbach. The latter remains a partner of PKF Durban and member of the PKF Africa Board. Vermaak was also previously the Africa Regional Director of PKF International was elected to one of the top leadership posts of the global accounting profession - Chair of the Forum of Firms.

"The intention with the appointment is to bring in a chair that is independent from any one PKF firm, essentially to provide an outsider's perspective," explained Vermaak.

EMEI MEET IN BULGARIA

Graham Martins and Stany Pereira from Dubai and B R Sudhir from Abu Dhabi attended the Europe-Middle East-India (EMEI) regional partners conference in Sofia, Bulgaria, while Sarika Dhameja from Dubai attended the regional tax meeting which was held concurrently.

INFORMATION SOLUTIONS

A new focus group is being formed to develop and share the increasing levels of Business Intelligence, Machine Learning and Automation solutions. Focus will be placed on sharing expertise within the network and developing new solutions.

NEW MEMBER FIRMS

PKF International Limited has strengthened its global coverage with the admission of:

  • PFC Accounting with its head office in Calgary and branch in Red Deer, Canada as the newest independent member firm in North America.
  • Shiodome Partners as a member firm in Tokyo. Shiodome Partners, based in Tokyo and Okinawa, has 5 partners and provides Business Consulting Services, BPO (Business Process Outsourcing), Financial Consulting Services and Business Support Solutions.
  • AFC Benelux and PKF Audit & Conseil as new member firms in Luxembourg. AFC Benelux, established in 2006, has 4 partners and employs over 40 people in its two offices in Luxembourg City and Hobscheid. PKF Audit & Conseil is a new firm established early 2018 to provide assurance and related accounting services to its clients, supported by the partners, employees and resources of AFC Benelux.
  • Thida & Partners Limited as a member firm in Myanmar. Based in Yangon, Thida provides a full range of assurance, tax and advisory services to both private and public companies across a range of sectors.
  • Octagon Chartered Accountants as an independent member firm in South Africa. Based in Johannesburg, Octagon has 11 partners and provides a full range of audit and assurance, accounting, tax and advisory services to both private and public companies across a large range of sectors.

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

VOL 20, Issue 3 July 2018

 

Transition from IAS 39 to IFRS 9

Roadmap to a Forward Looking Approach in financial reporting

OVERVIEW

Apart from the much discussed and debated IFRS 15 on revenue recognition, IFRS 9: 'Financial Instruments' is another standard which will have widespread and far reaching implications. Contrary to common belief, IFRS 9 affects more than just financial institutions. Any entity could have significant changes to its financial reporting as a result of this standard. That is certain to be the case for those with long-term loans, equity investments, or any non-vanilla financial assets. It might even be the case for those only holding short term receivables. IFRS 9 fundamentally redefines the accounting rules for financial instruments. It introduces significant changes and a fresh approach for financial asset classification; a much more forward-looking expected loss model; and a host of new requirements on hedge accounting.

Financial InstrumentsIFRS 9 fundamentally redefines the accounting rules for financial instruments. It introduces significant changes and a fresh approach for financial asset classification


KEY CHANGES

Classification and measurement of financial assets after initial recognition

IFRS 9 replaces IAS 39's arbitrary bright line tests and options for the classification and measurement of financial assets after initial recognition with a single model that has fewer exceptions. The new standard is based on the concept that financial assets should be classified and measured at fair value, with changes in fair value recognized in profit and loss as they arise ("FVPL"), unless restrictive criteria are met for classifying and measuring the asset at either Amortized Cost or Fair Value Through Other Comprehensive Income ("FVOCI").

IFRS 9 eliminates 'the held to maturity' category and the related 'tainting' rules, and also the 'available for sale' and 'loans and receivables' categories by requiring that on initial recognition, all financial assets are classified into one of just two measurement categories - amortised cost or fair value (FV).

A financial asset is measured at amortised cost only if it meets two conditions: the objective of an entity's business model is to hold the financial asset in order to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Investments in equity instruments do not meet the conditions to be measured at amortised cost because they do not contain contractual terms that give rise to cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding. Consequently, investments in equity instruments are measured at FV. IFRS 9 has no exemption from FV measurement for those instruments for which FV cannot be reliably measured.

