De Beer is an audit and accounting firm that was established in 1952. De Beer has nine partners and 106 staff in total. It operates from two offices in the south of the Netherlands and offers audit, international and domestic tax and accounting services to a range of SME and private clients. Industry specialisms include trading, real estate and logistics.
The addition of De Beer to Kreston Global’s network further extends its European region, which consists of 62 member firms across 33 countries providing a range of financial, audit and accounting, taxation and other advisory services to large and mid-sized businesses requiring inbound and outbound growth support and set up.
Liza Robbins, Chief Executive of Kreston Global, said:
“The addition of De Beer to our large number of both Dutch and European firms is a great move. Our nine Netherlands member firms together represent over e100m in revenue and collaborate closely on clients and operational matters to share knowledge and expertise widely. It will be wonderful to see Wil and the team at our next European conference and to hear more about their plans.”
“We are really excited to have become a member of the Kreston Global network. The network has an extensive international footprint which will benefit our clients as well as our people. We have also found the Kreston Netherlands member firms extremely welcoming and we are very much looking forward to working with them closely for example on the Dutch Zero Co2-projectto support clients with ESG issues, and to meeting the rest of the network in due course.”
News
Luxembourg firm joins Kreston Global network
April 18, 2024
Sector:Finance, Leisure & Hospitality, Real Estate & Construction, Technology, Media & Telecom
Kreston Global has today welcomed Luxembourg firm Global Osiris Audit & Expertise to the Kreston Global network.
The firm offers Audit and Assurance, Corporate Recovery and Insolvency services to national and international privately-owned entrepreneurial businesses across Luxembourg and across Europe. The firm deals with a variety of industries including technology, financial services, real estate, food manufacturing, hotels and consultancy organisations.
The addition of Global Osiris Audit & Expertise to Kreston Global’s network ensures a strengthening of accounting provision across its substantial European region, which consists of 61 member firms across 33 countries providing a range of financial, audit and accounting, taxation, and other advisory services to large and mid-sized businesses requiring inbound and outbound growth support and set up.
The firm will be rebranding to become Kreston Osiris Luxembourg over the next few months.
Liza Robbins, Chief Executive of Kreston Global, said:
“We are really pleased to welcome Global Osiris Audit & Expertise to our European region and our network as it brings a range of complimentary solutions for our Luxembourg service offering as well as considerable experience of operating within international networks. The firm will be a strong addition to our member firm lineup especially as it is located in such a key financial centre.”
Olivier Janssen, Managing Partner at Global Osiris said:
“We chose Kreston Global because of its member firm ethos and its great reputation for servicing entrepreneurial international businesses around the world. We can see enormous potential in our collaboration with Kreston and the network’s excellent member firms worldwide.”
News
Kreston Global announces new Singapore firm
April 15, 2024
Kreston Global has today welcomed Singapore firm, Helmi Talib LLP, to the Kreston Global network.
Established in 1992, Helmi Talib offers eight key service areas: Audit and Assurance, Tax Compliance and Advisory, Business Process Outsourcing, Liquidation and Receivership, Internal Audit, Payroll, Transaction, and Corporate Secretarial Services. For more than three decades, Helmi Talib has provided services to a wide range of clientele, the majority of which are subsidiaries of multinational organizations, and privately owned entrepreneurial businesses, under diverse sectors ranging from investment holdings, financial institutions, charities, and information technology to name a few.
The Firm was named by Singapore Business Review as one of Singapore’s top 30 accounting firms. Continuing to grow, the Firm today is led by five audit partners and five non-assurance directors supported by close to 80 staff.
Over the next few months, Helmi Talib Group will rebrand as Kreston Helmi Talib.
The addition of Kreston Helmi Talib to Kreston Global’s network further strengthens its Asia Pacific region, which consists of 45 member firms across 22 countries providing a range of financial, audit and accounting, taxation, and other advisory services to large and mid-sized businesses requiring inbound and outbound growth support and set up.
Liza Robbins, Chief Executive of Kreston Global, said:
“I’m delighted to welcome Kreston Helmi Talib to our network. Singapore serves as a major hub for our member firms in and beyond Asia, offering a dynamic business landscape which attracts our core market of companies with entrepreneurial organisations with a growth mindset. Kreston Helmi Talib’s extensive experience and client range make them both a natural fit for and a great asset to our network
Helmi Talib, Managing Partner at Kreston Helmi Talib said:
“The Kreston network has a great reputation for servicing entrepreneurial international businesses around the world, so joining the network is an exciting milestone in our professional journey. Given our extensive international client portfolio, Singapore being one of the world’s major hubs for inbound investment, we can see enormous potential in our collaboration with Kreston and the network’s excellent member firms across the globe.”
