08 Feb
UAE startups rising
UAE, Egypt and Saudi Arabia emerge in top three for Mena startups
The UAE is known to encourage entrepreneurs to unlock the potential that the nation has to offer them in fulfilling their business aspirations.
The recent reforms introduced by the wise leadership of the country to boost confidence among startups also proves that the ecosystem has matured, and is now expanding its reach in the region, with Egypt and Saudi Arabia complementing the growth.
The latest report from Magnitt indicates that the number of investments in Mena-based startups was up 31 per cent in 2019, with 564 investments and $704 million in total funding, up 13 per cent compared to 2018, excluding previous mega-deals in Souq and Careem.
“With exits at an all-time-high, including the Mena region’s first unicorn exit, the region’s founders, investors, and governments are seeing the returns on their efforts in the tech venture space,” said Philip Bahoshy, founder and chief executive, Magnitt.
In 2019, Egypt, for the first time ever, accounted for the largest number of deals in Mena with a jump of 25 per cent, while the UAE accounted for the lion’s share of total funding and a surge of 60 per cent.
Egypt is the largest and most promising startup hub of the Mena region. The government has been working very hard to open up opportunities for foreign investments. Rainmaking is working with Egyptian entrepreneurs and local ecosystem players since 2014 and has engaged more than 150 startups, provided support to almost 900 founders, and worked with nearly 70 local partners so far.
So how do Egypt and the UAE complement each other in the startup space? “Egypt provides an extensive pipeline of startups, entrepreneurs and talents, while the UAE offers significant availability of infrastructures and funding. Together, Egypt and the UAE could build an active alliance to drive innovation in the region and export innovation globally from the UAE,” said Ahmed El Sherif, managing director at Rainmaking Innovation Egypt.
“We expect a big spurt of funds to support startups over the next three to four years. In terms of industries, we are recording the greatest interest from local corporations into innovation investments in the fintech, insurtech, tourism, healthcare, industrial sectors, and impact industries.”
Similarly, Saudi and the UAE complement each other a lot in the startup space. “The UAE has leapfrogged in innovations, bringing in international investors, and taking away the lead, but Saudi is already catching up,” says Taha Sajid, chief technical consultant, Limar Global Tech.
“I have not come across any one business startup, who have started in either of these countries but not have their eyes on the other; Saudi for the investment perspective and the UAE for getting market exposure. It is due to the fact that in order for startups to grow, they need to have a proper ecosystem, have market adoption, get the investment for liquidity, loyal customers, all of these things are possible if you are not only restricted to one jurisdiction. Apart from less travelling distance, they share the same cultural/religious/traditional aspect and even the resources ethnicity, like most people belong to Mena, India, and Pakistan, they understand each other well, which makes them complement each other,” added Sajid.
Saudi Arabia will emerge as a popular startup hub in the Mena region; the main reason is the cultural change through the national transformation drive of Vision 2030 and the ease of doing business with the direct involvement of the Saudi government through its proper structure.
“Any startups, whether local or international, if the idea is appealing and suits the local market, will get the proper guidance through different bodies. If there is a fintech startup, regulations have clarity in terms of business activities that need to be regulated or not and how SAMA and CMA are interrelated. Secondly, there is a separate framework for local and international entrepreneurs with the proper step and process flow. All this process is being driven by the Ministry of Commerce and Investment, supported by incubators like Badir and facilitators like Fintech Saudi. On the other hand, if you are an IT startup, there is digital transformation hub driven by the Ministry of communication and IT, so all the bases are covered when it comes to supporting startups,” said Sajid.
Innovation remains top of the agenda for many governments from across the region. According to Magnitt, Hub71 in Abu Dhabi was created to spur innovation in the capital with $250 million in funds to support regional and international startups scale in the region. Moreover, also Saudi Arabia has seen a shift in policy. Multiple initiatives have eased the ability of startups to enter the country, access education and scale within the Kingdom. Only recently, the Public Investment Fund (PIF) announced a $1billion Fund of Funds (FoF) to spur venture investments.
Egypt, given its scale and educational system, remains a key hotbed of innovation, with many early- stage companies and founders solving big market issues that are local to them. “Dubai, with a first-mover advantage, continues to assess how best to encourage and foster the startup ecosystem with new legislation and support, including golden visas for founders to help develop its ever-evolving ecosystem,” added Bahoshy.