Financial Instruments

The IFRS 9 model is arguably simpler than IAS 39 but possibility of volatility in profit and loss cannot be ruled out. As the default measurement under IAS 39 for non-trading assets is FVOCI, under IFRS 9 it is FVPL and that is a major change. This can have major consequences for entities holding instruments other than plain vanilla loans or receivables, whose business model for realising financial assets includes selling them or have portfolio investments in equity instruments.

IMPAIRMENT

Accounting for impairments is the second major area of fundamental change. IFRS 9 introduces new impairment requirements to address the criticism that during the financial crisis the recognition of credit losses on financial assets was a case of 'too little, too late'.

On the one hand, IFRS 9 eliminates impairment assessment requirements for investment in equity instruments because they now can only be measured at FVPL or FVOCI without recycling of fair value changes to profit and loss. On the other hand, IFRS 9 establishes a new approach for loans and receivables, including trade receivables - an "expected loss" model - that focuses on the risk that a loan will default rather than whether a loss has been incurred.

Yes, the new standard moves from an 'incurred' loss to 'expected' loss model, meaning that expected credit losses must be recognised at the point at which an entity makes a loan or invests in a relevant financial asset. Under the "expected credit loss" model, an entity calculates the allowance for credit losses by considering on a discounted basis the cash shortfalls it would incur in various default scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The allowance is the sum of these probability of weighted outcomes. In short, expected credit losses represent possible outcomes weighted by the probability of their occurrence, these amounts rather represent measures of an asset's credit risk. Because every loan and receivable, including bank balances, carries with it some risk of default, every such asset has an expected loss attached to it, right from the moment of its origination or acquisition.

IFRS 9 (2014) requires an entity to recognise a loss allowance for expected credit losses on:

  • Debt instruments measured at amortised cost;
  • Debt instruments measured at fair value through other comprehensive income;
  • Lease receivables;
  • Contract assets (as defined in IFRS 15 'Revenue from Contracts with Customers');
  • Loan commitments that are not measured at fair value through profit or loss;
  • Financial guarantee contracts (except those accounted for as insurance contracts).

IFRS 9 requires an expected loss allowance to be estimated for each of these types of asset or exposure. However, the Standard specifies three different approaches depending on the type of asset or exposure which are referred to below. (Refer Figure 2: Expected Loss Model: Approaches).

Expected Loss Model

Impairment losses recognised in the financial statements should now also be based on more complete information, as the standard requires 'reasonable and supportable' forward-looking information to be taken into account, along with historical losses and current information.

Another criticism of financial instruments accounting highlighted by the financial crisis was the counter-intuitive results produced by the inclusion of changes in an entity's own credit risk in profit or loss in the valuation of financial liabilities. IFRS 9 addresses this by requiring the portion of fair value changes represented by changes in own credit risk to be reported in OCI instead of profit or loss.

HEDGE ACCOUNTING

The third major change that IFRS 9 introduces relates to hedging as hedge accounting is one of the most complex areas to apply and understand - IFRS 9 introduces a model more closely aligned with an entity's own risk management approach, with more qualifying hedging instruments and hedged items.

Companies that have shown reluctance in using hedge accounting in the past because of its complexity and impracticability, and those wishing to simplify, refine or extend their existing hedge accounting, may find the new hedging requirements more acceptable than those in IAS 39. IFRS 9 establishes new criteria for hedge accounting that are somewhat less complex and more aligned with the way that entities manage their business and related risks than under IAS 39.

This should enable entities to better represent their underlying hedging activities. Along with new disclosures about hedge accounting, these changes should give investors and other users of the accounts better information about the effects of entities' risk management activities.

However, this change comes with a price - the further threat of volatility in profit and loss, which is treatment of derivatives embedded in financial assets. Under IAS 39, embedded derivatives not closely related to a non-trading host contract must be measured at FVPL, but the host contract often still can be measured at Amortized Cost. Under IFRS 9, the entire contract will have to be measured at FVPL.

DISCLOSURE REQUIREMENTS

There are significant consequential amendments to IFRS 7, Financial Instruments: Disclosures, especially in respect of credit risk and expected credit losses.

Effective date

IFRS 9 generally is effective for years beginning on or after January 1, 2018, with earlier adoption permitted. This means that the provisions of IFRS9 will need to be applied at the beginning of their accounting period as well as at the end. However, entities whose predominant activities are insurance related have the option of delaying implementation until 2021.