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Kreston Global network welcomes new Argentinian firm
Kreston BA Argentina has been established to serve local private, public, and listed enterprises as well as international companies looking to invest in Argentina, at every stage of their business lifecycle.
Kreston BA Argentina is run by Ricardo Gameroff and Esteban Babino, who have nearly six decades of local and international experience from big four accounting firms between them as well as holding CPA, CFE and MBA certifications in Argentina and the United States. They are fluent in English and possess a deep understanding of both local and global business cultures. The new firm has a total of 10 employees based in Buenos Aires and provides a wide array of customised services covering all aspects of accounting and professional needs, from tax and legal planning to business process outsourcing solutions, financial audits, corporate fraud, internal audit and risk and legal advisory. The firm’s client base includes blue-chip clientele spanning energy, mining, manufacturing, oil & gas, utilities and agribusiness.
The addition of Kreston BA Argentina to Kreston Global’s network further strengthens its Latin America region, which consists of 25 member firms across 17 countries providing a range of financial, audit and accounting, taxation and other advisory services to large and mid-sized businesses requiring inbound and outbound growth support and set up.
Liza Robbins, Chief Executive of Kreston Global, said:
“I’m delighted to welcome Kreston BA Argentina to our network. Our Latin America region is full of energetic and collaborative firms who regularly work together on client and employee initiatives. Argentina is a really important location in the region as the country embarks on a new economic strategy. With Ricardo and Esteban’s backgrounds and their vision, I have no doubt that Kreston BA Argentina will be a great addition to our network”
“We are extremely energised to be joining the Kreston network and benefitting from its highly connected infrastructure full of firms who enjoy working together. It has a great name for servicing entrepreneurial international businesses around the world and we see the synergies it will bring for our clients and our new venture. ”
News
The practitioner’s guide to the OECD Multilateral Convention
January 18, 2024
Multinational firms leverage intangible assets in the rapidly changing digital landscape, posing challenges to outdated tax regulations. The OECD addresses this with a two-pillar solution, highlighting the crucial role of the Multilateral Convention in swiftly implementing the subject tax rule (STTR) to reshape global taxation for fairness and efficiency.
Challenges in international taxation amid digital transformation
In the digital transformation era, multinational enterprises (MNEs) exploit intangible assets like intellectual property and data to reap substantial profits across borders without a physical presence. Outdated international tax rules struggle to cope with this virtual reality, enabling MNEs to circumvent taxes through “nexus” and “profit allocation” tactics.
The OECD’s Two Pillar solution
The Organisation for Economic Cooperation and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) has devised a Two Pillar Solution to address this. This initiative aims to establish global consistency and transparency, ensuring MNEs pay a minimum level of tax on their global profits, regardless of where they are generated.
The first pillar involves the establishment of a global minimum tax, requiring legislative changes in jurisdictions with tax rates below the minimum. The second pillar, Subject to Tax Rule (STTR), closes loopholes in intragroup payments, preventing profit shifting to low-tax jurisdictions.
Catalyst for fair taxation and global consistency
In October 2023, the OECD introduced the Multilateral Convention, a crucial STTR implementation tool. This convention allows source jurisdictions to “tax back” certain intra-group payments, promoting fair taxation and protecting the tax base of developing countries.
The STTR’s swift implementation is facilitated by the Multilateral Convention, offering a streamlined process through simultaneous tax law modifications across multiple nations. This unified approach becomes effective from 1 January, 2025, benefiting companies with a fiscal year aligning with the calendar year.
While the speedy implementation of the STTR is a positive step, it has progressed ahead of other Pillar Two rules. The benefits of the Multilateral Convention include:
ensuring quick STTR implementation
levelling the playing field for developing countries
providing a fair framework for reclaiming taxing rights
In summary, the Multilateral Convention plays a crucial role in accelerating the implementation of STTR regulations, ensuring a fair and efficient global tax landscape for multinational enterprises.
July 1, 2023, marked a significant milestone for The Bahamas’ business community with the enactment of the Business Licence Act, 2023. This act not only replaces the old licensing legislation but introduces a fresh, more comprehensive regulatory framework. This shift, steered by the Department of Inland Revenue (DIR), aims to streamline and modernise the process of obtaining and maintaining business licenses in The Bahamas.
