CGI Gulf Insights of the Week (163)

ByCGI Gulf Insights of the Wee
Monday, 19 August 2019
Published inAugust 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Kuwait

Risk Indicator - DB3d
Risk Level - Slight

Ratings Trend - Deteriorating

OPEC+ countries extend oil cuts by nine months as expected: oil prices do not shift substantially in the aftermath of the decision. The risk of insecurity, including sectarian tensions between Kuwaitis, remains higher than usual in light of regional tensions such as the Saudi-Iranian rivalry.

Market Overview

Bahrain's Ithmaar says planning to delist from Boursa Kuwait
Ithmaar Holding, a Bahrain-based company that is licensed and regulated as an investment firm by the Central Bank of Bahrain, has announced plans to voluntarily delist from Boursa Kuwait. The company said it will continue to list on the Bahrain Bourse and Dubai Financial Market. The announcement, by Ithmaar Holding chairman Prince Amr Al Faisal follows the board's review and approval of the plan, which will be presented to shareholders for approval. The plans are subject to the approval of relevant authorities in Kuwait and Bahrain, the company said, without giving a reason for the delisting. Ithmaar Holding said its plans to voluntarily delist from Boursa Kuwait will have no effect on its subsidiary, Ithmaar Bank or any of its customers or investors. In May, Ithmaar Holding reported a net profit of $8.62 million for the three-month period ended March 31, an increase of 79 percent compared to the same period in 2018.

Industrial licenses and customs and tax exemptions in Oman up 602% in Q1
The number of industrial licenses and customs and tax exemptions handed out in Oman during the first quarter of 2019 increased by 602.1 percent compared to the same period last year. Figures from the department of statistics at the Ministry of Commerce and Industry reveal there were 2,654 given, up from 378 in Q1 2018. The number of industrial licenses in the first quarter of this year was 2,519, compared with just 326 licenses issued in the corresponding period last year. According to a report in the Times of Oman, the increase is due to companies applying for new licenses rather than renewing old ones. Most companies also submitted the application due to the expiry of their environmental approvals. The number of customs exemptions during the first quarter of the year 2019 was 130, compared with just 39 of the same period last year. There were five applications for tax exemptions during the first quarter of this year, compared with 13 applications in Q1 2018.

FTA launches new excise goods registration system
The UAE’s Federal Tax Authority (FTA) has launched a new electronic system for registering excise goods. In a statement on 17 August 2019, the FTA said that the new system is designed to offer transparent guidelines and standards for the registration of goods, along with new reporting requirements related to excise tax returns and declarations. The FTA is urging all businesses to follow the new process and ensure that the required documents are readily available when submitting a registration request. Requirements include product details, ingredients, marketing information – including images and videos – lab tests, and, in some cases, the retail price of the product based on UAE or international retailers. Additionally, the FTA is asking that taxable persons comply with new declarations, tax return forms and requirements such as import, produce, release from designated zones and local purchase scenarios. The FTA has launched a number of new manuals and guides to raise awareness of the new procedures. Any individual that produces or imports an excise good to be sold in the UAE market is subject to the excise tax, as is anyone who stockpiles these goods or releases them from a designated area. According to the FTA, there is no threshold for excise tax, meaning that all businesses with related activities are required to register with the new system.

UAE's IBC eyes $5bn deal to acquire 10,000-holiday homes in Dubai
UAE-based IBC Group announced on 14 August 2019, that it intends to acquire 10,000 properties in Dubai to furnish and manage as holiday homes. The company said it has contracted Berkshire Hathaway HomeServices Gulf Properties on an exclusive basis to play an advisory brokerage role to assist in identifying, acquiring and financing the properties. The deal is valued at $5 billion, with a possible scale up to acquiring one million properties in over 100 cities across the globe, a statement said. Operating in the UAE since 2014, the IBC Group has focused on private equity investment in real estate, arts and future technologies. The group is backed by global banking and finance leader Khurram Shroff, who is also the co-founder of The Gallery Suites Vacation Rentals, a worldwide short-term rental management firm, which focuses on providing specialized services to property investors, homeowners, and Airbnb hosts. IBC Group said it aims to become a key influencer in building the confidence in the real estate industry across the Middle East. It added that the properties to be acquired will be financed via an Islamic finance vehicle known as Sukuk.

Bounced cheques can result in civil court cases, UAE authorities say
Bounced cheque cases in the UAE can result in fines of between AED 2,000 and AED 10,000 and civil cases filed against those who issue them, according to Dubai judicial authorities. According to Legal Order Law No 1 of 2017 – which came into effect in December of that year – individuals facing bounced cheque cases worth AED 200,000 or less can be punished without the case being referred to judges. In such cases, fines go up to a maximum of AED 10,000. However, according to sources, Dubai Courts Judge Ayman Al Hakam said that the receiver of a bounced cheque still has the right to take the case to the Civil Court. “The issuer of the bounced cheque may think all that he needs to do is pay a fine if he can’t settle the case,” he said. “But the victim can still exercise his rights by opening a civil case against the issuer of the cheque for the amount of the cheque plus compensation. Bounced cheque cases don’t end with paying the fine.” The judge added that victims have three years to file a civil case from the time the issuer of the bounced cheque was convicted and fined. According to sources, Gassan Al Daye, the head of litigation Middle East with law firm Charles Russell Speechlys, said that if the Civil Court rules in favour of the plaintiff, a 12 percent interest rate will be added to the value of the cheque, beginning from its issue date.

Commodity Tracker

Business Events this Week In UAE

Middle East Banking Innovation Summit

@ Jumeirah Emirates Towers Hotel, Dubai, UAE
Date: 03-04 September 2019

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