Around the world

Around the world

Taxation

Africa

  • Last August, Nigeria’s government launched a voluntary offshore assets regularisation scheme, opening declaration facilities in Abuja, Dubai and London. ‘Nigerian‑relevant persons’ and their intermediaries can now regularise their offshore assets held anywhere in the world by paying a one‑time levy as a fine for the years of irregularity, in return for a permanent waiver of prosecution.

Middle East

  • Israel’s 2021/22 budget proposed that taxpayers who challenge a tax assessment in a district court will have to pay 30 per cent of the tax in dispute before litigation starts, if either the company’s turnover or the disputed amount is above NIS20 million.
  • The United Arab Emirates’ (UAE’s) Federal Decree Law No.28/2021 creates new opportunities to re‑litigate disputes, permits payments by instalments or bank guarantees, provides longer time‑bars for objection actions and reduces the payments required to proceed with a tax dispute.
  • The double taxation treaty between Israel and the UAE came into effect on 1 January 2022. Withholding tax rates are limited to 10 per cent for cross‑border interest payments, 15 per cent for dividends and 12 per cent for royalties.

Regulation and compliance

Africa

  • A Federal High Court of Nigeria ruling has allowed the country’s Federal Inland Revenue Service to apply for an ex parte order for access to any records held by a taxpayer in any form for the purposes of tax assessment, collection and remittance.
  • Kenya’s Proceeds of Crime and Antimoney Laundering (Amendment) Bill 2021 expands the definition of ‘reporting persons’ to include advocates, notaries and other independent legal professionals who are sole practitioners, partners or employees within professional firms. Such persons must now monitor and report complex, unusual, suspicious, large or other transactions while acting for their clients in the buying and selling of real estate or business entities; managing client money, securities or other assets; and organisation of contributions to companies. The authorities will have powers to interrupt a suspicious transaction for five working days.
  • The Financial Action Task Force (FATF) has published a mutual evaluation report on Nigeria’s anti‑money laundering (AML) regime. It found that there is a lack of an explicit policy to confiscate the proceeds of crime and an absence of AML reporting obligations on legal professionals. It recommends that Nigeria undertake a comprehensive review of AML risks.
  • Businesses registered under Seychelles’ International Business Companies Act must now have registered their beneficial owners with the country’s Financial Intelligence Unit (FIU). Beneficial owners are to be recorded on a central register maintained by the FIU and will not be accessible to anyone else.

Middle East

  • Last year, the Abu Dhabi Global Market (ADGM) introduced a new regulatory framework for the appointment of company service providers (CSPs). The regulations will require special purpose vehicles and foundations to appoint an ADGM‑licensed CSP.
  • The UAE’s Federal Tax Authority has begun to issue penalties for non‑compliance with economic substance regulations under Cabinet of Ministers Resolution No. 57 of 2020 Concerning Economic Substance Requirements.
  • A mutual evaluation by the FATF reports that Pakistan has made good progress in addressing the deficiencies in its customer due‑diligence (CDD) regime identified in its previous evaluation in 2019. The FATF has now re‑rated the jurisdiction as compliant on CDD and largely compliant with several other Recommendations.
  • In September 2020, the governments of the UAE and the UK announced an agreement to increase cooperation against illicit flows of funds to finance serious and organised crime and terrorism. The agreement focuses on high‑risk sectors such as real estate and cryptocurrencies.

Residency

Middle East

  • A joint committee of Israeli Tax Authority officials and tax professionals has recommended that the tax residence criteria for individuals should include irrebuttable presumptions for both Israeli residency and foreign residency, maintaining the current ‘centre of life’ criterion only where the irrebuttable presumptions do not apply. The committee also recommends cancelling the current rule exempting new immigrants and returning residents from reporting their offshore assets and increasing the reporting duties on trustees.

Trusts

Africa

  • Amendments to the Mauritian Income Tax Act now deny Mauritian trusts established after 30 June 2021 the opportunity to file a declaration of non‑residence, although a grandfathering provision will apply to existing trusts up to the 2024/25 year of assessment. The country’s revenue authority will now determine the residency of a Mauritian trust by the standard OECD central management and control test.

Digital assets

Africa

  • Nigeria has introduced a central bank‑backed digital currency for use as legal tender, the first African jurisdiction to do so. The currency is based on technology already licensed by national financial institutions (FIs) in six countries across the Caribbean and Central America.

Middle East

  • The UAE’s national AML committee has announced the adoption of a regulatory framework for virtual assets, to be implemented by the Securities and Commodities Authority and the UAE central bank. Guidance has also been issued requiring all UAE FIs to file suspicious activity reports or suspicious transaction reports with the UAE’s Financial Intelligence Unit within 35 calendar days of detection.

Data protection

Middle East

  • Saudi Arabia’s first national general Personal Data Protection Law commences on 23 March 2022. Businesses have been given a grace period of one year from this date to become  compliant.