PKF help

We have significant experience in the new accounting standard implementations and we have developed insights on different aspects of the major changes for IFRS 9.

We can provide assistance with the implementation of the IFRS 9 requirements using established methodology whilst maintaining integrity and independence which can include impairment testing, valuation of investment in unquoted equity investments, impact assessment, design and advice on the implementation of models, processes, systems and changes to internal controls.

Concluding thoughts....

Some entities may find that classification and measurement of their financial assets will be significantly the same as under IAS 39, and that their impairment allowances may not be materially affected. Others will change substantially. Regardless, every entity will have to go through the process of re-evaluating their accounting policies, financial statement notes disclosures and other areas affected by the new requirements and making appropriate changes to their accounting systems and internal controls.

The accounting changes beyond those specific to IFRS 9 are not insignificant - several require more disclosures and changes to the financial statement presentation. The management of the companies also need to consider the capital and regulatory impact as well.

The new impairment rule of calculating expected loss will require evaluating available qualitative data, data processes used by risk and reconciliation with finance function. This is the most significant of all the expected changes. The new implementation will require tracking and determining significant changes in credit risk throughout the lifetime of financial assets. The proposed changes to hedge accounting may allow additional hedging opportunities but will also cause changes to existing processes. The upcoming accounting changes will impact several processes and systems, e.g. the impairment process system. The interaction between fair value hedge accounting and impairment will be more complex under the new impairment model of IFRS 9. Alignment of key controls within the new processes will be required with the adoption of the IFRS 9 standard; There will be a requirement of change in IT systems due to the implementation of IFRS 9 as well.

However, management may take this opportunity to further align the risk and finance functions.

IFRS 9 raises the risk that more assets will have to be measured at fair value with changes in fair value recognized in profit and loss as they arise resulting in more judgements and volatility to income statement. Further, entities will have to start providing for possible future credit losses in the very first reporting period a loan goes on the books - even if it is highly likely that the asset will be fully collectible.

With careful planning, measured and thoughtful approach the changes that IFRS 9 introduces might provide a great deal of opportunity for financial position optimisation, or enhanced efficiency of the reporting process and cost savings. If not addressed now, there could lead to some radical challenges and surprises. It is still not too late if you haven't begun assessing the implications of IFRS 9.

(This article is compiled by Mr. Vinod Joshi, Director based in Dubai.)

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

VOL 20, Issue 3 July 2018

 

Latest Updates from Freezones Around the UAE

NEW FREE ZONES ADDED TO THE DESIGNATED ZONES LIST

As a part of the UAE VAT regime, a list of 20 free zones around the UAE was released by the UAE Federal Tax Authority in January 2018 as designated zones (DZs). Popular free zones like Jebel Ali free Zone (JAFZ), Dubai Airport Free Zone (DAFZ), Sharjah Airport International Free Zone (SAIFZ), Abu Dhabi Airport Free Zone (ADFZ), RAK Free Trade Zone (RAKFTZ)with fenced geographical areas and customs controls made the list.

Certain benefits were created by the distinction of DZs from the regular free zones:

  • A DZ that meets conditions specified in the VAT Executive Regulations shall be treated as being outside the UAE.
  • No VAT is chargeable for transfer of goods between DZs, subject to certain conditions.
  • Transfer of goods from one entity to another within the same DZ, as long as, it part of a supply chain and not meant for final consumption by the receiving entity, will not be subject to VAT.
  • For provision of services, being in a DZ offers no locational advantages, as VAT is chargeable at the standard rate on all services within the UAE.

Three new free zones have now been added to this DZ list from June 2018: International Humanitarian City, Al Ain International Airport Free Zone and Al Butain International Airport Free Zone

POSITIVE CHANGES IN DUBAI WORLD TRADE CENTRE FREE ZONE

The Dubai World Trade Centre (DWTC) Free Zone created quite a stir with a recent press release whereby it has slashed licence rates by 50% and also reduced charges for obtaining visas.

DTWC has also introduced the hot desk / virtual office concept with competitive rates that are probably the lowest among Dubai based free zones that offer virtual offices. DWTC has further incentivized setting up in their free zone by removing the requirement to deposit physical capital, if it is up to AED 300,000. A physical deposit accompanied by a bank letter is only required if the capital exceeds AED 300,000.

