FATCA Seminar 2015 in Kuwait

https://www.youtube.com/watch?v=Y5umuInmTi8&t=1s

Baker Tilly Kuwait Audit, Tax and Consulting

https://www.youtube.com/watch?v=2J3jfov5cBg&t=2s

Baker Tilly Kuwait New Action For Better Service

https://www.youtube.com/watch?v=XyCkPiwqyfE

Baker Tilly Kuwait Moves to New Premises

https://www.youtube.com/watch?v=0UtaegjVfXo

Common Reporting Standard Seminar in Kuwait

https://www.youtube.com/watch?v=8MpMZ5L8YN0

Ministry of Finance’s Resolution No. 46 on the Additional Preliminary Guidelines concerning Implementation of the International Agreements on Tax Information Exchange

On 14/8/2017, the Ministry of Finance has issued Resolution No. (46) Of 2017 on the Additional Preliminary Guidelines concerning implementation of the International Agreements on Tax Information Exchange. The circular highlighted the importance of using the self-certification form.

In addition, the Resolution required the financial institutions to appoint an auditor approved by the MOF, submitting annual reports and submitting the said reports to MOF no later than 31st May 2018 for the year ending 31st December 2017.

Mergers and Acquisitions (M&A) In the Mena Region for the First Quarter of 2017

The below article is a representation of the original article published in Zephyr by Bureau van Dijk and hence all credit for this article belongs to them. The article provides a brief about the M&A activities in the Middle East and North Africa (MENA) region in the first quarter of 2017. Baker Tilly Kuwait has merely paraphrased the article to convey the same message. Target companies within Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Syria, Tunisia, UAE, Yemen and part of the MENA region coverage within this article.

 

Increase in value and decline in volumes

MENA witnessed 160 M&A transactions in the first quarter of 2017 with a comprehensive value of USD 12.6 billion. While there was a 13% increase in value as compared to the last quarter of 2016 at USD 11.2 billion, it came against a 3% decrease in volume. This suggests that individual deals were executed at higher levels in the first quarter of 2017 as opposed to larger volumes with lower values. In fact the first quarter of 2017 saw the lowest volume since first quarter of 2015 at almost 148 deals as evident from the table below:

 

Deals by volume and value:

Announced Date	Number of Deals	Total deal value (USD Million)
Q1 2017	160	12,645
Q4 2016	165	11,164
Q3 2016	168	22,626
Q2 2016	181	12,274
Q1 2016	185	12,699
Q4 2015	170	10,252
Q3 2015	188	2,577
Q2 2015	185	6,529
Q1 2015	148	5,106

 

M&A Deals in Q1 2017

Deal value(mil USD)	Deal type	Target	Target Country	Acquirer	Acquirer Country	Deal status
1,770	Minority stake 8%	Abu Dhabi Company for Onshore Oil Operations	AE	China National Petroleum Corporation	CN	Completed
1,673	Acquisition 100%	National Titanium Dioxide Company Ltd's titanium dioxide business SA	SA	Tronox Ltd	AU	Pending
1,120	Minority stake 21%	Arab Bank plc	JO	Consortium		Completed
1,000	Acquisition 100%	Souq.com FZ LLC	AE	Amazon.com Inc.	US	Announced
929	Acquisition increased 67% to 93%	Kuwait Food Company SAK	KW	Adeptio AD Investments SPC Ltd	AE	Completed
898	Minority stake 4%	Abu Dhabi Company for Onshore Oil Operations	AE	CEFC China Energy Co., Ltd	CN	Completed
898	Minority stake 4%	Abu Dhabi Company for Onshore Oil Operations	AE	CEFC China Energy Co., Ltd	CN	Completed
820	Acquisition increased 50% to 100%	The Saudi Petrochemical Company	SA	Saudi Basic Industries Corporation SJSC	SA	Announced
731	Capital Increase 62%	Fajr Petrochemical Company PSC	IR	-		Completed
667	Minority stake 43%	El Mostakbal for Urban Development	EG	Banque Misr SAE	EG	Completed
368	Capital Increase 30%	Khorasan Steel Complex Company PSC	IR	-	EG	Completed
355	Capital Increase 14%	Doha Bank QSC	QA	-		Announced
242	Capital Increase 13%	National Iranian Copper Industries Company	IR	-		Completed
213	Capital Increase 22%	Mines and Metals Development Investment Company PSC	IR	-		Completed
183	Minority stake 4%	DAMAC Properties Dubai Co PSC	AE	Premium Investment International LLC	AE	Completed
132	Acquisition increased to 99%	United Bank of Egypt	EG	Central Bank of Egypt	EG	Announced
97	Minority stake 13%	International Medical Company Ltd	SA	Amanat Holdings PJSC	AE	Completed
96	Minority stake and Minority stake 8%	Al Aqeeq Real Estate Development Company; Arab Resort Areas Company	SA	A Taiba Holding Company	SA	Announced
90	Capital Increase 67%	Iran Behnoush Company PSC	IR	-		Announced
79	Minority stake 33%	Educational Holding Group	KW	Boubyan Petrochemical Company KSCC	KW	Announced
79	Minority stake 9%	EFG-Hermes Holdings SAE	EG	RIMCO EGT Investment LLC		Completed

