HLB Hamt - Insight Issue 12

Issue 12

HAMT

AUDIT | TAX | ADVISORY

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New accounting requirements bring leasing into the 21st century

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New initiatives from Dubai Govt to promote business

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RERA empowers homeowners with new platform

insight

Insight | HLB HAMT

CONTENTS

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06 Italian luxury penmaker still preserving its traditions in modern world

10 UAE introduce economic substance regulations: What you need to know

12 New accounting requirements bring leasing into the 21st century

14 New initiatives from Dubai Govt to promote business

16 The digital future of HR

18 RERA empowers homeowners with new platform

Partner’s message

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Sumesh Krishna, Partner at HLB HAMT

CEO’s role has evolved becomes key areas of focus.

Business leaders must communicate the importance of compliance and adoption, demonstrate their commitment, and educate their employees on the value of this change.

Artificial Intelligence (AI) are at our doorstep, we can expect two main areas that would change exotically related to technology. First, machine learning models will be used to enhance existing software services, making those more efficient and optimized.

With lots of companies using cloud-based software services, efficiencies will improve as AI is added to the software. Second, many office functions including back office functions are being automated using AI and machine learning.

Routine tasks such as bookkeeping, accounting, and expense management will become automated, remember 80% of a bookkeeper’s job are routine tasks or functions.

To help business owners with the compliance and change management function, the CEO’s need to be specific on the discussed subjects.

HLB HAMT | Insight

Over the past few decades, we have watched this country undergo great transformations to become one of the leading nations in the world.

It is also evidenced by the global indicators. This transformation has touched all aspects of our lives, including the country’s legal and tax system like VAT, ESR, Excise and Customs Laws, AML and technology adaption such as IoT and AI. When you are absorbing this change in to your organization level, the problems will start; resistance for changes, compliance issues, structural issues, cost related issues and other road blocks. The CEO’s roles are more important to the transformation to the framework whether it required by the statutory bodies or internal for business growth as well as the timely adaptation of technological changes.

The transformation of compliance and changes into an organizational value requires the CEO’s commitment, and then accountability of the CEO’s leadership team. To carry out this process, communications and awareness of the impact on employee behavior and customer approaches are

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News

New members

54 57 51

44 32 33

56 4152 34

36

50

61

40

56

55

37

62

31 58 49 60 53

47

35

45

42

39

43

48

59

38

46

63

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Belize HLB Belize LLP, based in BELIZE City.

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United States PYA, based in Tennessee.

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Qatar Antonio Ghaleb & Partner CPA, based in Doha

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Brazil HLB Brasil Pryor Consulting Solutions LTD based in Sao Paulo

As one of the leading global accountancy networks. HLB International has continued its growth with the addition of these new member firms. They have allowed us to strengthen our position in developed economies, as well as expand our presence into emerging markets.

Latest News

Insight | HLB HAMT

HLB celebrates 50th anniversary across the globe

LONDON – HLB, the global network of independent advisory and accounting firms, is proud to be celebrating its 50th anniversary in 2019 with the launch of a global campaign.

The commemoration is coming off the back of the network’s most successful year to date. Last year, HLB returned global revenues of $2.73 billion and achieved a record 15% growth from the previous year.

Since its foundation in 1969, HLB has grown to a network of 27,485 people across 153 countries. HLB has top ten member firms in all key economies, including China where members

often rank in the top 5. With five decades of entrepreneurship and collaboration, together with the innovative and creative mindset of our firms, HLB has become one of the fastest growing networks in recent years.

Running from June to October, the global anniversary campaign is part of several events taking place in honour of HLB’s 50th anniversary. This follows #HLBCommunities Day – the network’s first global CSR initiative – which saw HLB collectively donate 8,497 hours to local communities on Friday 7 June.

Marco Donzelli, HLB’s Chief Executive Officer, said: “Celebrating our 50th anniversary is an important milestone. It gives us an opportunity to thank all the people who have contributed to the success of HLB. It is also a chance for us to reflect on how far we’ve come while embracing our future.

“One of the fundamental reasons for HLB’s success is because of our people. We all share the same values and dedication when it comes to creating value and maximizing opportunities for our clients. And we work in a collaborative and innovative way, focusing on our communities to create a lasting impact. These things haven’t changed, and I know they will see HLB continue to thrive in the future.”

News

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HLB volunteers 8,497 hours to local communities in celebration of its 50th anniversary

LONDON – On Friday 7 June, HLB celebrated its 50th anniversary this year by coming together to support local and international community projects for #HLBCommunities Day.

