UHY GLOBAL JANUARY 2019 GLOBAL NEWS GLOBAL NEWS


ALL CHANGE AT IFAC The International Federation of Accountants (IFAC) has announced Dr In-Ki Joo as its new president. He will serve a two-year term, ending in November 2020. Dr Joo joined the IFAC board in 2012 and was the organisation’s deputy president from 2016 to 2018. A professor emeritus of accounting at Yonsei University School of Business in Seoul, South Korea, Dr Joo has served the profession academically for many years. He has held top positions with the Confederation of Asian and Pacific Accountants, the Korean Accounting Association, the Korean Academic Society of Business Administration, and the Korean Academy of Business Ethics, as well as being a Board member of the Korean Institute of Certified Public Accountants. "I am honoured and energised to lead IFAC during this time of great change and opportunity for our profession," said Dr Joo. "I look forward to focusing on a future-ready profession which harnesses the strength of its education platforms and commitment to ethics." IFAC represents around three million accountants in more than 130 countries around the world. By promoting high-quality international standards, IFAC aims to strengthen the accountancy profession and contribute to the development of strong international economies. Alan Johnson replaces Dr Joo as deputy president of IFAC. He joined the IFAC Board in 2015 and is also chair of the ACCA Accountants for Business Global Forum. He was previously a non-executive director of food retailer Jerónimo Martins and chief financial officer for Unilever’s global foods business. RETURN OF SST IN MALAYSIA Following a transition period in which Goods and Services Tax (GST) was set at 0%, a new Sales and Services Tax (SST) regime became effective on 1 September 2018, imposing a levy of 5-10% on the sale of goods and 6% on services. This means that just three years after the introduction of GST, the Malaysian government has reinstated the system of indirect taxation that it replaced. Overall, SST is applicable to just under 40% of goods listed on the Consumer Price Index, as compared with 60% under GST. Businesses are also subject to the new tax regime, although SST is applicable to fewer goods and services than GST. "About 85% of businesses will be out of the tax net," said Datuk Seri Subromaniam Tholasy, director general of the Royal Malaysian Customs Department. "We expect only 80,000 businesses to register with SST." "The SST regime aims to be both people-friendly, by lowering the cost of living, and business-friendly, by reducing compliance and administrative costs," says Patrick Chin, executive director and tax specialist at UHY in Malaysia, Kuala Lumpur. "As well as eliminating the costs associated with claiming GST refunds, the relative simplicity of SST will mean businesses will no longer face the challenges associated with the technical complexities of GST." For further announcements and guidance on the new SST regime, visit www.mysst.customs.gov.my UK TAX GOING DIGITAL The first stage of the UK government’s Making Tax Digital for Business (MTDfB) programme is due to be rolled out this year. From April 2019, all VAT-registered organisations exceeding the VAT registration threshold of GBP 85,000 will be required to keep digital records of all transaction details using software that can link directly to HM Revenue & Customs (HMRC) systems, and use that software to return data directly to the HMRC within five weeks of their VAT quarter. "HMRC estimate they lost GBP 3.5 billion in revenue through VAT return errors in the 2015 tax year alone," says Sean Glancy, partner and tax specialist at UHY Hacker Young, London, UK. "By modernising the way that UK taxes are administered, MTDfB aims to reduce errors and revenue loss. UK VAT- registered businesses should review their current accounting systems to ensure that they have the relevant digital connections with HMRC in place by April, but all businesses should start preparing for MDTfB compliance now." It is expected that MTDfB will be rolled out to businesses, self-employed individuals and landlords from April 2020 onwards, with a requirement to report summary information on profits, income and expenditure to HMRC on a quarterly basis. For further information, see VAT Notice 700/22: Making Tax Digital for VAT on the UK government website. BOOST FOR BLUE ECONOMY The world’s first sovereign blue bond has been launched in the Republic of the Seychelles. Assisted by the World Bank, the Seychelles government has raised USD 15 million from international investors in a pioneering approach to financing the sustainability of the island nation’s marine resources. Partners include Calvert Impact Capital, Nuveen and Prudential Financial, Inc., the Development Bank of Seychelles’ Blue Grants Fund and Blue Investment Fund, and the Seychelles’ Conservation and Climate Adaptation Trust. The Seychelles’ blue bond is the first financial instrument of its kind to mobilise private finance to support the long-term sustainability of marine resources. Arunma Oteh, vice president and treasurer at the World Bank, described the bond as highlighting "the powerful role of capital markets in connecting investors to projects that