Each state and many local jurisdictions have authority to impose a sales and use tax, subject to U.S. constitutional restrictions.
What type of tax is it?
Consumption based tax on the final consumers of taxable goods and services. Entities generally collect the tax from the customer and remit the amounts to the state.
What is it due on?
Retail transactions of tangible personal property, enumerated services, and certain digital goods.
What are the sales and use tax rates?
There is no national sales tax therefore there is no standard rate.
Rates vary state to state. Most states allow local jurisdictions, such as cities, counties, and districts, to impose sales tax in addition to the state tax.
Are there exemptions for sales tax?
Many states offer reduced rates or exemptions for certain types of goods and services, such as clothing, food, or personal hygiene items. However, each state varies.
Retailers and manufacturers are allowed to provide resale certificates to their wholesale dealers or suppliers to purchase goods without having to pay sales tax on the transaction.
What does a sales tax number look like?
Varies by state.
When does an entity need to register for a sales tax permit?
If the entity is engaged in the business of selling tangible personal property at retail or taxable services, the entity should register once they have established nexus in the state. Each state has its own standards of what constitutes nexus.
What is nexus and how is it established?
Nexus is a level of connection between an entity and a taxing jurisdiction. Until an entity has nexus, the taxing authority cannot impose sales tax on that entity.
Nexus can be established by the entity having a physical presence or an economic presence in the state. Each state has put into place economic thresholds, such as sales volume or number of transactions. Once those thresholds are exceeded, or physical presence,exists, the entity will have substantial nexus in the state and will be required to collect and remit sales tax.
Are there any special rules?
States also have marketplace facilitator laws where online marketplaces are required to collect and remit sales tax on behalf of third-party sellers. However, each state has its own definition of what constitutes a marketplace facilitator, therefore, online sellers should verify that tax is being collected on their behalf.
Does a foreign entity need a fiscal representative?
Some states require foreign registrants to have a registered agent in the state to receive official notices or correspondence.
How often do sales and use returns need to be submitted?
Depending on the state, returns must be filed either annually, semi-annually, quarterly, monthly, or semi-monthly. Sales volume or the amount of tax due typically determines an entity’s filing frequency.
Are penalties imposed for late filing and payment?
States will assess penalties for the late filing of the return and the late payment of tax. Generally, most states assess a penalty up to 25% of the tax due. However, some states will assess taxes up to 39%. The state will also assess interest on the underpayment of tax.
Is there a way to get penalty relief if an entity failed to timely file a return?
Yes – States offer voluntary disclosure agreements for entities to come forward to pay its tax obligation in exchange for penalty waivers and limiting the lookback periods. Additionally, penalties can be waived if there is reasonable cause for the late filing.
Sales Tax is similar to VAT/GST in that it is also charged on supplies of goods and services, but it is a consumption-based tax, charged on the sale to the end consumer rather than throughout the supply chain.
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Jenny Reed
Director of Quality and Professional Standards at Kreston Global
Jenny oversees the onboarding process of prospective member firms as well as the ongoing development of training and resources. She will be working with member firms to identify priority areas for professional development and training, as well as working with Kreston’s ESG Advisory Committee.
Herbert M. Chain
MBA, CPA (USA), Director, CBIZ Marks Paneth, and Shareholder, Mayer Hoffman McCann P.C.
Herbert Chain is a highly experienced author is a financial expert with 40 years of experience in business, accounting, and audit, having served as a Senior Audit Partner at Deloitte. He holds certifications from the National Association of Corporate Directors and the Private Directors Association, with knowledge of private company governance and effective risk management. He has extensive knowledge in the financial services sector, including asset management and insurance, and experience with SPACs.
Quality without borders: Quality management in a global network of firms
November 24, 2023
Quality management is crucial to maintain and enhance a global network’s reputation, protect the public interest, ensure client satisfaction, attract and retain top talent, and build a network’s competitive edge. It is also required by regulators and professional bodies.[1] Additionally, the International Standards on Quality Management (ISQM) provide a globally recognised framework for quality management in the accounting and auditing profession. Adhering to the ISQM requirements is essential for global networks to demonstrate the commitment of their member firms to delivering high-quality services.
For global networks, dispersed across countries and regions, and composed of independent firms, maintaining consistency and excellence presents unique challenges. A commitment to quality by global and firm leadership is essential to set the standard, demonstrate a tone at the top, and encourage (and require) appropriate behavior.
Critical elements of quality management
Culture, culture, culture
Leadership must emphasise the importance of quality at all levels of the network, develop a culture of quality, and communicate expectations for behavior. It must also encourage a culture of continuous improvement. This means creating an environment where staff feel comfortable identifying and reporting problems and where there is a process for addressing those problems.
It also requires those in authority within the firm to “walk the talk” (i.e., “tone from the top”) and not to ignore those who either believe themselves to be exempt from the standards that apply to others, or whose moral compass does not point to true north. Such inaction is very visible to staff and will undermine the effectiveness of a firm’s stated and/or documented policies and procedures, however good they may be.
2. Overcoming resistance to change
For most organisations, global or domestic, resistance to change can hinder the successful implementation of any initiative, including a quality management system. To overcome this, the organisation and its leadership must foster a change management culture by involving stakeholders at all levels and at all stages in the process, providing clear communication about the benefits of the new system(s), and demonstrating its positive impact on quality, firm success ad reputation, and client satisfaction.
3. Standardisation and harmonisation
One of the key factors in promoting effective quality management across a global network of independent firms is the establishment of standardisation and harmonisation protocols. Developing a set of standardised processes, methodologies, and best practices ensures uniformity in service delivery, documentation, and work performance. This can be achieved through the implementation of a global quality management system, which outlines the framework for quality objectives, procedures, and responsibilities. It should also encompass continuous improvement initiatives, regular performance reviews, and quality audits. While non-standardised methodologies and policies can still result in quality performance of services, standardisation permits effective resource sharing, scalability of operations, and consistent documentation frameworks.
In a diverse network of independent firms, there will always be aspects of quality management that need to be firm-specific for maximum effectiveness, but alignment of policies and procedures will often be beneficial and cost effective. The introduction of ISQM1 has helped accelerate this process for global firm networks.
4. Training and development
Investing in comprehensive training and development programs is vital to enhancing the capabilities and competencies of professionals within the network. Providing regular training sessions, workshops, and certifications not only strengthens technical skills but also cultivates a culture of continuous learning. Additionally, sharing knowledge and best practices among member firms through online platforms and collaborative forums fosters innovation and improvement across the network.
A focus on efficiency through these types of training and collaboration initiatives can also indirectly contribute towards audit quality. Streamlining processes and cutting out unnecessary work and/or documentation frees up staff to focus their time and effort on more important (i.e., riskier) matters.
5. Key Performance Indicators (KPI)
KPIs, sometimes known as Audit Quality Indicators (AQIs), play a vital role in measuring and monitoring quality across the network. It is important to define meaningful KPIs that align with the organisation’s overall objectives and values. These indicators should include both qualitative and quantitative metrics, such as client satisfaction ratings, adherence to industry standards, results of inspections or quality reviews, and employee training and development.
6. Client engagement and feedback
Quality management should extend beyond internal processes to include effective client engagement and feedback mechanisms. Regular communication channels should be established to capture client expectations, needs, and satisfaction levels. Implementing client feedback surveys, conducting post-engagement reviews, and actively seeking client input helps identify areas for improvement and enhances client relationships. This feedback loop is crucial for maintaining high-quality services and driving continuous improvement efforts.
7. Technology and automation
Leveraging technology and automation tools plays a vital role in streamlining processes, minimising errors, and maximising efficiency. Implementing next-generation accounting and auditing software systems (including artificial intelligence applications), data analytics tools, and workflow automation platforms can significantly improve the ability to analyze data, reduce work times, and enhance the quality of work performed. For example, dashboarding tools such as Caseware Sherlock can automatically measure and report on KPIs such as time to lock down the file, number of review points raised etc.
Regularly assessing and adopting emerging technologies ensures that the network remains at the forefront of industry advancements and accesses effective and efficient methodologies for performing engagements.
8. Monitoring and review
The network must have a system for monitoring and reviewing the quality of its work. This system should identify areas where improvement is needed and permit the network to take steps to address those areas.
Collaboration and peer review processes foster a culture of accountability and continuous improvement. These encourage cross-firm and cross-border collaboration, and allow firms to learn from one another, share best practices, and review each other’s work. Implementing robust peer review mechanisms helps identify areas for improvement, rectify errors, and ensure adherence to quality standards. The feedback received from these reviews should be used to refine processes, address gaps, and strengthen the overall quality management system.
Whilst the main objective of a global quality review program will always be to ensure that member firms can refer their clients to other member firms with confidence, the program should also aim to provide objective, constructive and friendly advice and recommendations to firms based on the reviewer’s own experience and best practices seen elsewhere within the network.
Constraints and overcoming the challenges
While pursuing quality management objectives, several constraints may arise. Identifying and overcoming these challenges is essential. Here are some common constraints and suggested approaches to overcome them:
Geographical and cultural diversity
The global nature of networks may introduce variations in language, cultural practices, and legal frameworks. Overcoming this constraint requires promoting cross-cultural understanding, establishing clear communication channels, and conducting regular cultural training sessions. Adaptation to local regulatory requirements while maintaining global quality standards is also crucial.
While a baseline framework is essential, it must be flexible enough to accommodate variations arising from local regulations, industry practices, and cultural norms. Encouraging local participation in the development of quality standards ensures that the quality management system is adaptable and relevant to different contexts.