The network’s first global Corporate Social Responsibility initiative, #HLBCommunities Day saw HLB collectively volunteer 8,497 hours through 1,320 participants across 42 community projects. #HLBCommunities Day saw diverse social, educational and environmental initiatives take place across the world, all with the common theme of giving back to local communities. Firms took part in projects including: donating time to after school programs, maintaining outdoor spaces such as local gardens, beaches, and school facilities through to volunteering

HLB announces strategic technology partnership HLB, the global advisory and accounting network, has announced a strategic partnership with Inflo, a leading supplier of accounting data analytics who are transforming the world of accounting.

This exciting new partnership will help HLB’s independent member firms provide an enhanced and consistent service experience for its people and clients worldwide.

Marco Donzelli, HLB Global CEO, says “HLB is one of the mid-tier networks with technology firmly at the heart of its development strategy. Partnering with Inflo allows HLB firms across the world to enhance traditional accounting services

and provide new offerings to clients by embracing emerging technologies.”

Inflo Chief Commercial Officer Mike Bowman said “Strategically evaluating and implementing emerging technologies is a key priority for accounting firms across the world.

Networks can play a key role in this process, helping member firms to quickly get started and creating broader value from collaboration and knowledge sharing. Leaders within HLB recognize this and are demonstrating a focus on promoting the growth opportunities available. We are delighted to be partnering with HLB.”

HLB hosts annual Audit and Tax Conference in Frankfurt, Germany Payroll issues; Cees Krijgsman, CEO of RiskCo, experts in pension funds, life insurance and group pension plans of banks and asset managers; Jamie Freiman of Rutgers on Emerging Technologies in Accounting; David Coble, Head of Research and Chief Economist at InvestChile, the Foreign Investment Promotion Agency on investment opportunities in Chile.

Marco Donzelli, CEO said “Our International Conference delivered a programme designed to meet the future needs of our members. The knowledge and expertise presented during the conference will enable them to continue to deliver solutions not only to their clients, but also to their employees.”

2019 HLB Asia Pacific Conference

(June 17, 2019 through June 20, 2019) Every year, HLB’s Asia Pacific members gather to discuss current trends in accounting and business opportunities in the Asia-Pacific region. As an independent member of HLB, a global network of advisory and accounting firms, Green Hasson Janks recently hosted the 2019 HLB Asia Pacific Conference for the first time ever in the U.S. (as well as an optional 5th day with Seiler LLP in Northern California)! This year’s conference, themed “Together We Make It Happen: The Power of Cross-border Collaboration”, welcomed over 100 delegates. Attendees included high-profile domestic and global thought leaders. Along with exclusive social events, attendees enjoyed a week of collaboration with HLB firms from across the globe.

This year’s conference included panel discussions revolving around hot topics in the accounting sector, current economic trends and innovative business solutions.

Members had the opportunity to hear insights on a variety of topics including: cybersecurity, Asian investment trends in the U.S., international tax updates, AI integration and more. Speakers from top accounting and business advisory firms shared different perspectives and insights while members engaged in candid yet informational Q&A.

HLB HAMT | Insight

(2nd – 3rd July 2019) The conference addressed how to inspire leaders in a multigenerational world and featured presentations which highlighted the challenges today’s leaders face while working in this new environment, including artificial intelligence, technology, advisory and talent development.

As well as insights from HLB member firms, the conference welcomed distinguished guest speakers including Dr Johannes Beermann, Member of the Executive Board of the Deutsche Bundesbank presenting on current Economic Developments in the European Union; Gary Figgins, Commercial Director of Cloudpay highlighting International

with the elderly and at food banks.

Marco Donzelli, HLB’s Chief Executive Officer, said: “It was fantastic to see so many amazing projects taking place in celebration of our 50th anniversary. For us, #HLBCommunities Day is not only an opportunity for us to build internal relationships and showcase our community involvement but it allows us all to connect on a global level and share in the impact we create together as a network.” #HLBCommunities Day is just one of the many events taking place during 2019, in celebration of the 50th anniversary of HLB.

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Montegrappa

Insight | HLB HAMT

Charles Nahhas, Middle East Distributor of Montegrappa

“These are some of mankind’s greatest achievements and it is something that we need to continue to honour and preserve.”

Montegrappa

ITALIAN LUXURY PENMAKER STILL PRESERVING ITS TRADITIONS IN MODERN WORLD Charles Nahhas, Middle East Distributor of Montegrappa, explains how the Italian luxury penmaker has been able to adapt and evolve even though disruptive new technologies continue to penetrate every aspect of our daily lives. In a compelling discussion the charismatic and dynamic Nahhas beautifully articulates how the 107 years-old penmaker has been able to preserve its traditions and heritage, whilst staying relevant and competitive in a world where consumer demands and habits are continually evolving.

makeshift factories.