How does the Business Licence Act affect small businesses in the Bahamas?
For businesses with turnover below $250,000
Small businesses, often the backbone of the economy, receive a welcome simplification. If your business earns less than $250,000 annually, you’re now exempt from submitting an independent accountant certification to the Secretary. Yet, keeping accurate records for at least five years remains vital, and the annual license renewal process continues as usual.
What are the Requirements for Mid-Sized Businesses Under the New Act?
Between $250,001 and $4,999,999
For those in the middle tier, there’s an added layer of accountability. You’ll need an independent accountant’s review report, aligned with the International Standards on Review Engagements (ISRE 2400 revised).
What Do Large Businesses Need to Know About the New Licensing Regulations?
Businesses over $5 million
The bigger players in the market are required to obtain an independent accountant’s audit report, following International Standards on Auditing (ISA).
What expanded disclosure requirements are introduced in the Act?
The new act isn’t just about licensing. It brings into play broader disclosure requirements, ensuring businesses are transparent about their revenue streams, deductions, related party transactions, and accounting policies. This transparency is key to maintaining a fair and competitive market.
BICA: Applying the Bahamas Business Licence Act 2023
The Bahamas Institute of Chartered Accountants (BICA) is at the forefront of this transition. Under the guidance of Pretino Albury, BICA President and Attestation & Assurance Leader at Kreston Bahamas, the institute is actively liaising with the government to ensure these changes benefit both businesses and the economy.
Special provisions for International Business Companies (IBCs)
The act also touches on International Business Companies (IBCs) and financial services entities. Those without domestic operations and capped at a $100,000 tax can now submit financial statements audited outside The Bahamas, easing their compliance burden.
How can businesses easily adapt to the new Business Licence Act?
Understanding and adapting to these changes is crucial for businesses operating in The Bahamas. For more detailed insight and guidance, contact Pretino Albury at Kreston Bahamas. Contact him at ppalbury@krestonbs.com or visit Kreston Bahamas for more information and assistance.
News
United States Sales Tax and Use Tax
November 28, 2023
What is the tax called?
Sales and Use Tax
What is the tax authority?
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.
News
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.
Kayode Oni is an accomplished finance analyst with a proven track record of accounting and consulting. Experienced in finance, accounting, financial analysis, investment appraisal, tax laws and regulations, consulting, project management, and data analytics, Kayode is a valuable asset in the financial sector at Kreston Pedabo.
With over 12 years of experience spanning diverse sectors such as financial services, real estate & hospitality, consumer markets, and oil & gas, Tyna Adediran is a resourceful and self-motivated Business Analyst and Management Consultant. Specialising in areas like Strategy Design & Execution, Project Management, and SME Transformation, she is known for her strong skills in data collection, diagnostics, and critical thinking. Beyond her professional expertise, Tyna is a passionate advocate for continuous learning, sustainable business practices, and youth empowerment, reflecting her commitment to making a positive impact on both the business world and society at large.
Kreston Pedabo on Africa Industrialisation Day
November 20, 2023
Sector:Energy
Agenda 2063 is Africa‘s development blueprint for inclusive and sustainable socioeconomic growth and development. African Heads of State and Governments adopted the continental agenda during the golden jubilee celebrations of the Organisation of African Unity (OAU)/African Union (AU) in May 2013. Agenda 2063 seeks to deliver on seven development aspirations, each with its own goals to move Africa closer to achieving “The Africa We Want.”
The blueprint contains key activities to be carried out in five Ten-Year implementation plans, ensuring that Agenda 2063 delivers quantitative and qualitative transformational outcomes for Africa’s people over a 50-year timeframe.
Agenda 2063
The implementation of Agenda 2063 at continental, regional, and national levels has progressed steadily during the reporting period. This is attributed to remarkable progress and achievements made towards the realisation of several goals and targets of the First Ten-Year Implementation Plan of Agenda 2063.
The data in the second continental progress report on the implementation of Agenda 2063 indicates that Nigeria has achieved a 40% score concerning the goals set for the seven development aspirations. This marks a significant increase of 208%, up from the 13% recorded in the first continental progress report on implementing Agenda 2063.