Whilst challenging, diversity within the network can also have a positive benefit, providing firms with new perspectives and insights from those firms who take a different approach. Collaborating internationally can generate ideas and ways of thinking that can unlock innovative solutions to problems and challenges.
Resource allocation
Unequal distribution of resources and varying levels of expertise among member firms can hinder quality management efforts. Addressing this constraint involves developing resource-sharing mechanisms, fostering collaboration, and conducting knowledge transfers among firms, recognising that when accomplished, the network as a whole is stronger and all benefit. Centralised resource pools, mentorship programs, and secondment (i.e., outsourcing) opportunities can help balance expertise and optimise resource allocation.
Compliance and regulatory challenges
Different countries may have different compliance requirements and regulatory frameworks, making it challenging to maintain consistent quality practices. Overcoming this constraint necessitates establishing an understanding for such differences and incorporating them into the design of any quality management system. Standardising core compliance processes while allowing for necessary local adaptations ensures compliance while preserving quality standards.
With a global network also comes the requirements to monitor services provided to clients across the network to minimise the risks of breaches of the independence rules on financial interests, mutuality of interest, and scope of services. This has been a significant emphasis on the part of the largest global firms and their networks, especially as related to their public clients, but it also is important for mid-sise networks and even associations. These risks can be overcome by effective communications among network member firms, awareness of services being provided by member firms, and, as often practiced by the larger global networks, the designation of a lead client relationship partner for the client whose responsibilities include monitoring and improving services to be provided by the network before engagement. Firms have also made significant investments in technology to track global services being provided by member firms.
Technology maturity of firms
Unequal technological infrastructure and varying levels of technological maturity can impede effective quality management. Overcoming this constraint involves providing adequate technical support, training, and access to essential technologies, providing standardised tools and systems while allowing flexibility to accommodate local IT infrastructure and preferences. Encouraging knowledge-sharing among member firms regarding technology implementation and providing incentives for adopting new tools can drive technological advancement throughout the network.
Conclusion
Developing, implementing, and enforcing a quality management system for independent firms within a global network is a daunting, yet achievable, task. With the support of senior leadership and the board, and the support and will of the leadership of member firms, however, it is doable – and will maintain and enhance the network’s reputation, protect the public interest, ensure client satisfaction, attract and retain top talent, and build a competitive edge.
[1] Note the recent enforcement actions by the U.S. Public Company Accounting Oversight Board and Securities Exchange Commission, the UK’s Financial Reporting Council, and other regulatory bodies against public accounting firms relating to lapses in their engagement performance and firm-level quality management systems.
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Kreston NBB Saudi Group announces Kreston NBB Cluster Advisory
Saudi Arabian Kreston member firm, Kreston NBB Saudi Group, today announced the establishment of a new advisory organisation, Kreston NBB Cluster Advisory, to meet the growing need for advisory services to clients in the region.
Kreston NBB Cluster Advisory offers a wide range of management consulting services designed for a range of client types. These include corporate governance, risk and compliance services, corporate restructuring, financial advisory services, accounting services, internal audit, and forensic accounting services.
Founded by Kreston NBB Saudi Group Managing Partner Nefal Barrak, the new firm is branded as Kreston NBB Cluster Advisory to take advantage of the extensive global reach of the Kreston Global network. The advisory firm has an ambitious growth strategy and is focused on building a solid quality-led national, regional, and international offering, strengthened by extensive training expertise, to ensure clients can achieve maximum potential. Two of the firm’s partners, Nefal Barrak and Samer J. Yamin, are ex “Big 4“ corporate finance and deal advisory specialists, and are looking forward to working in an entrepreneurial environment with ambitious growing clients.
Nefal Barrak, Managing Partner at Kreston NBB Cluster Advisory, said:
“The establishment of our advisory practice is to meet increasing client demand for specialist consulting services which we are seeing in both Saudi Arabia and the Middle East as a whole. We know the international market is a key growth area here in Saudi Arabia, and Kreston’s Middle East region is highly active and well-connected. As a firm looking to build a strong sustainable future, being able to take advantage of the Kreston Global network is key thanks to its dynamic, ever-growing community of firms serving their clients with dedication and commitment. We are excited to be able to offer a truly multi-disciplinary service to local and international clients.“
“It is always exciting to see firms expand their portfolio and grow and I’m looking forward to watching Kreston NBB Cluster Advisory and their colleagues across the Middle East collaborate on national and international clients in the region.”
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Nefal Barrak
Managing Partner, Kreston NBB Saudi, Saudi Arabia
Nafal Barrak brings extensive experience in consulting, accounting, and management from his time at Deloitte and BDO Saudi Arabia, including Dr. Mohamed Al-Amri & Co. Currently, he holds the position of Managing Partner at Kreston NBB Saudi, where he has facilitated the establishment of a culture of innovation and collaboration, contributing to significant company growth.
Investing in Saudi Arabia: Vision 2030 a catalyst for change
October 20, 2023
Against the backdrop of fluctuating foreign direct investment (FDI), Saudi Arabia, with a formidable GDP of approximately $833 billion, is pioneering economic revitalisation through its ambitious Vision 2030 initiative. Smart businesses are moving quickly positioning themselves to ride the wave of regulatory changes as the Kingdom moves forward to rejuvenate FDI with Vision 2030.
We spoke to Nefal Barrak Beneyyah, Managing Partner at Kreston NBB Saudi about how the vision is affecting doing business and investing in Saudi Arabia.
Understanding the impact of vision 2030 on investing in Saudi Arabia
The Kingdom experienced a significant FDI drop in 2022, making the Vision 2030 initiative, launched by Crown Prince Mohammed Bin Salman in 2016, even more critical. With aspirations to attract over $100 billion annually in FDI by 2030, Saudi Arabia is diversifying investments across sectors, including chemicals, real estate, fossil fuels, automobiles, tourism, plastics, and machinery, drawing interest from countries like France, Japan, Kuwait, Malaysia, Singapore, the UAE, and the USA.
Nefal believes the use structural reforms have supported the rapid change, “Since the launch of Vision 2030, Saudi Arabia has succeeded in implementing many initiatives, for example, privatisation, to enable economic transformation in the Saudi market. Under Vision 2030, Saudi Arabia has taken impressive steps to improve the business environment, attract foreign investment and create private-sector employment and maximised its investment capabilities by participating in large international companies and emerging technologies from around the world. Interestingly, the number of small and medium enterprises (SMEs) registered in Saudi Arabia has also grown since the launch of Vision 2030.”
The Line: A futuristic investment opportunity in Saudi Arabia
As a pillar of Saudi Arabia’s Vision 2030, The Line is part of an ambitious strategy by Crown Prince Mohammad Bin Salman, reflecting the country’s aspiration to diversify away from oil dependency and reshape its economy. A selfdescribed “cognitive city” 170 kilometres long and only 200 metres wide, stretches from the mountains of NEOM to the Red Sea.
With an estimated investment of $500bn, The Line is part of the NEOM mega-development, which focuses on developing sectors such as energy, water, and advanced manufacturing, positioning itself as a global hub for trade and innovation. However, the project faces challenges in securing concrete investments and navigating the sociopolitical landscape, marked by controversies and the need for healthy relations with neighboring countries. The megacity’s progress, buoyed by the Crown Prince’s commitment, hinges on the realisation of FDI dreams, with the first phase of construction potentially completed by 2025.
Funding this ambitious venture is the Saudi Arabian Public Investment Fund (PIF) and a range of local and international investors. The PIF, bolstered by collaborations with Blackstone Group and SoftBank, is pivotal in supporting various sectors within NEOM, such as renewable energy, advanced manufacturing, and biotechnology. The city’s listing, set to follow Aramco’s IPO, aims to draw investments from diverse fields.
Boosting FDI with strategic investment initiatives in Saudi Arabia
To bolster FDI, Saudi Arabia launched the Special Economic Zone (SEZ) programme and established the Investment Law Business Regulations Zone (ILBZ) in Riyadh. These initiatives, coupled with far-reaching legal reforms, including the new Foreign Investment Law. Under the draft law in Saudi Arabia, foreign investors will experience neutral treatment, enjoying freedoms to manage and operate their projects, including property ownership, contract conclusion, company acquisitions, and funds transfer. Both local and foreign investors will adhere to identical sectoral requirements for licenses, registrations, and certain economic activities, supported by facilitated procedures from Saudi authorities. Violations of the law may result in SR500,000 fines, cancellation of registration or licenses, and revocation of investment facilities, while confiscation or expropriation of investments is restricted and subjected to fair compensation.
These changes are pivotal in fostering a conducive investment environment. The ILBZ, offering attractive incentives such as a 50-year tax exemption and 100% business ownership rights, and the SEZ’s focus on nonconventional sectors, are instrumental in attracting quality FDI.
Streamlining foreign investing in Saudi Arabia’s securities market
In a recent move, Saudi Arabia’s Capital Market Authority (CMA) announced new regulations for foreign investment in its securities market on 2 May 2023. This legislation governs qualified foreign investors’ (QFIs) operations in the Saudi capital market and consolidates measures into a comprehensive document, including provisions for QFIs, disclosure requirements, and continuous obligations. The amended legislation reduces differences between QFIs and other investors and simplifies QFI requirements, including allowing investments in main market securities through discretionary portfolio management.
