Billions of dollars flow into the U.S. from China every year. CNBC’s Uptin Saiidi explores some of China’s biggest assets in New York and explains how the trend is shifting.
New research reveals a UK technology market which has attracted the eye of US businesses and seen a huge increase in transactions, with acquisitions of UK technology companies up 386% in 2017 than there were in 2009).
Of the 247 UK companies to have exited into the US in 2017, almost a third (32.3%) of those were technology companies, followed by manufacturing, which has also seen an increasing interest from the US over the same period.
While technology has been one of the principle drivers of the UK M&A market in the mid-market, the results highlight there has also been a wider trend of increasing activity from US acquirers. Overall, the UK has seen the acquisition of companies below £1billion increase by 86% over the last decade (2009 to 2017), with sectors such as Business Services and Manufacturing having increased in the number of sales to US acquirers.
Commenting on the findings, Andy Hodgetts, Senior Corporate Finance Manager at Buzzacott said: “The UK’s technology landscape is changing dramatically and is far more active than it was just under a decade ago. Silicon Valley is no longer the sole proprietor for developing new innovations, the UK is a hotbed for talent, and in the US’ acquisitions of UK companies, they are gaining access to that talent pool.
Hodgetts continued: “There has been a lot of uncertainty around Brexit and what it means for the UK, which has left many businesses unsure as to when might be a good time for them to sell. What we are seeing however is that there are a number of opportunities and buyers out there, especially in the US. For UK companies that are planning on exiting, but have waited due to the uncertainty the UK faces, it is important to not just think about companies within the UK that might want to acquire the business, but explore internationally too as there are plenty of buyers available, whatever the sector.”
(Source: Buzzacott)
From the pending implementation of VAT to the introduction of Inter-Governmental Agreements with foreign countries, below Finance Monthly hears about Kuwait’s most recent tax affairs through the lens of one the world’s largest professional services and accountancy firms, EY, and one of its top Partners and experts in Kuwait, Alok Chugh.
Despite previous plans, Kuwait’s parliament has recently announced that it will not implement VAT before 2021. What could this decision mean, both in the short and long term?
We are closely monitoring the progress in implementation of VAT and are in regular contact with all the key officials. Based on our discussions, we believe the VAT may be implemented sooner than 2021 (probably by January 2020).
While some businesses take a sigh of relief, this only seems to be short term, as once the other countries implement the VAT, the pressure on Kuwait will only increase.
What are the key challenges that could come with this decision?
Timing difference in implementation of VAT in Kuwait and in the neighbouring countries will have concerns by businesses involved in cross border transactions that may result in higher cash outflow. For Kuwaiti businesses, this is a blessing in disguise as this gives them additional time to prepare for VAT and also leverage from experiences of other countries.
What have been any other tax trends in Kuwait in the past six months?
Kuwait has signed the Inter-Governmental Agreements with the United States (US) for implementation of US FATCA. The financial institutions are required to do an annual FATCA reporting to the Ministry of Finance (MoF) and audit report prepared by a certified auditor is required to be submitted by the FIs on an annual basis.
In addition, Kuwait is a signatory to CRS Multilateral Competent Authority Agreement (MCAA). The MoF has recently issued additional guidelines for CRS, which among other things include appointment of an auditor for CRS reporting purposes (similar to the requirements for FATCA reporting).
Besides, from corporate tax point of view, there have been recent legal cases decided in the Kuwaiti courts, where the MoF has subjected the foreign principals and suppliers of products to tax in Kuwait, based on certain types of agency/distributorship agreements/arrangement. This effectively means a significant potential increase in the tax base. Kuwait is largely an importer of products and services wherein a number of foreign principals sell products and services through Kuwaiti agents.
Are there any concerns or future considerations regarding long term attractiveness for Kuwait as a place to do business? If so please elaborate.
Kuwait government is making efforts for: ease of doing business in Kuwait and has brought about legislative changes to attract foreign direct investments in Kuwait. Kuwait continues to spend on the mega projects in strategic Oil & Gas and Infrastructure projects. In addition, there are various other mega projects in pipeline, for which the tenders will be issued soon during the course of the year.
These projects definitely have promising business opportunities for local business as well as international companies wanting to participate in the Kuwait projects as subcontractors.
In addition, Kuwait has recently announced its Vision 2035, which will require significant investments in infrastructure, education, healthcare, over the course of 5-10 years.
Is there anything else you would like to add?