Nahhas said, “The company existed during World War 1, whilst all other buildings around them were forcibly converted into ammunition factories in order to support the war effort. Montegrappa continued making pens because they were required as communications devices. Interestingly, at that time the pen with new technologies

HLB HAMT | Insight

Montegrappa was established near Venice, in 1912, and were one of the first pioneers of the refillable fountain pen. It has survived two World Wars and befriended the great novelist Ernest Hemingway in its formative years. Nahhas explained how Montegrappa played an important role during the war despite the fact businesses all around them were being turned into

like a refillable ink reservoir were similar in its impact to smartphones today, it was something new and functional and its features were very important.”

Technology is evolving faster now than at any other point in human history. However, Montegrappa has faced these challenges in the past, and Nahhas highlighted the importance of maintaining the traditions of the past, even when technologies emerge that threaten to make your existing business model obsolete.

Nahhas said, “In the 1960’s they invented the BIC, which meant you could manufacture pens for $50c or less which was a gamechanger at the time. The same thing happened to traditional watchmaking in Switzerland. It faced a period of decline in the 1970’s when Quartz movements were invented. So why do we preserve these traditions, why is it important to still have a beautifully-crafted 18 carat gold Nib to write with, why it is important to have a mechanical watch made by craftsmen in Switzerland, when there now exists’ cheaper ways to deliver the same functionality?

The reason it remains important is that these tools are part of human history and carry important symbolism for us as a species.

The pen was the tool used by our ancestors to entrust the knowledge of all human civilisation to the next generation. The mechanical watch demonstrates mankind’s ingenuity and mastery of the most elusive and precious of resources, time.”

He added, “These are some of mankind’s greatest achievements and it is something that we need to continue to honour and preserve. By continuing to employ the artisans who carry on these skills, we celebrate and pay homage to our achievements and keep these craft alive.”

Montegrappa has been in the ownership of one family since the early 1930’s, and they’ve held true to the company’s traditional origins, although Nahhas concedes that the penmaker has innovated significantly in the last generation.

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Insight | HLB HAMT

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Montegrappa

Montegrappa’s new strategy has seen them shift their focus towards limited edition pens which has proved to be a very successful move.

Nahhas explained that whilst there remains a significant market for nice pens as a gift, its importance as a symbol that you cherish like jewellery or a watch has been diminished. According to Nahhas people increasingly wanted something ‘exclusive’.

“In the early 90’s the company started to work on very small numbers of limited editions in which they would make no more than 2,000 pieces of a certain reference and they would be numbered, and that really raised the profile of the company in terms of making very exclusive pieces. Montegrappa was no longer only just making premium pens made from gold and silver but were now producing pens that were becoming collectors’ pieces highly sought after at auctions after a certain edition had been sold out. Montegrappa amongst pen collectors is perceived as the most high-end pen available, largely because of the brand’s limited production and exclusivity.”

That ‘exclusivity’ represented a significant transition and shift for Montegrappa’s business model. It had gone from making expensive pens made from gold or silver, to a position where it didn’t matter what the pens were made from, all that mattered was how few of them there are and how ‘exclusive’ being an owner of those pens now were.

However, Nahhas explained that in recent years there has been another cultural change from consumers.

“We had seen the shift from expensive premium products to limited editions, but what we’re now seeing is a demand in the high-end market for bespoke products. What people want is their own unique

piece, or something very limited. For example, Montegrappa now offers a bespoke service where you can have an image engraved onto a barrel of a pen by hand. Some people have come to us and have requested their children’s faces to be engraved on their pen, or something else that is important and significant to them that they wish to have immortalised.”

According to Nahhas the Italian company has a distinct advantage over some of its larger rivals when it comes to ‘personalisation’.

He adds, “Montegrappa can take on these types of personalised projects because even though the company is well-known globally, it is still a relatively small company. It has become adept at taking on these kinds of projects because by being smaller it means that they are much more flexible than bigger companies and can stop and listen to individual customer requests.”

Nahhas said that the luxury industry is seeing a demand online – although he stressed that people still want to go to a shop and

Montegrappa

HLB HAMT | Insight

“Montegrappa’s website has a special configurator tool where you can configure your own pen online”

physically see and touch an item – but conceded that they’re seeing an increasing number of people that want to buy online.

He said, “On one side of the coin people have been afraid that going online might erode the traditional retail or vice versa, but in fact they complement each other. What we’ve found is that there are people that browse online and shop online and people who research online but still come into the stores to physical see the products.”

Montegrappa have embraced the

digital movement and its online special configuration tool has really resonated with its customers.