Kreston NBB Saudi: Navigating the opportunities of investing in Saudi Arabia
Aligned with Saudi Arabia’s evolving economic landscape, Kreston NBB Saudi offers a diverse service portfolio, ensuring adaptability and readiness to navigate the complexities of Vision 2030 and the newly introduced market legislations. Nefal is clear the firm’s commitment to quality, governance standards, and high-quality training underscores its strategic alignment with the Kingdom’s ambitious economic goals,
“Initially, our priority will be to fully support major multinational and national companies, which have already gained a leading market share, by providing them with our quality services regionally and globally starting from Phase I “Selecting the proper legal status” to Phase III, especially in the fields of assurance, tax consultancy/ planning, advisory service, and value-added tax compliance services. We also seek to support local and multinational companies with promising growth opportunities so they could develop into new regional and global leaders.”
Saudi Arabia’s ascent in the World Bank’s Doing Business report and impressive GDP growth of 8.7% in 2022 highlight its promising economic trajectory. The Kingdom’s transparent regulatory framework, strategic initiatives like the SEZ programme and ILBZ, and continuous regulatory reforms, including the recent securities market legislation, are driving forces making Saudi Arabia a dominant and attractive investment destination in the MENA region.
As Saudi Arabia endeavors to realise Vision 2030 through leveraging strategic initiatives, regulatory reforms, and newly introduced securities market regulations. Nefal observes, “Saudi Arabia is a future forward economy, offering untapped potential and unique business opportunities to national and international businesses.”
Mohamed Mamdouh is Director at Ahmed Mamdouh & Co. Kreston Egypt. He is also a committee member of Kreston Global Middle East.
Investing in Egypt: IMF backing, BRICS and reform attract investors
In 2022, Egypt doubled its 2021 Foreign Direct Investment (FDI) figure, bolstered by an International Monetary Fund (IMF) loan and a slew of regulatory reforms. The loan, awarded on December 17 2022 by the IMF, is a 46-month arrangement under the Extended Fund Facility worth $3 billion for the nation, conditional on the Government of Egypt (GoE) implementing a range of structural reforms. We spoke to Mohamed Mamdouh in the region to find out more about doing business in Egypt.
Egypt’s resilience as a top destination for Foreign Direct Investment (FDI)
Egypt attracted over $11 billion of inward investment in 2022, according to a 2023 report by UNCTAD (United Nations Conference on Trade and Development) in addition to the IMF funding agreement. The IMF’s backing aims to encourage Egypt in adopting a flexible exchange rate, implementing the State Ownership Policy to encourage privatisation, and lifting import restrictions imposed in the spring of 2022.
In line with this, Egypt has enacted several regulatory reforms like the Investment Law (Law 72 of 2017), a “New Company” law and a Bankruptcy law in 2018, and a new Customs Law in 2020, to optimise its business climate. In August 2023, Egypt also announced it was due to join trade coalition, BRICS, to help shore up the IMF investment and attract more FDI.
Sustainable development and climate readiness in Egypt: A growing priority
Additionally, Egypt’s engagement in global climate negotiations has been underscored by its hosting of the United Nations Climate Change Conference (COP 27) in November 2022, signalling a growing awareness of sustainable development.
Egypt’s economy is undergoing substantial transformations, thanks in part to a raft of governmental reforms targeted at foreign investments and broader economic development. This has led to increased demand for specialised auditing and accounting services, a need that Kreston Egypt is wellplaced to meet.
“Egypt has taken several initiatives over the last year, particularly focused on adapting to changes in the external environment,” remarks Mohamed Mamdouh, an expert in the Egyptian accounting and auditing sector. Among these initiatives are efforts to encourage foreign direct investment and bringing previously closed firms onto the stock exchange. “This has allowed auditing firms like Kreston Egypt to play a pivotal role in enhancing financial transparency and performance,” Mohamed observes.
Adapting to the changing tax landscape in Egypt: Implications for investors
In addition to these economic shifts, accounting regulations for domestic businesses have been revised, affecting areas such as currency exchange treatment and insurance firm standards. According to Mohamed, “Our local expertise, bolstered by the Kreston Global network, positions us to offer a full suite of auditing, accounting, and advisory services.” The firm specialises in a range of areas, including financial statement auditing, tax planning, transfer pricing and M&A due diligence, giving the team a broad understanding of the impact the reforms are having on clients.
Diversified investment opportunities in Egypt’s growing sectors
Changes to Egypt’s taxation laws aim to align with international norms, including The Organization for Economic Cooperation and Development (OECD) Base Erosion and Profit Sharing (BEPS) guidelines. “New regulations have emerged, covering a broader definition of Permanent Establishment, the use of e-invoicing, and a unified tax rate for gains,” Mohamed advises.
Beyond traditional financial matters, the regulatory environment in Egypt is also adapting to include ESG factors. “We are seeing a greater focus on ESG within the regulatory framework, states Mamdouh. Artificial Intelligence and blockchain are other key areas witnessing regulatory development. “The country is developing a stance on Artificial Intelligence, anticipating its role in enhancing business efficiency,” says Mamdouh. Regarding cryptocurrency and blockchain, he notes, “While the rules are still in development, there’s a clear interest in these technologies, indicating future regulatory action.”
Investment landscape
Opportunities for investing in Egypt are aligning with its new policy directions, offering potential in sectors like financial services, renewable energy, and technology. Kreston Egypt is ready to assist companies in navigating this evolving environment. “As the economy and regulatory landscape change, we are committed to guiding our clients through these complexities, contributing to their long-term success,” Mamdouh concludes.
Egypt is laying significant foundations to attract FDI, for businesses contemplating entry into the Egyptian market in 2024, the dynamic regulatory transformations underscore the importance of securing knowledgeable local expertise for effective navigation and compliance.
Sudhir Kumar, with over 30 years of business acumen in the domains of Management and Consulting in the UAE market is the primary resource behind the successful positioning of Kreston Menon as one of the leading Superbrand in the region. He works closely with all the market segments including Government, Corporate Sector, Free Zones as well as Financial Institutions. He spearheads the CSR initiatives of the organization along with his branding and corporate communication responsibilities.
Investing in the Middle East: Economic outlook for 2023/4
October 19, 2023
The Middle East economy is still attracting inward investment in 2023, despite a slowing global economy. The IMF and World bank are predicting GDP growth in the Middle East and North Africa (MENA) in 2023 to land somewhere between 2.4% and 3.1%.
Oil dependency and market dynamics
While oil and gas remain crucial for the Middle East’s economic landscape, especially for the Gulf Cooperation Council (GCC) states, there is a clear and evidenced interest in reducing this dependency by diversifying into other sectors to build more resilient, stable, and sustainable economies. Many regions have developed an ambitious tourism strategy, particularly Oman and United Arab Emirates (UAE), with Saudi Arabia’s flagship tourism investment opportunity NEOM picking up pace and The Line, Saudi’s planned 170km, $500 billion new city, due to be complete in 2039.
Diversification for economic stability
Oil and gas remain pivotal when investing in the Middle East. The EIU (Economist Intelligence Unit) notes that GCC states will particularly benefit from strong global demand and high prices for energy exports. The organisation expected oil prices to remain above $90 per barrel until at least mid-2023, echoing the International Monetary Fund’s (IMF) warning about rising oil prices due to global turbulence. (OPEC+) countries are unlikely to increase production despite pressure from the U.S. and Europe, focusing instead on price levels.
Inflation is another key concern, particularly for troubled states like Lebanon, Syria, Yemen, Iran, as well as Egypt and Turkey. According to the EIU, these countries are bracing for another year of double-digit annual consumer price inflation, with hyperinflation in Lebanon and Syria. This dovetails with the IMF’s report, highlighting inflation rates in some Middle Eastern countries.
Both the EIU and the IMF highlight the increasing focus of major Middle Eastern countries like Saudi Arabia, the UAE, and Iran on Asia for trade and investment. The EIU expects this “look East” policy to continue in 2023.
Promising tourism developments
Tourism is showing signs of recovery across the region, with the EIU anticipating international arrivals returning to pre-COVID levels by the end of 2023. This is due in part to major events like the FIFA World Cup in Qatar and efforts to promote tourism across Middle Eastern countries.
Business conditions in the GCC states are expected to be the most favourable in the region, per the EIU. These countries will see high oil and gas revenues spilling over into nonenergy sectors, helped by state-backed investments in diversification.
Challenges and opportunities investing in the Middle East
Both the World Bank and the EIU emphasise downside risks, including global shocks that could affect economic growth, stability, and social cohesion. Upside risks are limited and mostly hinge on external factors like a quick resolution of the war in Europe or stronger demand from China.
Ersel Barlak has 25 years of working experience in diversified roles such as corporate finance, business strategy, banking, audit and corporate business development covering a broad number of industries with significant project and deal execution leadership responsibility.
Ersel has a proven track record of leading projects such as valuations, project finance assignments, strategic assessments, market and financial feasibility studies, greenfield investments, portfolio reviews, competitive analysis, strategic planning, evaluation of investment targets, M&A engagements, formation of strategic partnerships, privatizations, divestitures, IPOs and SPOs.
Investing in Turkey: Can the economy find stability in 2024?
Investing in Turkey is a tale of two halves. As the 19th largest economy in the world, boasting a GDP of roughly $906 billion, Turkey is working against the odds to keep a seat at the economic table of the G20 powerhouses, navigating a complex list of setbacks, from natural disaster to hyperinflation.
The nation has experienced a notable journey of growth, reforms, and resilience over recent years. Ersel Barlak, partner at Kreston ATA, Turkey, examines Turkey’s foreign investment growth, second only to the United Arab Emirates in 2022. In the face of 58% inflation, Ersel discusses the firm’s trajectory amidst economic challenges and opportunities.