CAPITAL REQUIREMENT REMOVED IN MEYDAN FREE ZONE

The Meydan Free Zone which is probably the only free zone that only offers virtual offices, was behind in the pecking order due to the capital requirement of AED 100,000. Similar to DWTC and most of the top free zones in the UAE, Meydan free zone has also done away with the capital deposit requirement.

TECOM / DCCA - FREELANCE PERMITS

The initiative - Gofreelance - launched in partnership with Dubai Creative Cluster Authority (DCCA), offers freelancers in the education and media sectors the freedom of the 'gig economy' through licences for activities such as executive coaching, film director, scriptwriters and creative designers.

While there are five activities allowed in the education sector, the media category has nearly 50 activities, including acting, animation and journalism. The move aims to position the emirate as an innovation and talent hub. Currently, registration is open under two sectors: Media (Dubai Media City) and Education (Dubai Knowledge Park).

DUAL LICENSES IN ABU DHABI GLOBAL MARKET (ADGM)

Abu Dhabi's financial centre - ADGM now follows a system allowing ADGM registered entities to apply for a licence issued by the Abu Dhabi DED (Department of Economic Development), which authorizes them to conduct business activities outside the borders of ADGM without the need to maintain additional office space in mainland Abu Dhabi.

Companies operating in free zones can bid for businesses in the mainland. This move will encourage more companies to set up businesses in Abu Dhabi based free zones.

SAIF ZONE - GOLD AND DIAMOND PARK

SAIF Zone recently launched a Gold, Diamond & Commodities Park. The Gold, Diamond and Commodities Park would be one of its kind with modern infrastructure for exclusively for the gold & diamond sector. The facility and services are currently in the process of being completed.

THE AUS RESEARCH, TECHNOLOGY AND INNOVATION (RTI) PARK

Sharjah is planning an entire free zone dedicated to research and development (R&D). The AUS Research, Technology and Innovation (RTI) Park, an initiative of AUS Enterprises which is a holding company established to develop projects for the American University of Sharjah (AUS), hopes to welcome 200 companies in its first phase of development, which is due for completion in 2018.

Formed as an economic free zone dedicated to research and development, the park will focus on six research areas: digitization, energy, environment, industrial design and architecture, transport and logistics, and water technology.

SHARJAH PUBLISHING CITY

Sharjah Publishing City is the world's very first publishing Free Zone offering those in the book industry the opportunity to capitalize on tax free privileges while benefiting from being a wholly independently owned and operated company. Further benefits also include the ideal location, at the epicenter of the globe with all the advantages of having the MENA, African and Asian region's marketplace to hand.

The aim and purpose of Sharjah Publishing City is in keeping with the overall mission of the Sharjah Book Authority, to foster investment and growth in the publishing and printing sector within the UAE and the International community.

This update has been compiled by Chaitanya G. Kirtikar, Senior Manager, Structuring Services Department

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

VOL 20, Issue 3 July 2018

 

Meet Our Staff Member

Venugopalan Nair

Venugopalan Nair (Venu) graduated with a bachelor's degree in commerce from Mumbai University, India, and has been in the U.A.E. for the past thirty-five years of which thirty years have been with PKF as an Administrator. Prior to that he worked for about five years in various organisations in Mumbai where he was involved in a wide range of administrative activities.

He is nicknamed "Arnold" by his gym mates as he has been passionate about body-building right from his school days and which he still continues with the same vigor. Venu's wife, Gayathri is a teacher by profession and has worked with various schools in Dubai. Gayathri is a well-known Bharath Natyam (Indian classical dance form) dancer. They have a daughter, Gitanjali, who works as a marketing executive and, simultaneously, is pursuing a master's degree in Marketing from the University of Wollongong, Dubai campus.

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

VOL 20, Issue 3 July 2018

 

Publications

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

All the foregoing publications can be obtained from any of the offices in UAE and Oman

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

VOL 20, Issue 3 July 2018

 

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 20, Issue 3 July 2018

 

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
S.D.Pereira
Tel: (971-4) 4495430
Fax: (971-4) 3908836
e-mail:dic@pkfuae.com

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

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

ABU DHABI/AIRPORT FREE ZONE/ADGM
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 Ms. Greeta Creado, P.O. Box 13094, Dubai, U.A.E. E-mail: gcreado@pkfuae.com

PKF UAE is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member or correspondent firm or firms.

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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