Key areas where Nigeria has contributed significantly to the implementation of Agenda 2063 include:
Increased access to internet and electricity
Reduced under-five mortality rate
Increased access to anti-retroviral treatment
Increased women’s access to sexual and reproductive health services
Reduced prevalence of underweight among under-five children
Reduced the proportion of Official Development Assistance (ODA) in the national budget
Reduced unemployment rates
Increased real GDP per capita and annual GDP growth rates
Increased enrolment in pre-primary, primary and secondary schools
Increase in the proportion of the population with access to safe drinking water and safely managed sanitation services.
Increase in the share of manufacturing in GDP.
Key beneficial legislation for international businesses
No specific, unified legislation applies to all international businesses looking to expand into Africa. The legal landscape in Africa is diverse, and each country has its own set of laws, regulations, and policies governing international business activities.
However, some regional economic communities in Africa/Trade blocs, such as the Economic Community of West African States (ECOWAS) and the African Continental Free Trade Area (AfCFTA), have taken steps to harmonise certain aspects of business laws among member states to facilitate trade and investment.
International businesses aiming to expand into Africa typically need to navigate a range of legal considerations, including investment laws, taxation, employment laws, industry-specific regulations, trade agreements, intellectual property laws, and local content laws, among others.
Businesses must conduct thorough due diligence and seek legal advice tailored to the country or countries in which they plan to operate. Additionally, regulations and business environments can change, so it is advisable to consult legal experts with the most recent and relevant information.
A focus on Nigeria
In Nigeria, however, efforts have been made to attract foreign direct investment (FDI) through its investment promotion agency, the Nigerian Investment Promotion Commission (NIPC). The NIPC Act provides the legal framework for investments in Nigeria and incentivises investors in various sectors.
The Federal Government of Nigeria has adopted rigorous efforts to ensure that areas of concern for foreign investors, such as bureaucratic red tapes, incorporation processes, taxation, capital repatriation, and visa policies, are relaxed to the fullest extent possible to open up Nigeria’s economy to fair competition and prosperity.
Consequently, in line with the NIPC Act 22, the Nigerian Investment Promotion Commission regularly consults with crucial Government agencies to negotiate specific incentive packages in identified strategic areas of investment interest. These consultations have led to an increasingly attractive business environment with tax holidays for pioneer companies producing exportable goods, newly established industries in manufacturing, or expansion of production in sectors vital to the economy. The Government also grants non-tax incentives to non-pioneer firms in addition to industry-specific incentives.
NIPC Act
Section 24 of the NIPC Act provides that a foreign investor in an enterprise to which the Act applies shall be guaranteed unconditional transferability of funds through an authorised dealer in a freely convertible currency of:
dividends or profits (net of taxes) attributable to the investment;
Payments in respect of loan servicing where a foreign loan has been obtained; and
The remittances of proceeds (net of all taxes) and other obligations in the case of the sale or liquidation of the enterprise or any interest attributable to the investment.
Foreign Trade Zones
Foreign investors can set up businesses directly in Free Trade Zones (FTZs) without incorporating a company in the customs territory. Registered companies may also apply as a separate entity to operate in an FTZ that would append the company’s name with the FZE (Free Zone Enterprise) suffix to gain the FTZ benefits.
FTZ incentives include:
Exemption from all Federal, State, and Local Government Taxes, Rates, and Levies.
Duty-free importation of capital goods, machinery/components, spare parts, raw materials, and consumable items in the zones.
100% foreign ownership of investments.
100% repatriation of capital, profits, and dividends.
Waiver of all import and export licenses.
One-stop approvals for permits, operating licenses, and incorporation papers.
Permission to sell 100% of goods into the domestic market (in which case applicable customs duty on imported raw materials shall apply).
For prohibited items in the customs territory, free zone goods are allowed for sale provided such goods meet the requirement of up to 35% domestic value addition.
Rent-free land during the first 6 months of construction (for Government-owned zones).
News
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.”
News
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.
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!”
To learn more about doing business in Nigeria, click here.
News
Kreston Global announces ACCA certificate in sustainability for Finance Bursary Program
July 3, 2023
Sector:ESG
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
A guide to starting a business in the Netherlands
June 28, 2023
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.
News
Ganesh Ramaswamy
Partner at Kreston Rangamani and Associates LLP, Global Tax Group Regional Director, Asia Pacific
Ganesh has extensive experience of more than 30 years in providing specialist tax services, particularly to large privately owned groups, with particular strengths in the property, retail, healthcare and hospitality industries. He has supported various entities with specialist advice on tax-effective structures and restructures, cross-border transactions on account of outbound and inbound India investments, mergers, acquisitions and divestments. Ganesh has also worked with stakeholders across businesses to deliver solutions such as tax due diligence, tax consolidation and restructuring of large family businesses in the Middle East, Asia, and Singapore.