Overview of investing in Turkey
Turkey has witnessed ambitious reforms and high growth rates between 2006 and 2017, leading to a substantial reduction in poverty. The share of individuals below the $6.85 per day poverty line nearly halved to 9.8% between 2006 and 2020 according to World Bank data.
Ersel Barlak, with six years in the network under his belt, has a clear perspective on why that is.
“When compared to the EU countries, Turkey is the country with the highest youth population, half of Turkey’s population is under 32, which forms a youthful workforce with a strong potential,” shares Ersel, attributing part of the success to the nation’s intellectual capital.
“As of 2020, approximately 1 million undergraduates graduate from more than 200 universities yearly. The workforce in Turkey experiences the biggest growth among the EU countries as it becomes more and more productive every day .”
Despite the challenges of high private sector debt, persistent current account deficits, high inflation, and an unemployment rate double that of European G20 members, Turkey managed to achieve a robust economic growth of 5.6% in 2022 following the COVID pandemic recovery.
Foreign investment: Istanbul’s significance
The country took a blow in February 2023 in the form of devastating earthquakes, which inflicted physical damage in 11 provinces, accounting for 16.4% of Turkey’s population and 9.4% of its economy. The direct losses are estimated at $34.2 billion according to a World Bank report, but reconstruction of that figure could potentially double.
Ersel reflects on Istanbul’s resilience and emergence as a regional hub for foreign investors amidst these adversities. “Particularly Istanbul has become a strong attraction centre for foreign investors investing in Turkey,” notes Ersel, underscoring the city’s strategic significance and adaptability.
OECD economic outlook for investing in Turkey
The OECD Economic Outlook, June 2023, further details this situation, projecting a moderate economic growth of 3.6% in 2023, attributed to weaker exports, while domestic demand continues to fuel growth. This was still the best outlook in the G20.
The extensive damage caused by the earthquakes has indeed disrupted economic activity, yet the rapid initiation of reconstruction work is expected to largely offset this negative impact. The unemployment rate is anticipated to hover around 10%, and inflation, currently at 58%, is projected to “return to normal” rates of 15% by the end of 2025, with nominal wages experiencing a rapid ascent.
Investment incentives and strategic advantages
So what is bringing foreign investment to Turkish shores, despite uncertainty? Turkey offers a myriad of investment opportunities, bolstered by extensive incentive programs, a liberal investment environment, and strategic geographical leverage. “Hundreds of leading global companies in automotive, energy, and retail industries take advantage of competitive R&D incentives,” states Ersel. He further highlights Turkey’s role as a gateway for international companies aiming to expand into diverse markets and the youthful demographic profile that augments the nation’s appeal.
Focus, too, on uninterrupted reforms, makes the process of starting a business in Turkey appealing, Ersel believes, “Thanks to the reforms introduced in the fields of innovativeness of production, the sustainability of growth, qualified workforce, and collaboration in the international market, the average time period required to start a business shortened to 6.5 days from 38. In addition to its expanding domestic market, Turkey also offers access to approximately 1 billion consumers in the regional market with the support of free trade agreements .”
Investing in a greener future
Looking to the future, Kreston ATA is focusing on expanding its Corporate Finance & Advisory business. While acknowledging that the demand in specific service areas has remained constant, Ersel highlights the firm’s commitment to leveraging emerging opportunities and adapting to the evolving economic landscape. The integration of ESG policies is also gradually gaining traction in Turkey. “ESG is a new concept to our clients. Frankly speaking, it is not a priority on their agendas,” reveals Ersel.
However, he does predict a shift in this outlook, as clients exporting to the EU will need to comply with regulatory standards, hinting at potential future investment in this area to align with international business norms.
Conclusion
Turkey, with its blend of historical significance, economic resilience, and strategic advantages, remains a destination for foreign investment. As the nation navigates economic challenges and opportunities, insights from Ersel Barlak provide a glimpse into the evolving narrative of doing business in Turkey – a tale of adaptability, strategic foresight, and continuous growth.
18 October is World Ethics Day, a global observance that promotes ethical practices and principles across various domains. At Kreston Global, we wish to use this opportunity to celebrate the crucial role of ethics in accounting, tax, and auditing. In these professions, ethics is more than a guideline; it’s the bedrock of trust, transparency, and accountability. It reminds professionals to uphold the highest moral and professional standards, particularly in our complex and interconnected world.
What is the role of ethics in the accounting industry? Ethics is of the utmost importance in accountancy. We are one of only a few industries with a Code of Ethics that sets out how professional accountants in practice and business should behave and act. It’s the cornerstone of our profession, guiding us in doing the right thing, even when no one is watching or would even notice.
You recently shared the 2023 edition of the International Ethics Standards Board for Accountants (IESBA) Code of Ethics. Are there any noteworthy updates you would like to comment on?
Yes! The IESBA Code of Ethics is usually updated annually to keep it up to date with all the latest developments in the profession, including consequential and conforming amendments resulting from changes to auditing standards, etc.
This year’s update includes two key revisions relating to (a) the definition of engagement team and (b) group audits. The revisions deal with the independence and other implications of the changes made to the definition of “engagement team” in the Code to align with changes to the definition of the same term in the ISAs and ISQMs. The revisions also address the independence considerations in a group audit situation. Both changes are effective for audits with periods beginning on or after 15 December 2023.
Ethics is at the heart of what you do. Have you any advice for managing ethics globally?
Perspective is critical. Sometimes, we can all get so close and involved with an issue that it can be challenging to keep a perspective on our actions. Having someone available within a firm to provide an independent view and opinion is really helpful.
Building the right culture within a firm is also essential, as it fosters openness, trust and confidence that if an issue is raised, it will be dealt with appropriately and not swept under the carpet. The right culture has to be built top-down and permeates the whole organisation. Ethics should be integrated into everything we do as accountants.
What challenges do members of the accounting industry face in today’s global environment?
There is ever-growing commercial pressure on accountants, sometimes resulting in incentives to do the wrong thing. Standing up for what is right can be incredibly difficult, sometimes to personal detriment, but it’s important that we do, as this encourages others to behave similarly. I’ve been in such situations, and it’s never easy, but the one thing we always carry with us is our reputation, and I treasure mine over and above any promotion, bonus or job prospect.
What are your key top tips for ethics in daily practice?
In a difficult situation, I always try to ask myself how my action (or inaction) would look to someone else. This is the core of the “reasonable and informed third party” concept, i.e. that even if something was technically not prohibited by the detailed rules, if a reasonable and informed third party would think it unethical, then you shouldn’t do it. It helps us not to try and bend the rules or look for loopholes; if it wouldn’t look right to a third party, we shouldn’t be doing it.
The best approach, though, is not to get into a tricky situation in the first place and thus avoid putting oneself into a situation which may result in an ethical dilemma. Avoiding temptation is much easier than resisting it!
Founded in 1998 by Ajibade Fashina and Albert Folorunsho, Pedabo will mark its 25th anniversary in November with a rebrand to Kreston Pedabo, part of a strategy to extend its international services offering to a wide range of private and listed companies. Made up of 10 partners and 150 staff across three locations in Nigeria, the firm specialises in audit, assurance, tax compliance and advisory, financial advisory and risk management, management consulting and other support services.
The addition of Pedabo to Kreston Global’s network further strengthens its African regional presence, which consists of 30 member firms across 29 countries providing a range of financial, audit and accounting, taxation and other advisory services to businesses exploring inbound and outbound growth opportunities.
From left to right: Ajibade Fashina (Managing Partner), Kehinde Folorunsho (Tax Partner), Killian Khanoba (Snr. Tax Partner), Olubunmi Kuteyi (Tax Partner), Albert Folorunsho (Managing Consultant) and Peter Asemah (Audit Partner)
Liza Robbins, Chief Executive of Kreston Global, said:
“Pedabo has built an exceptional reputation in the Nigerian tax, audit and advisory landscape over the past 25 years. The breadth and depth of their expertise make them a trusted business partner for inbound and outbound clients. We look forward to working with them to build their standing in the international market, forging links across the network and beyond. They will be a great asset to our network and our African firms are extremely excited to be working with them.”
“Pedabo is indeed excited to begin this new phase; as founding partners, Albert and I are elated and proud of the progress that we have made in building the Pedabo we see today having truly established a Legacy of Excellence, but we are even more enthusiastic about the next 25 years and the new leadership that will take the firm to new heights with the Kreston brand. The choice of Kreston was not one that was made lightly, and we intend to establish a truly successful collaboration as we explore the Pedabo future leveraging the strengths and opportunities of the 13th largest accountancy network worldwide. So… Hearty cheers to Pedabo and on to the next 25 years of excellence on a global scale!”
Ajibade Fashina (Managing Partner), Albert Folorunsho (Tax Partner)
To learn more about doing business in Nigeria, click here.
News
Transfer pricing
August 25, 2023
In the age of globalisation, businesses often set up operations in multiple countries, exchanging goods, services, and intangible properties within their international groups. Transfer pricing refers to the prices charged for these intercompany transactions. The objective? To ensure that each entity in the group earns an appropriate return on its functions, assets, and risks. Yet, with shifting global regulations and diverse tax requirements, this can be a complex terrain for businesses to navigate.
What is Transfer Pricing?
Transfer pricing delves into the intricate setting of prices for transactions between related entities, be it between parent and subsidiary companies or diverse divisions that operate across borders. The principle behind transfer pricing rules, implemented by numerous countries, is to ensure that multinational businesses don’t manipulate profit allocations to benefit from lower tax jurisdictions. The central idea is that the reported tax in any nation should align with its actual economic activities.