Source:https://www.khaleejtimes.com/business/local/uae-startups-rising
07 Feb
Tax exemptions for UAE sovereign investments in India’s infrastructure sector
In the future, other sectors may be identified for tax exemptions by the Indian government.
In line with its ongoing efforts to create an ideal investment environment internationally, the UAE, in coordination with the relevant authorities in India, has managed to reach tax exemptions for the UAE’s sovereign investments in India applicable to the infrastructure sector for all sovereign investment institutions in the UAE, both federally and locally.
This is part of a set of amendments and investment incentives recently announced by the Indian government to attract and encourage foreign sovereign investment in sectors of importance to India.
Younis Haji Al Khoori, Undersecretary of MoF, highlighted the significance of these initiatives and praised the UAE’s close strategic ties with India, while also stressing the importance of strengthening them further.
Al Khoori said, “These exemptions are part of the UAE’s unrelenting efforts to further improve economic relations with countries around the world. The move also reflects the success of the recent negotiations between the joint venture teams from the UAE and India. These meetings strengthen bilateral ties and help create investment incentives that support trade exchange and economic activities between the two countries.”
In the future, other sectors may be identified for tax exemptions by the Indian government.
These exemptions will come into effect on April 1, 2021, and will be limited to investments made within the period not exceeding March 31, 2024, provided that the investment is maintained for at least three years.
Source:https://www.khaleejtimes.com/business/economy/indias-new-tax-exemptions-to-benefit-uae
03 Feb
Investors see coronavirus as an opportunity; UAE equities best bet in GCC
Investors in the UAE and GCC are not rushing to sell their holdings due to coronavirus and rather those investors who missed last year’s rally are taking it as an opportunity to enter emerging markets, say analysts.
“So far, we have not seen any sellout requests from investors. The inquiries that we have seen is that when should we start adding to emerging market equities. And our answer is that if you have already invested, it is wait-and-see time. We’ll not add until coronavirus outbreak dies down. Let us wait and see when the factories reopen in February in China and supply chain returns to normalcy. We have not received a single call from any investor who wants to sell out as yet,” said Anita Gupta, head of equity strategy at Emirates NBD Group.
“In fact, on emerging markets, many people who missed out opportunity are asking when to enter. Investors are looking at it more as an opportunity than a scare,” Gupta said during the release of global investment outlook report for 2020 on Sunday.
After a spectacular 2019, propelled by monetary easing meeting excessive pessimism, Maurice Gravier, chief investment officer, Emirates NBD Group, expects markets to come back to the reality of fundamentals.
He said that the global economic backdrop is resilient, with growth expected to be close to that of last year, while inflation remains subdued. “The effects of last year’s rate cuts will be felt, supporting consumer spending, helping manage the enormous amounts of debt in the system, and providing oxygen to other central banks especially in emerging economies.”
UAE equities: Best bet in GCC
Emirates NBD’s Anita Gupta is the most bullish on the UAE equities among GCC markets.
“The UAE market is trading at lower valuations than the emerging and GCC markets both from price-to-book and price-to-earnings multiple. It also got very high dividend yield. In today’s world turning defensive, that makes the UAE market attractive for investors. However, the UAE market needs a catalyst because trading volumes are low and to take volumes up, what is going to work is the foreign ownership limit. Increased foreign ownership limit means emerging markets indices will add weight to the UAE equities which will results in more inflows both from passive and active investors. And that will increase trading volume as well,” she told Khaleej Times in an interview on Sunday.
“Also, with oil prices being where they are now, are pretty positive for government spend that flows through to private sector. So that should also be the catalyst for the UAE markets, going forward,” she added.
After the UAE, Gupta is quite bullish on the Saudi equities because of the stimulus measures Riyadh is taking.
“Saudi is increasing listings, starting with Saudi Aramco last year. Their corporate governance is also improving; plus, Saudi market is very well-diversified compared to other Gulf markets. They have companies listed from healthcare, insurance, retail, food companies, petrochemical and banking sectors. And the highest trading volume in the region with retail being a big part of their daily trading,” she added.
MR Raghu, managing director of Marmore Mena Intelligence, says GCC equity markets are expected to be neutral with the exception of Dubai, Oman and Bahrain.
“The neutral outlook is supported by moderate improvement in economic conditions and corporate earnings. Wherein oil price is widely expected to be at around current levels. The outlook for Dubai is positive on the back of expected improvement in the corporate earnings. While the outlook for Bahrain and Oman seems negative, given the strains in the economy,” Reghu added.