ESG Reporting in Asia Pacific
May 1, 2023
Sector:ESG
Experts in our ESG committee comment on the progress of ESG in Asia Pacific, exploring the implications of new legislation and how it is changing doing business in the region.
Hong Kong and China
The ESG regulatory environment in Hong Kong and China is evolving rapidly, with new regulations being introduced all the time. This is due to a number of factors, including the growing importance of ESG issues for investors and consumers, the increasing pressure on companies to reduce their environmental and social impact, and the growing global consensus on the need to address climate change.
In Hong Kong, the SFC (Securities and Futures Commission) is the main regulator for ESG issues. In 2019, the SFC issued a circular on ESG funds, which set out its expectations for the disclosure of ESG-related information by fund managers. In 2020, the SFC launched a consultation on proposals to enhance climate-related disclosures by Hong Kong SFC-licensed fund managers. The SFC is also working with other regulators, such as the HKMA (Hong Kong Monetary Authority) and the HKEX (Hong Kong Exchanges and Clearing), to develop a more comprehensive ESG regulatory framework.
In China, the CSRC (China Securities Regulatory Commission) is the main regulator for ESG issues. The CSRC has issued a number of guidelines and regulations on ESG issues, including the Code of Corporate Governance for Listed Companies and the Standards for the Contents and Formats of Information Disclosure by Companies Making Public Offering of Securities. The CSRC is also working with other regulators, such as the Ministry of Finance and the Ministry of Environmental Protection, to develop a more comprehensive ESG regulatory framework.
The ESG regulatory environment in Hong Kong and China is still in its early stages of development. However, the pace of change is accelerating, and it is clear that ESG issues will become increasingly important in the years to come. Companies that are able to effectively manage ESG risks and opportunities will be well-positioned to succeed in the future.
Here are some of the key challenges and opportunities for companies operating in the ESG regulatory environment in Hong Kong and China: Challenges: • The regulatory landscape is complex and evolving rapidly, making it difficult for companies to keep up with the latest requirements. • There is a lack of clarity on some ESG issues, which can lead to uncertainty and compliance risk. • There is a risk of greenwashing, where companies make misleading ESG claims in order to improve their reputation. Opportunities: • There is a growing demand for ESG products and services, which provides companies with the opportunity to develop new products and services. • There is a growing awareness of ESG issues, which can help companies to better understand their ESG risks and opportunities. • There is a growing focus on ESG by regulators, which can help to improve the quality of ESG reporting and disclosures. Companies that are able to effectively manage ESG risks and opportunities will be well-positioned to succeed in the future.
At present, the clear ESG policy regulation mainly comes from the financial regulators, focusing on the mandatory specification of enterprise ESG information disclosure and the policy guidance of ESG investment, and due to the ESG contains E (environment), S (society), G (corporate governance) in different aspects of many issues, different government departments also have different emphasis on its regulatory function related issues.
Specifically, for different objects, the current ESG regulatory measures can be roughly divided into two categories: one is mandatory for listed companies or some specific enterprises, and is forced to disclose ESG information meeting the minimum standards through administrative regulations; the other has incentive requirements and encourages enterprises to disclose ESG information through market means such as green investment.
As the regulatory authority for the information disclosure of listed companies, China Securities Regulatory Commission (hereinafter referred to as CSRC) continuously studies and improves the ESG information disclosure system of listed companies and standardizes the operation of listed companies according to China’s national conditions and the stage of market development.
In terms of ESG investments, Domestic regulation focuses on green finance and inclusive finance, The introduction of a series of policy guidance, promotes commercial banks, public funds and other financial institutions to develop more green loans, green bonds, green funds, carbon financial products and other financial products based on ESG investment concept, Guide funds to favour clean, low-carbon and environmentally friendly enterprises and projects, “To provide appropriate and effective financial services to all social strata and groups requiring financial services at affordable costs (Notice of The State Council on the Issuance and Issuance of the Development Plan of Inclusive Finance (2016-2020))”, China will promote green and sustainable economic and social development.
Malaysia
In Malaysia ESG is also evolving rapidly, as the country strives to become a more sustainable and socially responsible nation. In recent years, there has been a growing focus on ESG issues by both the government and the private sector, and a number of new regulations have been introduced.