Nahhas said, “Montegrappa’s website has a special configurator tool where you can configure your own pen online. It is different from the bespoke personalization service, because obviously the bespoke personalisation is a hand crafted service where the personalization is done by an artist directly on the pen creating a completely unique piece of art. The configurator, by contrast, allows you to create your own pen by customizing every component, so for example you could select a silver barrel with a wooden cap, and a forepart made of celluloid, with an 18K fountain pen nib and an oblique broad point.

The clip could be customized with a precious stone and initials could be engraved on the ring of the pen. It is really empowering the customer to create something really unique to them. We’ve calculated that with all the combinations of letters, stones, finishes and different materials and nibs you can have more than 20 million different options – and once a customer selects what pen he wants we can turn it around and deliver it in 10 days.”

Montegrappa has evolved as technology has progressed, but it has also managed to protect, maintain and nurture skills that are over 100 years-old in terms of how it manufactures its luxury, exclusive and bespoke pens. Montegrappa is a perfect illustration and embodiment of a company that fuses both modernity and history in its products.

Visit www.montegrappa.me/ configurator to try the new Montegrappa configurator tool and create your own pen. Use the code xxx to avail of a special offer and get a free gift exclusively for our readers.

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Substance regulation

UAE INTRODUCE ECONOMIC SUBSTANCE REGULATIONS: WHAT YOU NEED TO KNOW HLB HAMT’s Lead Auditor Hussain Ali, explains the new economic substance regulations in forensic detail - and highlights the measures businesses that may be subject to the regulations need to implement in order to avoid paying hefty fines and penalties.

Insight | HLB HAMT

In 2016, the European Union (EU) Code of Conduct Group initiated a review of the tax policies of non-EU countries to determine whether they met EU standards of good governance and fair taxation. Subsequently, several jurisdictions were required to introduce legislation to make sure that the tax benefits under those regimes (i.e., low or no corporate income tax) were not granted to entities lacking appropriate economic substance Economic Substance Regulations in UAE On April 30th, 2019, the UAE Cabinet issued the Cabinet of Minister Resolution No.31 of 2019 concerning economic substance regulations in the UAE. These regulations require all in-scope UAE entities (relevant

entities) that carry on particular activities (relevant activities) to have demonstrable economic substance in the UAE from April 30th, 2019 and the financial period for the first assessment shall be December 31, 2019.

The regulation brings UAE business entities into more transparency and compliance and affirms the UAE’s commitment to address concerns around the shell companies and their business activities without having local economic activities and substance.

The economic regulations are expected to have a limited impact on UAE-headquartered businesses and foreign multinationals that have certain commercial operations and management in the UAE (aside from

complying with additional disclosure requirements going forward).

However, for multinationals that undertake ‘relevant activities’ in the UAE but are managed remotely, the governance structure and operating model should be reassessed amid UAE economic substance requirements, and any necessary adjustments should be made to ensure compliance with the regulations.

Who are subject to the new regulations?

The Regulations apply to all UAE onshore and free zone companies that carry on a “Relevant Activity”.

It is yet to be confirmed whether the Regulations will also apply to sole proprietorships and branches.

On the other hand, companies

Substance regulation

directly or indirectly owned by the UAE government (both federal and local) are expressly excluded from the Regulations. On this basis, UAE sovereign investment funds and other UAE government-related entities would not need to meet the UAE economic substance requirements.

The “relevant activities” included in the regulations are Banking, Insurance, Fund Management, Lease-Finance, Headquarters, Shipping, Holding Company, Intellectual Property (IP) and Distribution and Service Centre What are the economic substance requirements?

To satisfy the economic substance requirements concerning a relevant activity, a relevant entity must: 1. Conduct the relevant “core incomegenerating activities” in the UAE. 2. Be “directed and managed” in the UAE; and 3. Regarding the level of activities performed in the UAE: Have an adequate number of qualified fulltime employees in the UAE; Incur an adequate amount of operating expenditure in the UAE; Have adequate physical assets in the UAE. A relevant entity that only undertakes a Holding Company Business will be subject to less stringent economic substance requirements. Additional requirements apply if a relevant entity carries out “high-risk IP related activities”.

If a relevant entity carries out more than one relevant activity, the economic substance requirements must be met for each of the relevant activities.

The regulations also enable a company to outsource some, or all, of its activity to third-party service providers. However, these service providers must have an adequate presence in the UAE - and the

company must be able to demonstrate that it has adequate supervision of the outsourced activities.

Support from service providers cannot be ‘double-counted’ if the services are provided to more than one Relevant Entity.

What are the reporting requirements?

The reporting requirements and the procedure is not yet clear at this moment, but as per the regulation a Relevant Entity will be required to report certain information on its Relevant Activities on an annual basis to the relevant regulatory authority (being the authority that issued the trade license to the Relevant Entity).

Existing entities: Must comply with the Regulations from 30 April 2019, with the first return due in 2020.