At its core, the principle guiding these rules is the “arm’s length principle”, which dictates that any transaction between related entities should be priced as if it were between independent entities under identical situations.
Transfer pricing isn’t limited to tangible goods; it extends to intellectual assets such as proprietary knowledge, trade secrets, and brand names, services including R&D and management functions, and even financial operations like lending or guarantee provisions.
What are the regulations that impact Transfer Pricing?
With the staggering estimated loss of $100 billion-$240 billion in tax revenues due to profit-shifting strategies, the Organization for Economic Co-operation and Development (OECD) has sprung into action with a comprehensive action plan centred on base erosion and profit shifting (BEPS) principles, coined as the 15-point action strategy, further refined as the dual-pillar framework.
Central to this initiative are Action Points 1 and 8:
Action Point 1: This aims to ensure that digital-economy businesses are adequately taxed in the regions they generate profits, regardless of their physical presence.
Action Point 8: This focuses on curbing the relocation of intangible assets within affiliated companies, addressing the complexities involved in valuing these assets.
Delving deeper, BEPS 2.0 features two pillars, with Pillar 1 being pivotal for transfer pricing. It mandates that sizable MNEs allocate a segment of their income to countries where they operate and generate revenues, ensuring they contribute tax accordingly.
While the OECD has rolled out guidelines shaping transfer pricing directives globally, each country might interpret and apply them uniquely. The emergence of digital service taxes (DSTs) by various nations has raised eyebrows due to the potential for complications like double taxation. Yet, the inception of Pillar 1 hints at a phasing out of DSTs over time. A commendable 135 nations have already embraced the dual-pillar strategy.
Why is Transfer Pricing Critical?
Regulatory Compliance: Various countries have introduced stringent regulations to ensure that transfer pricing practices are at arm’s length – meaning they are consistent with transactions between independent entities. Non-compliance can lead to hefty penalties.
Optimising Tax Liabilities: Efficient transfer pricing strategies can help companies optimise their global tax liabilities, thereby making a significant difference to the bottom line.
Risk Management: Proactive management of transfer pricing policies reduces the risk of double taxation and helps businesses avoid contentious tax disputes.
What Transfer Pricing services do Kreston Global offer?
Expertise tailored to your needs: As a top 15 global accounting network, Kreston Global combines local expertise with international reach. We understand the nuances of transfer pricing regulations across different jurisdictions and can guide you in aligning your strategies with global best practices.
Comprehensive Service Offering:
Transfer Pricing methodologies: Develop and/or optimise your transfer pricing methodologies with our planning expertise and benchmarking solutions.
Documentation and compliance: Assist with transfer pricing documentation to ensure compliance with country-specific regulations.
Analysis and modelling: Perform analysis and modelling of intercompany services charges, giving you deeper insights into transactional patterns.
Benchmarking searches: Our specialists conduct benchmarking searches for royalty and license agreements, intercompany interest rates, and comparable company samples, ensuring your pricing remains competitive and compliant.
Intellectual property valuations: We are adept at performing valuations of intellectual property and evaluations of migration strategies, ensuring your intellectual assets are accurately priced and protected.
Innovative Tools & Technologies: Utilising cutting-edge technologies, we offer efficient, scalable solutions for all your transfer pricing needs. From real-time analytics to scenario modelling, we provide insights that drive strategic decisions.
Why choose Kreston Global?
With a global network of experts and a client-first approach, Kreston Global can help your business to navigate transfer pricing obligations. Let us help you turn challenges into opportunities, ensuring compliance, optimising tax liabilities, and driving growth in the global market.
Contact us today to discuss how we can identify your transfer pricing obligations and support your global business strategy.
Key contacts
Martin Bonner
Partner and Tax Advisor, AREA Bollenberger, Austria and Kreston Global Transfer Pricing Chair
Explore how economic substance in transfer pricing ensures compliance, supports sustainable tax strategies, and strengthens multinational business operations.
Surandar Jesrani is the CEO of MMJS Consulting in Dubai, steering businesses toward successful VAT implementation in the UAE and GCC since 2017. Before MMJS, he managed finance and taxation at a top Private Equity Group and sharpened his international taxation skills at Infosys and General Motors. An alumnus of The Institute of Chartered Accountants of India, Surandar specialises in Accounting, Finance, and International Taxation.
UAE’s corporate tax update
August 10, 2023
Surandar Jesrani of MMJS consulting in Dubai shares his thoughts on the implication of UAE’s corporate tax update with eprivateclient magazine. Read the full article here or the summary below.
The United Arab Emirates (UAE) has long demonstrated its commitment to international tax transparency standards, notably as a member of the Organization of Economic Co-operation and Development (OECD). Here’s a glimpse into the recent evolution in the UAE’s tax scenario.
The path to global tax transparency
OECD’s 2015 Base Erosion and Profit Sharing (BEPS) Action Plans aimed at preventing Multi-National Enterprises (MNEs) from employing strategies to lower their tax liabilities across jurisdictions. Nonetheless, as the initial BEPS strategies weren’t wholly suited to the challenges of a digital economy, the OECD introduced an Inclusive Framework (IF) in 2021. This two-pillar model proposed that MNEs should pay a minimum corporate tax of 15% in every jurisdiction.
The UAE, endorsing this global tax framework initiative, joined a consensus with 139 other countries. In alignment with its OECD obligations and its vision of positioning itself as a leading global business hub, the UAE announced a federal corporate tax on business profits in 2022.
Key principles of the UAE corporate tax update
UAE’s corporate tax regime adheres to universally acknowledged principles ensuring:
Flexibility with modern business practices.
Simplicity and certainty.
Equitable taxation.
Transparent procedures.
Effective from 1 June 2023, the UAE corporate tax law encompasses 20 chapters and 70 articles detailing the scope, application, and compliance rules. All business and commercial activities, undertaken by individuals or entities, fall under this tax regime, divided into resident and non-resident classifications.
An overview of taxable entities
Resident Persons: Legal entities in the UAE are taxed on global income.
Non-resident Persons: Foreign businesses are taxed on income sourced in the UAE.
Moreover, all business-active individuals and legal entities will need to register under the UAE corporate tax law.
Certain entities can avail tax exemptions, like the UAE government entities, qualifying public benefit entities, qualifying investment funds, and some specific entities as designated by the Minister.
Tax rates and categories
Depending on the size and type of business, the UAE corporate tax rates vary:
Taxable Persons: 0% on income up to AED 375,000, and 9% on income above this threshold.
Qualifying Free Zone Persons (QFZP): 0% on qualifying income and 9% on other incomes.
Small businesses: 0% if the gross revenue of the previous year is under AED 3 million; otherwise, they’re taxed similarly to general taxable persons.
MNCs, until the full adoption of Pillar Two rules by the UAE, will be taxed under these regular corporate tax rates.
Compliances
Entities are required to file tax returns within nine months post the close of a tax year. While there are provisions for withholding taxes on specific domestic and foreign payments, currently, it stands at zero per cent.
Conclusion
UAE’s introduction of corporate tax is a strategic move in its journey as an OECD IF member, especially concerning the global minimum tax proposed by BEPS Pillar Two. With a 9% tax rate, the UAE remains an attractive proposition when compared to other tax jurisdictions. Furthermore, the UAE tax law’s foundation on internationally practised principles ensures a streamlined transition for businesses accustomed to similar laws elsewhere. As a result, many enterprises may re-evaluate their corporate structures to maximize genuine tax benefits under this new regime.
If you would like to speak to one of our UAE taxation experts, please get in touch.
News
Kreston Reeves strengthens Private Client legal team with two new solicitors
July 24, 2023
Accountants, business, and wealth advisers Kreston Reeves has strengthened its Private Client Legal team with two new solicitors.
Jenn Trussler joins from Irwin Mitchell and Lily Parisi joins from Sussex law firm GWCA Solicitors. Both bring to the firm experience and expertise in advising individuals and families on Wills, Powers of Attorney, Probate and Estate Administration, Inheritance Tax and Trusts.
The 10-strong legal team at Kreston Reeves works alongside its tax and private client tax wealth management teams providing individuals and families with the advice and support needed to navigate an increasingly complex world.
Simon Levine, Partner and Joint Head of the Legal Services team at Kreston Reeves said: “Our clients increasingly need a holistic view when managing their personal affairs, and Kreston Reeves with its combination of legal, tax and wealth planning provides the perfect solution. It is at the heart of our purpose to guide our clients, colleagues and communities to a brighter future.
“We are delighted to announce the appointments of Jenn and Lily and look forward to the contributions they will make as they build and develop their careers at Kreston Reeves.”
News
Kreston Global announces ACCA certificate in sustainability for Finance Bursary Program
July 3, 2023
Kreston Global today announces a new partnership with the Association of Chartered Certified Accountants (ACCA) to provide subsidised bursaries to 40 member firms to undertake their Certificate in Sustainability for Finance.
ACCA’s Certificate in Sustainability for Finance course covers topics such as evaluating business value chains, models, and practices for sustainability; understanding climate change risks and financial implications; and explaining the UN SDGs and their significance for organizations. It also assesses ESG issues and information collection, analysis, and reporting processes, and emphasises the importance of sustainability analytics for organizations.
The new bursary partnership between Kreston Global and the ACCA is one pillar of Kreston’s Impact Strategy, established in 2022 to support the network in becoming more sustainable and to help member firms create ‘positive impact.’ It stands alongside a number of other sustainability initiatives including the launch of Kreston’s first Environmental, Social and Governance Advisory Committee, which is focused on helping firms begin their own journey to sustainability and carbon reduction, or – where they have already done so – helping them to accelerate their activities.