The deals for the first quarter of 2017 were dominated by four deals each worth USD 1000 million or more amounting to nearly 44% of the quarters overall value. There were 9 deals worth more than USD 500 million in the same quarter.

From the top 20 deals by value, Iranian companies dominated with 5 of those deals closely followed by UAE and Saudi Arabia at 4 deals each.

Foreign buyers dominated the M&A ecosystem and at USD 1,770 million, China National Petroleum Corporation’s acquisition of an 8% stake in an Abu Dhabi Company for Onshore Oil Operations was the largest in the quarter. The titanium dioxide (TiO2) business of National Titanium Dioxide is propositioned for a takeover by Tronox of Australia, the deal valued at USD 1,673 billion. Amazon, the US based e-commerce giant announced the acquisition of Souq.com for a value of USD 1,000 million. Souq.com is the largest online retail and marketplace in the Arab region.

 

Top Target Countries by Volume and Values

Top Country by Volume:

Target Countries	Q1 2016	Q4 2016	Q2017
Egypt	35	34	33
UAE	25	31	30
Jordan	30	24	27
Kuwait	16	3	17
Iran	33	21	17
Saudi Arabia	18	11	11
Tunisia	4	8	8
Bahrain	3	7	5
Morocco	7	11	4
Qatar	2	3	3
Lebanon	6	4	3
Oman	7	7	2
Iraq	0	0	1
Palestine	1	0	0
Libya	0	0	0
Yemen	0	0	0
Algeria	2	1	0
Syria	0	0	0

Egyptian companies at 33 deals was the leader in terms of volumes during the first quarter of 2017, on the other hand companies based in the UAE were a close second with 30 deals. While the quarter-on-quarter growth in the volume of deals in the MENA region mostly fell if not remained constant, Kuwait saw a growth five times higher at 17 (Q4 2016: 3).

 

Top Country by Value:

Target Countries	Q1 2016	Q4 2016	Q2017
UAE	738	4,438	3,940
Saudi Arabia	682	422	2,687
Iran	1,626	2,361	1,862
Kuwait	6,546	10	1,337
Jordan	197	459	1,250
Egypt	462	797	1,122
Qatar	558	430	355
Morocco	941	1,601	44
Bahrain	256	37	40
Tunisia	8	175	22
Lebanon	401	29	17
Oman	279	344	0
Palestine	2	0	0
Algeria	8	60	0
Iraq	0	0	0
Libya	0	0	0
Yemen	0	0	0

UAE companies at USD 3,940 million were the leader in the quarter in terms of values. However, Saudi Arabia recorded a quarter-on-quarter growth at 6 times to USD 2,687 million in the first quarter of 2017 (Q4 2016: USD 422 million) thus overtaking Iran in deal making (Q4 2016: USD 2,361 million; Q1 2017 USD 1,862 million).

 

Top Target Sectors by Volume and Values

Top Sectors by Volume:

Target Countries	Q1 2016	Q4 2016	Q2017
Other services	66	53	44
Construction	19	14	23
Education, health	7	9	13
Banks	7	6	12
Chemicals, rubber, plastics	18	21	12
Wholesale & retail trade	4	6	8
Insurance companies	10	7	8
Primary sector	7	4	7
Food, beverages, tobacco	7	5	6
Machinery, equipment, furniture, recycling	5	9	5
Hotels & restaurants	7	3	5
Metals & metal products	4	4	4
Wood, cork, paper	4	0	4
Textiles, wearing apparel, leather	0	3	3
Gas, water, electricity	4	1	2
Transport	8	2	2
Post and telecommunications	1	2	2
Publishing, printing	7	9	1
Public administration and defense	0	0	0

Companies within the construction sector dominated the deals in the first quarter of 2017 with 23 announced deals valued at USD 1,126 million, while the Education and health industry were next by volume (Q4 2016: 9; Q1 2017: 13).