New entities: Must comply with the Regulations upon receiving its trade license, with the first return due in 2020 (or later) Failure to comply would result in administrative penalties (not less than AED 10,000 but not exceeding AED 50,000 in the first year, increased to an amount not less than AED 50,000 but not exceeding AED 300,000 in the subsequent year), subject to a six-year limitation period.

Additional penalties such as suspending, revoking or not renewing the UAE Relevant Entity’s trade license could also apply.

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international groups that will be most concerned about the potential impact, particularly businesses that are carrying out relevant activities in the UAE, but which are managed remotely.

For UAE headquartered businesses and for businesses with genuine commercial activity in the UAE the impact may not be significant, but it is worth considering the implications in all cases How can HLB HAMT help?

Impact assessment of the activities of the company to determine whether it would fall within the scope of the regulations.

Help businesses meet all the regulatory compliance, corporate structuring and reporting requirements in the Regulations, and mitigating the potential penalties.

Hussain Ali, Lead Auditor, HLB HAMT

What will be the impact of the regulation?

The regulations apply to any business based in the UAE, including entities owned by GCC nationals or businesses. However, it is likely to be

HLB HAMT | Insight

“The regulation brings UAE business entities into more transparency and compliance and affirms the UAE’s commitment to the stakeholders.”

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IFRS 16

NEW ACCOUNTING REQUIREMENTS BRING LEASING INTO THE 21ST CENTURY

Insight | HLB HAMT

Nithin NK, Director, Audit, HLB HAMT

Nithin NK, Director, Audit at HLB HAMT, dissects IFRS 16 in-depth and outlines what exactly you need to know and how it’s going to impact your business.

IFRS 16

IFRS 16 is an International Financial

Report Standard (IFRS) promulgated by the International Accounting Standards Board (IASB) providing guidance on accounting for leases.

It is expected to give many enterprises a significant headache during its initial implementation phase – as teething problems are a common occurrence when it comes to new robust financial regulations.

However, on-hand to help businesses navigate their way around all these tricky implementation issues, is Nithin NK, Director, Audit at HLB HAMT. NK explained: “IFRS 16 can initially cause trouble to the entities as there are huge changes in the lessee’s books of accounts. It was issued in January 2016 and will be applicable for financial periods starting January 1st, 2019 or later.”

the term of the contract.

Under IFRS 16 however, if it is a lease, it will affect the balance sheet.

One area this could have a practical effect on would be some IT contracts.

For example, software service contracts might contain leases of equipment, such as a dedicated fibre optic connection. Finding and reviewing all these contracts and then applying the standard’s definition of a lease could be time consuming.

2. Completeness of lease information Many companies with several subsidiaries would find it difficult to identify the leases where regular payment happens. Data analytics are required to identify such leases.

3. Gathering all the documentation Gathering contracts from several

IFRS 16 in a snapshot: What do you need to know?

Potential Impact?

For lessees, most leases will come on balance sheet

Operating leases capitalised with corresponding recognition of the liability & Right-of-use asset

Lease operating expenses will be replaced with Depreciation and Interest costs

Companies using EBITDA as KPI will see positive impact post 01st Jan 2019

Impact on the presentation of the financial statements and changes to financial ratios will need careful communication

Shareholders/investors will need to be educated on the financial impact at transition

According to NK, these are the five implementation issues enterprises can face:

4. Determining estimates The standard requires a very large number of estimates to be made, including the stand-alone selling prices of lease and non-lease components; the length of the lease

“IFRS 16 can initially cause trouble to the entities as there are huge changes in the lessee’s books of accounts.”

term where the lessee has either an extension or termination option; the interest rate implicit in the lease; and amounts payable under residual value guarantees.

Stand-alone selling prices are to be used to allocate the payments under the contract to the lease and non-lease components pro-rata.

For example, a lease contract might contain both the right to use a floor in a property, the lease component, and a payment for services such as cleaning and reception services, the non-lease component.

A practical expedient provides, by class of underlying asset, an election not to separate lease and non-lease components. Although if selected, this election requires all payments to be capitalised as though the entire contract was a lease.

Estimating the interest rate implicit in the lease could also be problematic.

If the interest rate implicit in the lease cannot be determined readily, the standard does allow the incremental borrowing rate to be used but estimating this could also be challenging.

When the entity’s incremental borrowing rate is used, it is not simply the entity’s WACC or overall incremental borrowing rate. The incremental borrowing rate is supposed to be asset specific (i.e, what rate would be obtained to borrow the same amount as the right-of-use asset over a similar term and with the same security).

5. Modifications Modification in lease are accounted either as new lease or adding to the existing lease. Determining this requires obtaining information about whether the modification increases the scope of the lease by adding the right to use one or more underlying assets and whether the consideration for the lease modification represents the stand-alone sales price for the modification.