One of the most significant developments in the ESG regulatory environment in Malaysia has been the introduction of the Sustainable Development Goals (SDGs). The SDGs are a set of 17 global goals that aim to achieve a more sustainable and equitable future for all. The Malaysian government has committed to achieving all 17 SDGs by 2030, and has put in place a number of policies and initiatives to support this goal.
Another significant development has been the introduction of the Malaysian ESG Reporting Framework. The framework is designed to help businesses disclose their ESG performance and comply with relevant regulations. The framework is based on the Global Reporting Initiative (GRI) Standards, and covers a range of ESG issues, including climate change, water management, and human rights.
The ESG regulatory environment in Malaysia is still in its early stages of development, but the country is making significant progress. The government is committed to sustainability and social responsibility, and businesses are increasingly taking steps to comply with ESG regulations.
Here are some of the key ESG regulations in Malaysia: • The Sustainable Development Goals (SDGs): The SDGs are a set of 17 global goals that aim to achieve a more sustainable and equitable future for all. The Malaysian government has committed to achieving all 17 SDGs by 2030, and has put in place a number of policies and initiatives to support this goal. • The Malaysian ESG Reporting Framework: The framework is designed to help businesses disclose their ESG performance and comply with relevant regulations. The framework is based on the Global Reporting Initiative (GRI) Standards, and covers a range of ESG issues, including climate change, water management, and human rights. • The Companies Act 2016: The Companies Act 2016 requires companies to disclose their ESG performance in their annual reports. The Companies Act 2016 also requires a director of a company to exercise his powers in good faith in the best interest of the company. Bursa Malaysia has required Malaysian public-listed companies to include sustainability reporting in their annual reports. Directors of large, listed companies are also required to apply the corporate governance and sustainability practices in the Malaysian Code on Corporate Governance. • The Environmental Quality Act 1974: The Environmental Quality Act 1974 sets out the environmental standards that businesses must comply with. • The Occupational Safety and Health Act 1994: The Occupational Safety and Health Act 1994 sets out the safety and health standards that businesses must comply with. • The Labour Act 1955: The Labour Act 1955 and Employment (Amendment) Act 2022 sets out the employment standards that businesses must comply with. The ESG regulatory environment in Malaysia is evolving rapidly, and businesses need to stay up-to-date with the latest developments. By complying with ESG regulations, businesses can help to ensure a more sustainable and equitable future for Malaysia.
Australia
In Australia, the Australian Securities and Investments Commission (ASIC) has been a leading regulator in the ESG space. ASIC has issued a number of guidance documents and infringement notices on ESG issues, and has also undertaken a number of enforcement actions. In 2021, ASIC fined a major Australian bank $10 million for misleading investors about its ESG credentials.
Additionally, the Australian Accounting Standards Board (AASB) has been empowered to issue guidance on the accounting treatment of ESG-related items, including disclosures for climate related risk and sustainability reporting standards.
The New Zealand Financial Markets Authority (FMA) has also taken a number of steps to promote ESG investing in New Zealand. The FMA has issued a number of guidance documents on ESG issues, and has also undertaken a number of enforcement actions. In 2021, the FMA fined a major New Zealand bank $5 million for misleading investors about its ESG credentials.
Both ASIC and the FMA have made it clear that they will take action against companies that mislead investors about their ESG credentials. This has led to a number of changes in the way that companies report on their ESG performance. Companies are now more likely to provide detailed information about their ESG risks and opportunities, and to undergo independent ESG audits.
The growing regulatory focus on ESG issues is likely to continue in the years to come. As ESG investing becomes more mainstream, regulators are likely to take a more active role in ensuring that companies are complying with their ESG obligations. This will lead to a more transparent and accountable ESG market, which will benefit investors and companies alike.
In addition to the regulatory environment, there are a number of other factors that are driving the growth of ESG investing in Australia and New Zealand. These include: • The increasing awareness of climate change and other environmental issues • The growing demand for socially responsible investments • The increasing availability of ESG data and information • The growing sophistication of ESG investment products • The increasing evidence to suggest financial outperformance of companies that rate well on ESG metrics • The increasing pressure for companies to improve ESG performance as they otherwise face reputational and brand risk
The growth of ESG investing in Australia and New Zealand is likely to continue in the years to come. As more and more investors become aware of the importance of ESG issues, and as more and more ESG investment products become available, ESG investing is likely to become the norm.
If you have an ESG question for one of our experts in the Asia Pacific region, please get in touch.
News
Earth Day 2023: Liza Robbins
April 21, 2023
Sector:ESG
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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