Liza Robbins, Chief Executive of Kreston Global, said:
“The finance and accountancy industry, as with many sectors, is undergoing an exciting period of transformation when it comes to ESG and sustainability. For our clients, as for ourselves, sustainability is not simply a buzzword but rather a critical aspect of responsible business practice that carries significant regulatory, reputational, and commercial weight. The ACCA has developed a number of initiatives internationally that we participate in – this partnership is a testimony to the value we place on our work together.”
“With investment decisions, contract tenders, and purchase behaviour increasingly filtered through ESG considerations, we are now seeing SMEs looking to stay ahead of the regulatory curve by incorporating sustainability reporting in line with the standards required of larger companies. Equipping our member firms with ESG analytical and advisory capabilities through ACCA’s Certificate in Sustainability for Finance is a significant opportunity to support our firms and our firms’ clients as they navigate to sustainable best practice. It also ensures that we, as a business network, continue to pursue our purpose of promoting positive impact around the world.”
Helen Brand, Chief Executive ACCA, said:
“At ACCA we’ve been working hard to help organisations across the world strive for a sustainable recovery from the pandemic, and meet the urgent challenges presented by climate change. Sustainability knowledge is increasingly crucial for finance professionals and organisations of all types, and we’re proud to have developed the Certificate in Sustainability for Finance to improve and widen this important skillset.
“We’re delighted to partner with Kreston Global in providing subsidised bursaries to help financial professionals and others take the certificate. Accountancy professionals play a crucial role in guiding organisations on adopting and reporting on sustainable practices to ensure long-term success, manage risks, and contribute to a more sustainable future. Undertaking this certificate will be an important step on the journey for many.”
News
Managing cyber risks: The role of Internal Audit
June 28, 2023
Doron Rozenblum, Managing Partner at Kreston-Ezra Yehuda-Rozenblum, was recently featured in Accounting Today, sharing insights on why internal audit is the key to cyber risk management. Cyber incidents, such as IT outages, data breaches, and ransomware attacks, are the highest global risk. Data breaches are particularly concerning for companies, with costs reaching a record high of $4.4 million in 2022 and projected to exceed $5 million in 2023. Other significant risks include ransomware attacks and failures in digital supply chains or cloud services. Cyber-related vectors, including criminal attacks, human error, and technical glitches, can cause severe disruptions to businesses. Hackers now target both digital and physical supply chains, posing a greater threat to small and mid-sized businesses, while large corporations invest more in cybersecurity.
The evolving landscape of cyber risks: Threats and trends
In the digital landscape, every company, regardless of size, is vulnerable to breaches that can jeopardise operations, reputation, brand, and revenue pipelines. The cyber risk landscape in 2023 is diverse and continuously evolving, with cybercrime costs predicted to reach $8 trillion by 2023 and $10.5 trillion by 2025.
Ransomware attacks, particularly through phishing, pose the greatest threat in both public and private sectors. These attacks are not only increasing in number but also in financial and reputational costs. Phishing involves hackers tricking individuals into sharing valuable data or spreading malware through deceptive emails, often impersonating higher-ranking individuals or trusted institutions. Business Email Compromise (BEC) is another serious issue, often associated with phishing. Attackers use collaboration tools beyond email, such as chat and mobile messaging applications, to carry out their schemes. Hackers frequently abuse Microsoft’s brand in phishing attacks, and brand impersonation attacks are concerning due to poor security habits and lack of user knowledge.
Fraud, especially identity theft, is trending digitally as more people engage in online banking and shopping. In 2022, consumers reported losing nearly $9 billion to fraud, a 30% increase from the previous year, with a significant number of identity theft reports.
Strengthening cyber risk management: Strategies for Internal Audit
Enterprises face heightened vulnerability to cyber risks due to their size, complexity, and interconnectedness. The use of cloud services and the Internet of Things (IoT) creates new attack vectors that are challenging to secure. Robust cyber risk management strategies involving all stakeholders are crucial to address these risks.
While artificial intelligence (AI) holds potential, it can also be a threat vector. AI systems and platforms should be implemented with caution due to the potential for inaccurate assumptions and conclusions drawn from unreliable sources.
Internal audit has evolved as a critical defence against cyber risks. It extends beyond financial areas to include cybersecurity. To effectively audit cyber risks, an internal audit requires understanding the latest threats, knowledge of the organisation’s IT environment and cybersecurity framework, expertise in risk management and data analytics, and collaboration with IT, risk management, and compliance functions.
A risk-based approach is necessary for a strong internal audit of cyber risk. Critical assets and systems must be identified and protected, existing controls should be evaluated, and areas for improvement should be identified. Cyber risk management should be integrated into the organisation’s overall risk management strategy, and regular updates on the cyber risk profile and emerging threats should be provided to the board and senior management. Supply chain management is another critical area that requires assessment of vendors’ and suppliers’ cybersecurity practices.
In conclusion, cyber risks pose a growing threat to organisations, and internal audit plays a vital role in managing these risks. Assessing the risk landscape, reviewing internal controls, and utilising data analytics tools are crucial for effective management. By adopting a collaborative and risk-based approach, internal audit can help organisations navigate the complex and evolving cyber risk landscape.
Kreston Global firms in the Netherlands have recently expanded resources for entrepreneurs with its latest guide to starting a business in the Netherlands. This useful new guide offers practical insights and tips to facilitate a smooth transition into the Netherlands business landscape.
The guide provides a practical roadmap for entrepreneurs looking to establish a business in the Netherlands. It serves as an efficient tool, highlighting the most critical issues businesses might face when entering the Dutch market. However, the guide does not aim to be exhaustive, given the wide range of potential business scenarios and constraints.
Expert consultation from Kreston Global
To supplement the guide, Kreston Global encourages entrepreneurs to consult with their member firms located in the Netherlands for more detailed information. Whether it’s a question about the basics or a complex concern, the team is ready to provide expert advice.
Flexibility and liberal framework of Dutch law
According to Dutch law, a foreign individual or company can operate in the Netherlands through either an incorporated or unincorporated entity or branch. The guide elaborates on the flexible and liberal framework that Dutch corporate law provides for the organization of subsidiaries or branches.
The essentials of starting a business in the Netherlands
The guide offers a holistic approach to doing business in the Netherlands, covering a variety of key areas. These include starting a business, finding a location, understanding subsidies and financing, complying with tax legislation, managing personnel, and a list of useful addresses.
No matter where you are in your entrepreneurial journey, “Doing business in the Netherlands” is designed to equip you with the knowledge and resources you need to succeed. Backed by Kreston Global’s extensive network of eight member firms active in the Dutch region, this guide marks a significant step towards supporting global entrepreneurs in this internationally-focused and strategically positioned base for Europe.
If you are looking to expand your business into the Netherlands, read the doing business in the Netherlands guide. If you would like to speak to one of our firms in the Netherlands, please get in touch.
Javier is an audit manager at Kreston FLS in Mexico City. He graduated from Universidad Iberoamericana and holds a Master’s degree in Business Administration from Shanghai and has studied at Loyola University in Chicago. He has experience in auditing and consulting, both in Mexico and the United States, where he worked for over six years.
AI in Mexico: The impact of AI on business operations and services
June 13, 2023
The use of AI in Mexico is experiencing rapid growth in adoption, which has been further accelerated by the COVID-19 pandemic. Among these technologies, Artificial Intelligence (AI) has emerged as a disruptive force, transforming the way businesses operate and deliver services. Read the full article written by Kreston FLS audit expert, Javier García Sabaté Payró, and featured in Veritas here (Spanish) or the summary below.
Opportunities for entrepreneurs and advisors
According to a study conducted by IBM, the current adoption of AI in Mexican companies stands at 35%, with an additional 44% already incorporating AI into their existing applications and processes. This indicates a growing recognition of the potential benefits that AI can bring to entrepreneurs and business advisors. By embracing AI, businesses can take advantage of an already thriving industry to save costs on the bottom line. Examples below;
The Mexican Society of Artificial Intelligence projects that the AI market in Mexico will reach 1.2 billion pesos by 2025, indicating substantial growth and opportunities in the AI sector.
Mexico boasts a thriving startup ecosystem, with more than 5,000 startups operating across various industries such as Fin-tech, Health-tech, and Ed-tech. This dynamic landscape showcases the country’s entrepreneurial spirit and diverse range of innovative ventures.
Mexico City serves as the primary technological hub in the country, housing over 900 new companies and a burgeoning number of technology firms. Additionally, notable technology hubs like Guadalajara, Monterrey, and Tijuana contribute to Mexico’s growing reputation as a hub for technological advancements.
AI Applications for Business Advisors and Entrepreneurs
AI offers a wide range of valuable applications, one such application is data analysis. With AI, large volumes of financial, accounting, and contractual data can be analysed within seconds. This enables the identification of patterns and trends that would be difficult to detect manually, leading to more informed decision-making and targeted recommendations for clients. Here is a brief summary of just some of the areas AI could support businesses in Mexico;
– Process Automation:
The most basic function of AI facilitates the automation of manual and repetitive tasks such as data entry and account reconciliation. This not only saves valuable time and minimises errors but also allows accountants, advisors, and entrepreneurs to redirect their focus towards strategic and high-value tasks specific to each business. By automating mundane processes, AI streamlines operations, enhances efficiency, and maximises productivity.