How HLB can help: Impact analysis which helps the client to understand what change they can expect in terms of reporting numbers.

Help in modifying the accounting software to incorporate the new ledger heads as required in the standard and analyse different possible scenarios which the entity may face in future in terms of leasing.

HLB HAMT | Insight

1. Identification of lease Whether there is an identifiable asset – Supplier has no right to substitute the asset.

Whether there is a right to control the use of asset.

IFRS 16 contains a slightly revised definition of a lease but in practice this is likely to only cause differences at the margins. Where previously there were difficult judgements as to whether a contract contained a lease, those past conclusions may need to be revisited.

However, while the definition might lead to very similar conclusions, it could still cause problems in practice.

For example, whether a contract was an operating lease or a contract for services did not make a big difference under IAS 17; the expense was generally recognised straight line over

departments like property, IT, legal team etc. Some of these documents can be very long, and occasionally poorly drafted. This can add considerable time to the analysis process.

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Dubai Govt Initiatives

NEW INITIATIVES FROM DUBAI GOVT TO PROMOTE BUSINESS

The Dubai Government has launched a series of new initiatives that have been specifically designed to boost the local economy. Lavin Nalinababu, Senior Manager, Business Consultancy at HLB HAMT, outlines some of the unique specifications within the new trade licenses and some of the long-term visa opportunities available to those making significant investments in Dubai.

Insight | HLB HAMT

In a sign of continuing investor confidence in Dubai and new opportunities arising across diverse economic sectors, the Department Economic Development in the emirates issued 2934 new license for various professional, commercial, industrial and tourism activities in June 2019.

BRL also issued 250 instant licenses, which processed in a single step without the need for either the memorandum of association or an existing location for the first year while the number of DED trader licenses, which allows to conduct business activities on social media platform reached 219 in the same period. DED trader is an initiative aimed to license business activities on social networking sites.

NEW FORMS OF LICENSE: DED trader • An initiative aimed to license business activities on social networking sites.

This is primarily to help business to promote their products.

• Businesses can promote their products through social networking sites, events and exhibitions, display in consumer point of sale etc. This also helps to protect trade name.

• Businesses are also allowed to have bank facilities, membership in Dubai Chamber facilitating import and export. This also allows temporary employment services.

• The cost of setting up the DED trader is very minimal.

Instant license • Issuing the trade license in one-step without the need for either the MOA or an existing location for the first year only. The MOA and location to be submitted upon renewal.

• This can be a limited liability company, one person LLC, sole proprietorship or a civil company.

• Some of the activities would need external approvals.

• Helps business to keep the cost low for the first year of operation. Helps business to establish.

INITIATIVE FROM DED TO EASE OF DOING BUSINESS Suspension of business activity under an expired license • This will help business to retain the license without penalty for nonrenewal. The suspension of license will be for maximum of three years. The license free can be cancelled any time.

No activity is allowed during the freeze period.

• The business can renew the license

“DED trader is an initiative aimed to license business activities on social networking sites.”

Dubai Govt Initiatives

anytime during the freeze period, however, the fees paid for freeze will not be returned.

Mortgage: • It is the process of mortgaging the license and the business office related to it or the partners shares in order to apply for a loan from one of the banks in UAE or for any other purpose that requires a mortgage certificate.

• There are two types of mortgage, the mortgage of business office which requires announcement, and the mortgage certificate shall be issued. The mortgage of shared doesn’t require announcement, and a mortgage certificate shall be issued in respect thereof.

CANCELATION OF COMPANY’S LICENSE THAT HAS BEEN EXPIRED FOR MORE THAN TWO YEARS Long term visa for investors without sponsors • The following categories are entitled to apply for a 10-year residence visa in the UAE. • Investors in public investments of at least AED 10 million

Entrepreneurs: • This category includes those having an existing project with a minimum capital of AED 500,000, or those who have the approval of an accredited business incubator in the country.

• The entrepreneur is allowed a multi-entry visa for six months, renewable for another six months. The long-term visa includes the spouse and children, a partner and three executives.

Outstanding Students: • Outstanding students with a minimum grade of 95 per cent in public and private secondary schools • University students within and outside the country having a distinction GPA of at least 3.75 upon graduation.

• Long-term visa includes families of the outstanding students Residence visa to investors in Property: • Investors buying property for more than 1 million is eligible to get residency visa including the family members. The investor should have the title deed in the personal name and should also obtain clearance from Dubai police.