 

Top Sector by Value:

Target Countries	Q1 2016	Q4 2016	Q2017
Chemicals, rubber, plastics	1,449	637	3,324
Primary sector	120	2,620	2,787
Banks	1,337	1,992	1,922
Construction	646	36	1,126
Hotels & restaurants	3,716	11	1,029
Wholesale & retail trade	276	272	1,025
Metals & metal products	902	1	612
Other services	2,908	2,270	526
Education, health	46	784	198
Food, beverages, tobacco	134	178	118
Machinery, equipment, furniture, recycling	103	16	31
Insurance companies	848	1,525	21
Wood, cork, paper	6	0	12
Textiles, wearing apparel, leather	0	0	10
Publishing, printing	7	46	0
Public administration and defense	0	0	0
Post and telecommunications	36	90	0
Transport	157	79	0
Gas, water, electricity	7	0	0

The most valued sector in the first quarter of 2017 was chemicals, rubber and plastics industry with a value of USD 3,324 million, followed by the primary sector (Q4 2016: USD 2,620 million; Q1 2017: USD 2,787 million).

 

M&A outlook MENA

A significant increase in M&A activity is sensed particularly in the UAE which has strong economic fundamentals and continues to draw investors to the region. The outlook for M&A activity in the MENA region is optimistic in the long run as threats to the stability of the MENA economy ease, and dealmakers regain confidence in the market, their apprehension should turn into appetite.

Source : “Baker Tilly in Kuwait - Corporate Finance Unit”

Base Erosion and Profit Shifting Framework (BEPS)

In compliance with the international conventions, the State of Kuwait has signed, on 7th of June 2017, a multilateral agreement to implement the procedures relating to Base Erosion and Profit Shifting Framework (BEPS).

Worth mentioning that Base Erosion and Profit Shifting (BEPS) refers to an international law that aims at combating tax evasion and ensures that countries collect their due taxes from all the companies working in the country as some companies tend to establish fake headquarters in the countries that are classified as “Tax Haven” with the aim of Base Erosion and Profit Shifting.

Baker Tilly Kuwait assists you comply with laws, regulations, resolutions and instructions issued by the regulators as well as enhancing the sound tax planning to avoid multiple taxation in several jurisdictions through:

• Attestation of BEPS Compliance Reports as required by the relevant authorities.


• Experts with an in-depth experience in the Tax Compliance consulting domain;


• Our commitment to on time delivery with quality deliverable and implementation.

Baker Tilly Celebrates Teamwork Achievement 2016

Living Our Mission

As teamwork is one of the KPIs achieved by the end of 2016, Baker Tilly celebrates the team work achievement during 2016 as it managed to carry out its mission through the dedicated work of its members. The 50+ plus employees of Baker Tilly work in a harmony as a team. In their different positions, they all contribute to Baker Tilly’s mission and visions with dedication, loyalty and respect.

Baker Tilly always believe in creating a harmonious work environment which balances both, work and play. This helps not only in business growth but also in a healthy work environment.

Latest amendments to the Executive Bylaw of the Capital MarketAuthority Law On 4 May 2017, the CMA issued the Resolution No. 64 of2017

[vc_row][vc_column][vc_column_text]On 4 May 2017, the Capital Market Authority ("CMA") issued the Resolution No. 64 of 2017 pertaining to amending the Executive Bylaw of the CMA Law which comes into effect as of the date of its issuance. Some amendments have been made to the Module Three (Enforcement of the Law), the Module Eight (Code of Business Conduct) and the Module Fourteenth (Market Conduct).

The amendment made to the Module Eight referred to above is the issuance of a new Addendum to the said Module concerning "the Standards for Record Keeping Systems". Under this amendment, the persons licensed to carry out any of the following securities activities (investment portfolio manager - securities broker registered on the stock exchange - securities broker not listed on the stock exchange - qualified securities broker registered on the stock exchange – custodian) shall make a reconciliation and comply with the technical requirements mentioned in the said Addendum, including developing policies and procedures manual for Record Keeping Systems and to provide the CMA with the same no later than 1 June 2018, while observing complying with all the provisions of the Module Eight of the Executive Bylaw.