– Streamlining data analysis
By leveraging AI, large volumes of data, including financial, accounting, and contractual information, can be analysed within seconds. This capability enables the identification of intricate patterns and trends that would be arduous to detect manually, potentially taking years to analyse. The ability to swiftly analyse data empowers businesses to make more informed choices and provide precise, targeted decisions, based on real-time data.
– Risk analysis and management
With advanced algorithms, AI can identify potential risks and evaluate their likelihood of occurrence. Moreover, by analysing vast amounts of data from diverse sources such as financial reports, market trends, legal references, and customer behaviour, analysts and entrepreneurs can concentrate their efforts on specific areas of interest. This focused approach enhances risk management practices, allowing for a comprehensive understanding of possible risks and paving the way for better outcomes.
Through AI-driven data analysis, process automation, risk analysis, electronic invoice analysis, and identification of risks, businesses can harness the transformative power of AI. By embracing these applications, organisations gain valuable insights, optimise operations, and make informed decisions that drive success in an increasingly data-driven and competitive business landscape.
– Enhancing compliance and efficiency
AI is proving to be a valuable tool for compliance and efficiency in Mexico. For instance, AI-powered tools that facilitate the download and analysis of electronic invoices have revolutionised the process. These tools can swiftly analyse complete years’ worth of invoice information within minutes. This capability assists advisors and entrepreneurs in accurately responding to authorities’ requirements, avoiding the need for deadline extensions and mitigating potential costs for both companies and authorities.
The Future of AI in Mexico: Job opportunities and technological hubs
The future of AI in Mexico looks promising, with a wealth of job opportunities emerging in the fields of data science, machine learning, and software development. According to the World Economic Forum, AI is expected to generate 900,000 new jobs in Mexico by 2025. Technological hubs such as Mexico City, Guadalajara, Monterrey, and Tijuana are witnessing a surge in startups and technology firms, further propelling the AI revolution in the country.
Embracing AI for future success
In conclusion, AI is revolutionising business operations and services in Mexico. Entrepreneurs and business advisors have a unique opportunity to leverage AI’s capabilities to streamline processes, make more informed decisions, and drive growth. By embracing AI early on, businesses in Mexico can gain a significant competitive advantage and pave the way for future success. With the rapid advancement of AI, it is crucial for authorities, entrepreneurs, and business advisors in Mexico to stay informed and delve deeper into this transformative technology. By doing so, they can position themselves at the forefront of the AI revolution and seize the numerous opportunities it presents for business growth and innovation in Mexico.
If you want to discuss using AI to improve business processes for your business in Mexico, please get in touch.
News
Stuart Brown
Kreston Global ESG Committee member, Head of Technical and Compliance at Duncan & Toplis
Stuart is an FCA-qualified chartered accountant with more than ten years of practical accounting and audit experience.
He leads the technical developments for Duncan & Toplis. This covers audit, financial reporting and maintaining the quality of work.
He has recently been appointed to Duncan & Toplis’ operations board and has become a member of the ICAEW’s influential Ethics Advisory Committee. Stuart also sits on the Kreston Global ESG Committee.
AI can play a critical role in ESG initiatives by helping companies analyse vast amounts of data, identify patterns and trends, and make more informed decisions about reducing their environmental impact, improving social outcomes, and enhancing corporate governance. Here are a few examples of how AI is being used in ESG initiatives:
Environmental: AI can be used to analyse satellite imagery and other data sources to track deforestation, identify pollution sources and monitor climate change’s impact on ecosystems. This information can help companies better understand their environmental impact and develop strategies for reducing their carbon footprint and other environmental harm. AI can also support gathering internal energy and carbon usage data to assist with reporting within financial statements and other publications.
Social: AI can analyse social media and other online data sources to monitor public sentiment and identify emerging social issues that may be relevant to a company’s business. This information can help companies to be more proactive in addressing social issues and improving their social outcomes. AI can also provide efficiencies in the day-to-day operation of businesses freeing up employees’ time to focus on other initiatives.
Governance: AI can analyse financial data and other information to identify potential risks and conflicts of interest that may impact a company’s governance practices. This information can help companies to strengthen their internal controls, improve transparency, and enhance their overall governance structure.
However, it is important to note that AI is not a panacea for ESG issues. While AI can provide valuable insights and help to automate specific tasks, it is not a substitute for human judgment and decision-making. Instead, companies must still ensure that they have strong governance structures, including robust policies and procedures, to ensure that their ESG initiatives are effective and aligned with their overall business objectives.
Moreover, there are also ethical concerns associated with the use of AI in ESG initiatives. For example, AI algorithms may inadvertently perpetuate bias or discrimination if not designed and implemented responsibly and ethically. Therefore, it is important for companies to be transparent about their use of AI and to ensure that their AI initiatives are consistent with their ethical and social responsibilities.
In conclusion, AI has the potential to play a valuable role in ESG initiatives by helping companies to understand better and address complex environmental, social, and governance challenges. However, it is important for companies to approach AI cautiously and ensure that their use of AI is aligned with their ethical and social responsibilities. Ultimately, the success of ESG initiatives will depend on integrating human judgment and decision-making with the insights and efficiencies that AI can provide.
News
Earth Day 2023: Liza Robbins
April 21, 2023
As Earth Day 2023 approaches, it is important to acknowledge the importance of sustainability in the corporate world. Due to the increasing environmental difficulties, it is crucial for businesses to integrate sustainable methodologies into their activities. In this article, Liza Robbins, Chief Executive of Kreston Global, provides her perspective on how tax and accounting specialists can assist businesses in focussing on sustainable practices.
Earth Day 2023 theme is ‘Invest in our planet.’ Businesses can profit significantly from a sustainable transition if they invest early on. How do you think businesses will profit – or benefit?
Climate change has become a crucial topic in today’s business world, with various stakeholders such as staff, clients, suppliers, and investors expressing their concerns about the impact of businesses on the environment. As a result, they have high expectations for companies to engage in sustainable practices. Ignoring these issues will result in negative consequences for the reputation and profitability of the business, as sustainable companies are more attractive to stakeholders.
The recruitment and retention of top talent have become significant challenges for businesses globally. Individuals increasingly seek to work for companies that have a positive impact on the planet, and the focus on sustainability can be a key factor in attracting and retaining employees. Therefore, organisations that integrate sustainable practices into their operations will benefit in terms of attracting and retaining talent.
Governments and regulators worldwide are also introducing new policies and laws to combat climate change, and organisations that adopt carbon reduction strategies now will be better equipped to navigate these new requirements. Adopting sustainable practices not only ensures regulatory compliance but also enhances the organisation’s reputation and brand value, positioning the organisation as a trailblazer in sustainability, which is highly attractive to stakeholders. In summary, businesses must recognise that sustainability is not a peripheral issue but a core concern that can drive long-term success and stakeholder satisfaction.
What is the role of accounting networks like Kreston Global in the education and behaviour change that firms and their clients need to take us to net zero by 2050?
At Kreston Global, we recognise the significant role we play in driving positive change in the world. As representatives of the accounting profession, we take great pride in our network’s ability to create a lasting positive impact. With over 25,000 individuals across 115+ countries, we have the reach and the influence to shape the global business landscape.
Our connectivity allows us to leverage our position to educate and consult on sustainable business practices, showcasing good practices that positively influence firms and their clients. At Kreston Global, we firmly believe that sustainability is a critical aspect of modern business, and we actively promote this mindset to our network and beyond.
Kreston Global recently partnered with Treedom Agroforestry to mitigate the emissions generated by enabling our members to connect face-to-face. What actions have you taken in your firms or your personal life that you can share that will help mitigate or reduce emissions?
At our organisation, sustainability is a top priority, and we have taken significant steps to integrate it into our operations. As part of our Strategic Plan, we have made a commitment to ESG and positive impact, and have enlisted the help of our network experts in this area, establishing an ESG Committee to identify best practice that can be shared across the organisation. We strongly believe that sustainability is not just a buzzword but a critical aspect of responsible business practices.
On a personal level, I am deeply committed to the Reduce, Reuse, Recycle mantra. I believe that we should all be mindful of our consumption patterns and strive to reuse items whenever possible. For instance, I have significantly reduced my car usage and prefer to walk or cycle for short journeys. I am delighted that the pleasant weather has made this more feasible lately.
At Kreston Global, we are also committed to reducing our carbon footprint. We carefully consider our travel plans and aim to combine multiple uses for a single flight whenever possible, such as attending meetings or conferences. We are dedicated to doing our part in creating a more sustainable future, both at work and in our personal lives.
To read more about the sustaiblity and ESG reporting in Kreston Global, click here.
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Earth Day 2023: Mahendra Rustagi
As we approach Earth Day 2023, it’s essential to recognise the significance of sustainability in the business world. With the growing environmental challenges we face, it’s crucial for businesses to incorporate sustainable practices into their operations. In this article, Mahendra Rustagi, CEO of Kreston SNR, shares his insights on how businesses can incorporate sustainability into their financial reporting and tax compliance, the benefits of investing in sustainable initiatives, available tax incentives, and how tax and accounting professionals can help businesses quantify the benefits of sustainable practices.
Mahendra pointed out that Indians have a deep respect and commitment towards the Earth, evident in their tradition of worshipping it as Mother and seeking forgiveness before any construction work. This respect for the environment is something that businesses can learn from and apply to their operations.
The business world is among the most significant emitters of greenhouse gases and other pollutants. How can businesses incorporate sustainability into their financial reporting and tax compliance?