Lavin Nalinababu, Senior Manager, Business Consultancy at HLB HAMT

HLB HAMT | Insight

The investment may take many forms such as: • A deposit of at least AED 10 million in an investment fund inside the country • Establishing a company in the UAE with a capital of not less than AED 10 million • Partnering in an existing or a new company with a share value of not less than AED10 million • Having a total investment of not less than AED 10 million in all areas mentioned, on condition that the investment in sectors other than real estate is not less than 60 per cent of the total investment.

• Persons with specialised talents.

• This includes specialised talents and researchers in the fields of science and knowledge such as doctors, specialists, scientists, inventors, as well as creative individuals in the field of culture and art.

• The visa advantage extends to the spouse and children. All categories are required to have a valid employment contract in a specialised field of a priority in the UAE.

Eligibility for a 5-year visa without a sponsor: • The following categories are entitled to apply for a 5-year residence visa in the UAE. • Investors in a property in the UAE • The investor must invest in a property of a gross value of not less than AED 5 million.

• The amount invested in real estate must not be on loan basis.

• The property must be retained for at least three years.

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Tech in HR

THE DIGITAL FUTURE OF HR Disruptive technologies such as AI, Blockchain, Big Data and Virtual Reality are going to completely transform the HR ecosystem. That’s the prediction of Binny Broono, Manager - HR Consultancy at Tax, Audit and Consultancy experts HLB HAMT.

Insight | HLB HAMT

Binny Broono, Manager - HR Consultancy, HLB HAMT

Tech in HR

There has been widespread skepticism and fears that the integration of emerging new technologies like AI into an industry such as HR would inevitably lead to multiple job losses.

However, that prediction was vehemently rejected by Binny Broono, HR manager at HLB HAMT, who believes the integration of transformative technologies like AI, Blockchain, Big Data and Virtual Reality will empower the HR workforce – and ultimately free them of mundane administration responsibilities.

In a detailed and fascinating overview on the future of the HR ecosystem, Broono examines the role new technologies will play and attempts to project the impact the integration of AI will have on the industry.

Broono explained that automation is universal, and its frontiers are ever expanding. However, the HR is very less aware of the potential – It is predicted

reduced—intervention by humans.

Most organisations believe that automating the HR activities is the role of IT however on the contrary the process owners will be the best person to implement the change.

75% of the HR jobs can be automated as indicated by research, in consolation to the rest, more complicated jobs that require complex social interaction will and cannot be automated in the future.

Individual employee and candidate at an organisation will be different and cannot have their needs met by an automated HR department.

On the contrary computers cannot wholly replace human beings in the HR function, but will eventually revolutionise the HR process. Like many aspects of cloud and business digitisation, where tasks are taken away from us as humans, we are given more scope to direct our work in innovation and towards more

“As we take a leap towards the implementation of AI, careful strategy and a vision are perquisite for a successful implementation of board room plans.” creative endeavors powered by the new wave of technologies such as Automation, Digitalisation, ML and AI. The HR industry has developed efficient and data-driven operations solutions with predictable ROIs, an indication of the graduation of the role of the HR from an administrative and compliance department to key decision and impact maker.

So, what has been the evolution in the last few years, and how are we equipped to face the 21st century?

Technology has been the game changer, organisations continue to transition their core HR systems to the cloud and employ more AIdriven technologies to automate communication between HR and employees. The benefits of these tools—such as productivity gains, faster hiring or reduction of compliance risk. It is also told that the HR Function is the most vulnerable to

be replaced by automation.

It’s clear HR is undergoing through unprecedented changes. Don’t be surprised to see an increased demand for skills like Digital HR, design thinking, strategic workplace planning, agile working, diversity and inclusion.

“AI will completely revolutionise HR”, says Broono I need to share two concepts. The first concept is difficulty, and the insight is that in order to transform your business with Machine learning (ML), you should think about goals that are challenging but not impossible.

The second concept you need to use to assess ML use cases is specificity.

Just like with difficulty, there’s a sweet spot between too open and too specific that allows teams to establish a heading but not get derailed by obstacles.

The varied implementation of machine learning is evident in – chatbots that can automate screening, questioning, scheduling interviews, whereby drastically reducing time and manpower.

Video screening powered by AI has the likelihood of identifying, analysing body language and facial reactions.

AI based screening and interviewing will negate the unconscious bias, stereotyping resulting in varied culture, merit based and skill-oriented interview.

Virtual reality training with simulated training that are as close to real work, subtle situations, provide prospects in handling hazardous material training and critical situation simulation.

Blockchain is also inevitable in incorporation of recruitment due to its immutability and accessibility, also reducing reliance on job portals.

To conclude technology can help you to automate and streamline HR processes in the employee life cycle from hiring, onboarding, training, compensation and exit. As we take a leap towards the implementation of AI, careful strategy and a vision are perquisite for a successful implementation of board room plans.