I take this opportunity to share our firm credentials. Our firm represents about 70% of the tax payers in the country and we are proud to serve almost all the major market players. We are a team of about 50 tax specialists, the largest tax team amongst the tax service providers, which includes team of experts in VAT, BEPS, Transfer Pricing, cross border tax advisory and tax compliance services.
Alok is a partner with EY’s Middle East practice and is based in Kuwait. He has lived and worked in Kuwait for over 25 years and has detailed knowledge of business and taxes in Kuwait. He has considerable experience in advising entry-level strategies for foreign multinationals wishing to do business in Kuwait. Alok has been involved in a number of consulting assignments (including cross-border planning, application of double tax treaties and the efficient handling of tax and commercial affairs for project due diligence, business paper preparation or review, and structuring operational activities). Alok is a member of the Institute of the Chartered Accountants of India and is an active member and frequent lecturer at the American Business Council, French Business Council, British Business Forum and Canadian Business Council in Kuwait. He is also on the Board of the American Business Council in Kuwait. Alok has been consulted by various government organizations in Kuwait on the practical implementation of various regulations in Kuwait, including the Ministry of Finance. Alok also works closely with the Kuwait Direct Investment Promotion Authority (KDIPA) and a number of other government institutions.
Contact details
Alok Chugh
Partner - MENA Government and Public Sector Tax Leader
Mobile: +965-97223004 / +965-97882201
Phone: +965 22955104
Floor 18-21, Baitak Tower, P. O Box: 74, 13001 Safat, Kuwait
- 2,265 FDI projects secured in 2016-17, a rise of 2%.
- Total FDI jobs down by -7%, falling from 115,974 to 107,898 in 2016-17.
- Software and Computer Services is number one for FDI, with 418 projects 2016-17.
- The South East, West Midlands and North West hold the highest number of FDI projects.
- America remains the UK’s largest source of inward investment, providing 557 FDI projects.
It has been reported by GOV as per the report UK FDI Investment, Trends and Analysis: 2018 that growth in the value of Foreign Direct Investment (FDI) positions held in the UK by overseas investors (FDI liabilities) exceeded that of UK FDI positions held abroad (FDI assets) in 2016.
This resulted in the UK’s net FDI position falling from £50.8 billion in 2015 to £12.5 billion by 2016, the lowest net position since comparable records began in 1997.
Inspired, Turnerlittle.com took time to consider the projects and jobs created by FDI in the UK, identifying the 6 sectors benefiting from this type of investment the most.
Figures from the Inward Investment Results 2016-17 report released by the Department for International Trade, declare total FDI projects in the UK rose by 2% in 2016-17, from 2,213 (2015-16) to 2,265. This comprises projects by “existing investors” in the UK (1,212) and projects by “new to the UK” investors (1,053.)
Types of Foreign Direct Investment taking place include New Investments – up by 9%, Expansions – down by -5% and Mergers and Acquisitions (including Joint Ventures) – down by -6% in 2016-17. Further, the USA remains the UK’s largest source of inward investment; providing 557 projects, followed by the rest of Europe, Middle East and Africa (261) and China and Hong Kong – with 160.
However, the increase in total FDI projects is not mirrored in total jobs, with roles suffering a -7% fall from 115,974 (2015-16) to 107,898 in 2016-17. New roles decreasing from 82,650 (2015-16) to 75,226 in 2016-17.
In a table created by Turner Little, it is evident where projects are feeding a healthy workforce by comparing total projects and total new jobs in regions across the UK.
Turnerlittle.com found that excluding London, the South East (217), West Midlands (151) and the North West (147) hold the highest number of Foreign Direct Investment projects. This equates to 5,432 new jobs in the South East, 6,570 new jobs in the West Midlands and 6,501 new roles in the North West, 2016-17. Proving FDI to be a real asset in the UK.
In terms of industry, Turnerlittle.com found the UK’s Software and Computer Services sector to be number one for FDI, with 418 projects in 2016-17. This total is followed by the Financial Services industry (217) and Business and Consumer Services (211.)
Closing the top six sectors benefitting from Foreign Direct Investment the most are Environment, Infrastructure and Transportation, with 184 FDI projects in the UK, Creative Media (151) and Advanced Engineering and Supply Chain – with a total 146.
The top three sectors with the least FDI projects are Chemicals and Agriculture (50), Extraction Industries (49) and Aerospace (47.)
(Source: Turnerlittle)