The business/industry is responsible to the extent of about 30% of Total Green House Gases (GHG). So they have a huge responsibility to care for their environment and society in a governed manner.
The efforts of businesses in this direction of sustainability should be incorporated by way of a report which we should form as an integral part of reporting. Like in India, the top 1000 listed companies have been mandated to disclose their data related to sustainability efforts through a report called BRSR (Business Responsibility and Sustainability Report) which is attached to and forms part of financial reporting. This can help to build trust with stakeholders and demonstrate a commitment to sustainability.
Earth Day 2023 theme is ‘Invest in our planet.’ Businesses can profit significantly from a sustainable transition if they invest early on. How do you think businesses will profit – or benefit?
Early investment in sustainability would mean improved energy efficiency, lesser water consumption and less waste reduction resulting in efficient operations and reduced operating costs. All this means higher profitability. Also, improved reputation and brand image and higher valuations, motivated team of employees, loyal customers etc, so one can say the business will benefit hugely in long run.
Businesses which are better on the ESG front can stay ahead of potential future regulations, avoid the financial and reputational risks associated with non-compliance and bring long-term economic benefits. Overall, investing in sustainability early not only benefits the environment but can also bring long-term economic benefits to businesses.
What are some tax incentives available for companies that implement sustainable initiatives, and how can businesses take advantage of them?
In India, the government has not yet started any income tax incentives for sustainable initiatives, however, the government is seriously considering and granting some income tax incentives for use of renewable energy and higher directions on some social spending. The Government of India has introduced a scheme called –Production Linked Incentives (PLI ) where huge incentives are provided to a certain class of environment-friendly products manufacturing linked to production. For example, Producers of Electrolysers are being given huge incentives to manufacture Electrolysers for the production of Green Hydrogen. Also, there are incentives for Green Sustainable Buildings and Energy Efficiency through the Bureau of Energy Efficiency (BEE).
Globally, there are several tax incentives available for companies that implement sustainable initiatives. These include tax credits for investments in renewable energy, tax deductions for expenditures related to environmental protection, and accelerated depreciation for certain environmentally friendly assets. Some countries also offer tax incentives for green buildings or for companies that reduce their carbon emissions. To take advantage of these incentives, businesses can consult with tax experts to identify the specific incentives that apply to their sustainable initiatives and ensure that they comply with the applicable regulations. They can also ensure that their financial reporting accurately reflects the impact of their sustainable initiatives, which can further demonstrate their commitment to sustainability and potentially attract socially responsible investors.
How can sustainable practices positively impact a company’s bottom line, and how can tax and accounting professionals help businesses quantify these benefits in their financial statements?
Implementing sustainable practices can positively impact a company’s bottom line in several ways. For instance, it can help reduce operating costs by improving energy and resource efficiency, optimising supply chains, and reducing waste. Sustainable practices can also increase revenue by improving customer loyalty, attracting socially responsible investors, and accessing new markets. Sustainable business practices lead to an enhanced reputation, being more attractive to staff and business partners who value environmentally sustainable practices, and attracting new customers who are seeking environmentally friendly products and services. Relationship between sustainability management practices and business financial measures as higher return on investment (ROI) and sales growth have already been proven.
Tax and accounting professionals can help businesses quantify these benefits in their financial statements by identifying the relevant tax incentives and credits available for sustainable initiatives, accurately reflecting the impact of sustainable practices on the company’s financial performance, and guiding compliance with applicable regulations.
Tax and Accounting professionals can also make the businesses understand the return on investment (ROI)on their sustainable Investments by quantifying the benefits through categorisation and a scoring model for each SDG component which would help them to make informed decisions about future investments in sustainability.
In conclusion, Mahendra’s insights inform us that businesses have a significant role to play in addressing environmental challenges, and they can do so by incorporating sustainability into their financial reporting and tax compliance. By investing in sustainable initiatives early on, businesses can not only benefit financially but also enhance their reputation and attract socially responsible investors. Tax and accounting professionals can assist businesses in identifying tax incentives, accurately reflecting the impact of sustainable practices on financial performance, and guiding compliance with regulations. As we celebrate Earth Day 2023, let us all take a moment to reflect on the impact of our actions on the planet and work towards a sustainable future.
News
Earth Day 2023: Ganesh Ramaswamy
As Earth Day 2023 approaches, it’s important to consider the role that businesses can play in promoting sustainability and combating climate change. Ganesh Ramaswamy, Partner at K Rangamani and Associates LLP, provides valuable insights into how businesses can incorporate sustainability into their financial reporting and tax compliance.
The business world is among the most significant emitters of greenhouse gases and other pollutants. How can businesses incorporate sustainability into their financial reporting and tax compliance?
In order to reach the Paris Climate goals businesses need sustainability reporting standards to measure their social and environmental impact more effectively. The business world expects the most significant innovations to happen soon in the corporate accounting and tax reporting standards due to the inclusion of ESG and sustainability reporting in financial statement reporting. Many businesses are embracing sustainability goals and seeking to reduce their carbon footprints. Most businesses have started sustainability reporting on a voluntary basis in their financial statements. ESG and sustainability reporting are part of the board agenda for many companies. To move forward the finance reporting function in businesses must be integrated with ESG and sustainability reporting. Moreover, the finance teams of businesses the world over should contribute to the process of setting standards in sustainability reporting.
Earth Day 2023 theme is ‘Invest in our planet.’ Businesses can profit significantly from a sustainable transition if they invest early on. How do you think businesses will profit – or benefit?
Investing in sustainable practices would definitely see businesses improving their ROI in the next decade. Building and growing a sustainable business has a lot of benefits like attracting a large pool of capital, building a stronger corporate brand, and promoting long-term growth which will definitely help the company and the investors benefit a lot. Individual and institutional investors are investing heavily in companies that proactively adopt ESG practices and have them integrated into the business strategy. Adoption of renewable energy like solar energy, wind energy and bioenergy automatically reduces costs.
Corporations that understand the importance of adapting to evolving socioeconomic and environmental conditions are better positioned to identify strategic opportunities and overcome competitive challenges. Proactive and integrated ESG policies can help companies gain a competitive advantage over other industry players. Employees generally care deeply about the companies they work for and the businesses they support, hence, they embrace values that are aligned towards social good, and environmental and social responsibility.
What are some tax incentives available for companies that implement sustainable initiatives, and how can businesses take advantage of them?
The tax incentives for businesses that implement sustainable initiatives are referred to as “green incentives” which comprise the following among various others:
Accelerated depreciation for investments in the sustainable energy sector.
Vehicle tax credit for electric motor vehicles
Grants for small businesses which take sustainable initiatives
Emission reduction credits which are encashable
Grants on salary payment to employees coming out of a green initiative.
These types of incentives can push many businesses would move in a more sustainable direction, or boost that allows these businesses to make the initial investment in green energy options or set up a new eco-friendly venture.
Sustainability reporting is a form of non-financial reporting that enables companies to convey their progress towards goals on various sustainability parameters, including environmental, social and governance metrics, and risks and impacts they may face. By disclosing the sustainability report, companies are able to communicate more transparently with the public about their business activities related to non-financial management and performance aspects. Though a number of different measurement and valuation methods exist, most of them are focused exclusively on ecological aspects, i.e. impact on climate, forest decline or water. Tax and accounting professionals can help businesses to quantify these benefits by valuing the following key dimensions for sustainable development:
Effects of economic activity on the environment e.g., resource use, pollutant discharges, waste.
Environmental services to the economy e.g., natural resources, sink functions, contributions to economic efficiency and employment.
Environmental services to society e.g., access to resources and amenities, contributions to health, living and working conditions
Effects of social variables on the environment e.g., demographic changes, consumption patterns, environmental education and information, institutional and legal frameworks.
Effects of social variables on the economy e.g., labour force, population and household structure, education and training, consumption levels, institutional and legal frameworks.
Effects of economic activity on society e.g., income levels, equity, employment.
What is the role of accounting networks like Kreston Global in the education and behaviour change that firms and their clients need to take us to net zero by 2050?
Networks like Kreston Global should act as strategic visionary which understands and guides the member firms on the trade-offs among people, the planet and profits. The networks can also function as a catalyst which can align the member firms’ strategy and culture so as to develop a sustainability agenda for the member firms. It is also quite easy for networks to provide an integrator role among member firms spread over various regions so as to uphold an overall commitment to the sustainability of the network.
Kreston Global recently partnered with Treedom Agroforestry to mitigate the emissions generated by enabling our members to connect face-to-face. What actions have you taken in your firms or your personal life that you can share that will help mitigate or reduce emissions?
The initiatives taken by our firm are the following:
Pooling of cars among staff while commuting to the office
Vegan food replaces fish and meat for lunch.
Water in glass bottles replaces PET bottles.
Use of natural light during daytime.
Focus on staff recreation facilities.
Increase in per diem for employees to travel by train instead of planes.
Floor carpets are made of natural fibre and not artificial fibre.
Employees are encouraged to use cotton clothing over synthetic clothing.
Natural jute bags replace plastic containers.
To conclude, Ganesh makes note of the importance of incorporating sustainability into financial reporting and tax compliance is a vital step for businesses in reducing their carbon footprint and achieving sustainability goals. Investing in sustainable practices benefits businesses in the long run, as it improves ROI, attracts capital, and strengthens the corporate brand. Tax incentives for implementing sustainable initiatives can help businesses to make the initial investment in green energy options or set up new eco-friendly ventures. On this Earth Day 2023, let’s pause and consider how our actions affect the planet and strive for a future that prioritises sustainability.
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