The technical requirements stated in this Addendum are pertaining to the means of receiving and retaining the customers' orders, including (telephone conversations - electronic correspondences - electronic trading - direct orders within the authorized person's premises - written orders) and their consequent obligations and requirements, in addition to some other general requirements.[/vc_column_text][/vc_column][/vc_row]

Do Internal Auditors and Doctors Have Something in Common?

“I would like to welcome you to my first blog post with Baker Tilly and I hope that the minutes you will spend reading it will add value to you.

Like many business and management theorists, I believe that business entities are similar to living organisms when it comes to their life cycles. They are born, they grow and develop, they get sick, they reach maturity, they begin to decline and age, and finally, in many cases, they die.

Now, what would a prudent person do when he feels sick? Indeed, any prudent person would not wait it out and hope he will get better on his own. Instead, he will visit a doctor to find out what is wrong.

Ok, so does this mean that the only time to visit a doctor is when you feel sick? Definitely not, it is important to visit your doctor regularly to get preventive care. Preventive care lets your doctor find potential health problems before you get sick.

Likewise, with business entities being vulnerable to countless risks, they should consider having specialists who have adequate knowledge, skills and abilities to assist them dealing with risks in a prudent and reasonable manner.

Who are the internal auditors?

They are the specialists who schedule periodic check-ups to examine the healthiness of nearly all processes within the business entity. They are the ones who provide advice and insight on how to improve these processes.

In simple terms, they are the doctors of business entities.

Hold on, doctors also get sick!

Well, that is true. That is why internal auditors are required to have ongoing and periodic quality assurance programs as mandated by the International Standards for the Professional Practice of Internal Auditing (Standards) issued by the Institute of Internal Auditors.

Bottom line, I believe that the value derived from equipping business entities with strong and well-resourced internal audit functions cannot be compromised.”

References:

Haire, M. (1959). Modern organization theory. John Wiley.

Bahij Elkhatib

Bahij N. Elkhatib, CIA, CMA, CIDA, is assuming the role of Internal Audit & GRC Manager with Baker Tilly Kuwait. He has considerable experience in providing Internal Audit & GRC services to clients in different industries.

Kuwait Banks Mandated to Take the Necessary Procedures to Implement Common Reporting Standards (CRS)

On 15 July 2014 the CRS, an information standard for the Automatic Exchange of Information (AEoI) was developed and approved by the Organization for Economic Co-operation and Development (OECD) Council.

On 19 August 2016, the Government of the State of Kuwait represented by the Ministry of Finance (MoF) signed the Multilateral Competent Authority Agreement (MCAA) with the OECD for exchange of information for tax purposes. Pursuant to the MCAA, the Financial Institutions (FI’s) in Kuwait shall provide the MoF with financial information in accordance with the CRS.

In light of the above, on 22 February 2017 the MoF officially communicated the MCAA to the Central Bank of Kuwait (CBK) and instructed the CBK to inform all local FI’s to begin the process of gathering the required financial information in line with CRS.

The CBK in return instructed all banks operating in Kuwait, through circular number 2/BS/IBS/403/2017, to comply with the MOF letter of 22 February 2017 and the MCAA of 19 August 2016.

In order to assist banks in Kuwait to comply with the requirements of CRS, Baker Tilly Kuwait offers the following services:

1. Preparing a GAP Analysis Report


2. Developing CRS Policy and Procedures


3. Providing ICT consulting services for CRS compliance


4. Training Services

New CMA Circular Regarding AML-CFT Annual Reporting

Date of issuance 8 January 2017,
Deadline 1 March 2017

On 8/1/2017, Capital Markets Authority (CMA) issued circular No. (2) Of 2017 on Licensed Persons’ Annual Report. The circular highlighted the importance of compliance with the provision of Article (7-5) of Module Sixteen of the Executive Bylaws of Law No. (7) of 2010 on preparing an annual report by the compliance officer to the board of the licensed person.

The said report should include all actions taken to implement the internal policies, procedures and controls and any proposal for increasing the effectiveness and efficiency of the procedures, in addition to submitting a copy of the report to the CMA no later than 1st of March.