Source:https://www.khaleejtimes.com/business/markets/investors-see-coronavirus-as-an-opportunity-uae-equities-best-bet-in-gcc
03 Feb
NRIs in UAE are not subjected to Income Tax
The budget proposals announced by the Indian Finance Minister have sent shock waves to non-resident Indians.
Question: The budget proposals announced on Saturday by the Indian Finance Minister have sent shock waves to non-resident Indians. Will they have to pay tax in India since they don’t pay tax in the UAE? Please explain urgently.
Answer: The proposed amendment is meant to cover individuals who are constantly on the move and spend weeks in different countries in order to avoid tax liability in any country of the world. Typically such persons spend less than three months in each country every year so that they do not fall within the ambit of the tax laws of such country. Therefore, a provision is sought to be introduced in the Finance Bill, 2020, which will be applicable from the financial year beginning on 1st April, 2020, relevant to the assessment year 2021-22, to provide that an Indian citizen who is not liable to tax in any country in the world would be deemed to be a resident of India for tax purposes.
Under the UAE tax law, residents may be liable to tax; certain corporations having specified income are taxable. However, individuals and others are exempt from tax. As and when such exemption is removed, the liability to pay tax will arise. Hence, such persons employed in the UAE or carrying on a business or profession with a valid visa, though technically covered under the UAE tax law, are not subjected to Income Tax. The words “liable to tax” are crucial in this context.
In fact, the amendment is not meant to cover persons who are resident in any country. Under Article 4.1(b) of the Indo-UAE Double Tax Avoidance Agreement, an individual who has spent in the aggregate at least 183 days in a calendar year in the UAE is deemed to be a resident. Hence, Indians working in the UAE will not be covered by this amendment. It is further proposed in the Budget that a person who visits India and spends less than 120 days will retain his non resident status under Indian tax laws; otherwise he will lose it. This proposal will prevent investments from flowing into India and will be opposed. If this amendment goes through, an Indian must ensure that he spends less than 120 days in India in a financial year.
Q: I have invested in shares and debentures of several listed companies. Some of these companies have delayed or defaulted in repaying loans taken by them from banks and financial institutions. As an investor, I am greatly concerned that this information of delay or default is not readily available. If investors are aware of these defaults, they would immediately take remedial action and pull out their investments before the share prices drop substantially. Is there any means of getting this information? I am taking full advantage of the portfolio management scheme.
A: The regulator, Securities & Exchange Board of India, has recently tightened the guidelines for listed companies on disclosure of loan defaults. As per the new norms, when a default is committed by a listed company in repaying the principal amount on schedule, the company has to disclose the fact of such default to the stock exchanges. This requirement is applicable where the delay in repayment of the principal amount and interest is beyond thirty days from the agreed payment date. The notice of such delay or default is required to be given within 24 hours from such thirtieth day.
This will provide transparency and protect the interest of investors so that they can act appropriately in the shortest possible time. These disclosure norms have been formulated by SEBI in consultation with the Reserve Bank of India. Since you are availing of the portfolio management scheme, you may note that SEBI has decided to increase the net worth requirement of portfolio managers from Rs20 million to Rs50 million. This will ensure that the managers have a stronger financial base.
Q: I have served on the board of several companies in the Gulf during the past fifteen years. On returning to India for good, I would like to serve as an independent director on the board of reputed companies if invited to do so, as I believe that there is a substantial shortage of independent directors. What are the consequences of taking up such assignments?
A: Independent directors perform functions which are critical to good corporate governance. However, the liability framework governing such directors casts an onerous burden and the liability-related risks faced by independent directors are disproportionate to the remuneration which they may earn. The Companies Act, 2013 seeks to limit the liability of non-executive directors by providing for certain safe harbour rules designed specially for them. However, the directors have to initially face investigative or legal proceedings before they are exonerated.
Further, you need to know that all independent directors with less than ten years experience of acting as such, will have to take an online proficiency self assessment test before they can be appointed on boards of companies. The test will be conducted by the Indian Institute of Corporate Affairs. This Institute will create and maintain a data bank with names, addresses and qualifications of people who are eligible to be appointed as independent directors. Boards of companies will have to disclose the results of these tests in their annual report.
Source:https://www.khaleejtimes.com/business/global/nris-in-uae-are-not-subjected-to-income-tax-