Implementing such technologies will have stiff resistance in face of layoffs, redundancy, fear, however on the upside, the long-term benefits are larger, and it is a worth exploring the avenue.

HLB HAMT | Insight

at least 20% of the workforce will be automated in the future.

Technology is transforming traditional HR functions such as hiring, training and benefits administration.

And the execution of all this change demands a strong HR role.

The ability to grasp and gain knowledge in automation will prove to be the cutting edge and distinction between those who survive and evolve in HR and those laid redundant or automated out of their HR jobs. The fear of automation replacing the jobs, especially automating the repetitive transactions is existent. However, on the contrary, more HR staff will be performing analytical functions and getting more involved with other organisational activities.

Automation refers to the use of electric or mechanised processes to perform work without—or with

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18

RERA Platform

RERA EMPOWERS HOMEOWNERS WITH NEW PLATFORM

Real Estate Regulatory Authority (RERA) has been forced to create a new platform specifically designed to address issues faced by unit owners in terms of their community charge. Renjith Tharakath, Audit Manager at HLB HAMT offers his expert insight on the platform that has been named Mollak, which translates to owner in Arabic. In what is a detailed analysis, Tharakath highlights the unique features of the digital platform which ultimately gives control back to homeowners and creates a culture of transparency in the real estate industry.

Insight | HLB HAMT

What is the platform?

Mollak is a unique digital online system established by RERA for the purpose of signing up owners’ associations which provides the following on-line support services • Registration of Owners Association • Registration of Management companies and staff • Registration of Management agreements

The two main services in Mollak is the service charge budget review and verification of unit holders’ receivables balance.

Service Charge Budget Review of Freehold Properties in Dubai: Every freehold property in Dubai should have an owner’s association, comprising all the unit owners within that property. The Owners Association

must be formed upon completion of registration of the first sale of the property and they will control, manage and administer the common areas in the property.

The owner’s association will usually hire association managers (facility management company) with experience in managing free-hold properties, to act on their behalf.

For meeting the common

RERA Platform

expenses, the Owners Association will raise fund from the unit holders in the form of service charge based on the budget prepared by Association Managers which include the forecasted maintenance charges of the property and thus arrives the service charge rate.

Previously the prepared budget was directly submitted to RERA for approval but now this should be reviewed by the approved audit company registered with Real Estate Regulatory Authority (RERA) for review and approval before approaching the authority for approval.

The main interest to implement this is to protect the unit holders interests, because the Association Managers can over budget the expenses and

increase the service charge rate which is ultimately hitting to unit holders since they are contributing the same.

Service charge may not be the same for every owner; it varies depending on factors which can range from the size of the unit, the permitted use of the unit and certain standards that must be maintained particularly by unit owners.

The scope of Service Charge Budget Review must be conducted in accordance with the RERA Owners’ Association Department guidelines and international best practices.

Charge Approval Form • RERA Requirements for Service Charge Budget Approval Form • Info Pack • Review Disclosure Checklist • Manpower List • Tender Evaluation Form • Service Providers Contract Control List • Comparison of Actual vs. Budget • Compliance with RERA Requirements & Guidelines • Budget Acknowledgement Form • Summary of Income and Expenditure Statement

The scope of Budget Review should include the following sections: • Project Details (Particulars of the building/community) The particulars of the building including the name of the project, unit numbers, occupancy, service charge rates and title deeds.

• RERA Forms

Financials: A detailed review of service charge must be conducted, and it should include details such as the master community invoice, insurance policy, management agreement and summary of utility cost breakdown along with the basis of calculation.

“RERA has made rules regarding budget review stricter to enhance transparency in the sector and avoid corruption.”

Renjith Tharakath, Audit Manager, HLB HAMT

Supporting Documentation: A detailed review of the tendering documents must be conducted to ensure that the tender procedures have been followed.

The list of service providers and their respective service contracts must be checked – and there are signed engagement letters and agreed minutes of the meetings in record.

Previous year’s approved service charge budget, developer’s valid trade license and the basis of allocation must also be reviewed.

General Requirements: This involves a detailed review of the budget computations, contracted and non-contracted expenses, tendering process and previous year’s audit report.

RERA has made rules regarding budget review stricter to enhance transparency in the sector and avoid corruption. This has been made possible by collaborating with financial audit agencies.

Unit Balance Verification: The Association Manager should approach the Auditing firm approved by RERA to verify and approve the service charge due and total area of each unit holders and then upload the same in the Mollak System.

HLB HAMT | Insight

The forms submitted by the association manager need to be reviewed along with conducting a variance analysis of the actual expenses of the previous year and the budgeted expenses of the current year. The reviewers must check whether the below mentioned forms are completed by the association manager; • Request for Service

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HAMT

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