support better stewardship of the planet." The finance raised will be used to support projects that have positive economic and environmental benefits, including the expansion of marine protected areas, improvements in fisheries governance, and the development of the ‘blue economy’. "The World Bank is excited to be involved in the launch of this sovereign blue bond, and believes it can serve as a model for other small island developing states and coastal countries," says Laura Tuck, the World Bank’s vice president of sustainable development. "The launch of the sovereign blue bond in our island nation demonstrates Africa’s potential to innovate and to be a pioneer in its approach to sustainable investment," says Vimal Damry, managing partner, UHY Premier Financial Services Limited, Seychelles. "It will greatly assist the Seychelles to safeguard its ocean and develop a sustainable blue economy, as well as having the potential to serve as an example for other countries in the region to follow." For more on the blue economy, see our infographic here. BANKING ON CRYPTO Head of the International Monetary Fund (IMF), Christine Lagarde, has suggested that state banks should play a role in the cryptocurrency landscape. Addressing delegates at a three-day conference on FinTech, as part of the 2018 Singapore FinTech Festival, Lagarde spoke on the case for new digital currency, raising the role of the state at a time where the nature of money is changing and FinTech is changing the way the economy works. Bitcoin currently accounts for over 50% of cryptocurrencies globally, although many others exist. With market capitalisation of all cryptocurrencies estimated at over USD 200 billion*, it seems that they are here to stay. The message from Lagarde is that the key is harnessing the benefits while managing the risks. "Should central banks issue a new form of money? A state-backed token, or perhaps an account held directly at the central bank, available to people and firms for retail payments?" she asked. "True, your deposits in commercial banks are already digital. But a digital currency would be a liability of the state, like cash today, not of a private firm." 2018 marks the Singapore FinTech Festival’s third year. Hailed as "the world’s largest platform for the global FinTech community," the event attracted over 250 speakers and 40,000 participants. Sopnendu Mohanty, chief FinTech officer at the Monetary Authority of Singapore, said that, going forward, the FinTech Festival would "continue to champion financial inclusion through innovation and digital transformation to achieve a more global and all-embracing FinTech ecosystem." Lagarde cited public policy goals around security, consumer protection and privacy as being areas where state cryptocurrency could have a positive impact, but also referred to its potential in respect of financial inclusion. "Digital currency offers great promise, through its ability to reach people and business in remote and marginalised regions," she said. Lagarde’s address coincided with the release of a new IMF paper, Casting Light on Central Bank Digital Currencies, which focuses on the pros and cons of state digital currency at a domestic level. *Figure as of November 2018 NEW ECONOMY, NEW FUTURE Over 400 business and government leaders from 60 countries came together at the inaugural New Economy Forum to start devising solutions to issues facing the global economy. Hosted on Sentosa Island, Singapore in November 2018, the New Economy Forum (NEF) was founded by US businessman, politician and philanthropist Michael Bloomberg with the aim of finding solutions to the risks, opportunities and challenges in the world economy. In his opening address, Bloomberg highlighted the critical role of the private sector, telling delegates: "The more that business leaders talk with one another – and take the lead in building new partnerships – the faster we can make progress." The NEF is led by Bloomberg (pictured, above) and ten partners from leading corporates and institutions across a range of industries and geographies, and backed by an advisory board chaired by former US secretary of state and national security advisor Henry Kissinger, and Hank Paulson, chairman of the Paulson Institute and former US secretary of the treasury, and comprised of political and business leaders, from former UN secretary general Ban Ki-moon to US business magnate and philanthropist Bill Gates. The keynote speech at the inaugural forum was delivered by Wang Qishan, vice president of the People’s Republic of China. Among the other speakers were Christine Lagarde, head of the International Monetary Fund (IMF) and Anwar Ibrahim, president of the People’s Justice Party and leader of the Malaysian Pakatan Harapan coalition. In a two-day programme of panel discussions, solutions workshops and roundtables, the topics discussed focused on seven key areas: Global governance: building on the success of existing systems and accommodating the aspirations of rising powers Trade: including the role of the World Trade Organization (WTO) and looking at how trade can strengthen local communities Technology: addressing the 'labour conundrum' posed by artificial intelligence, and ensuring that technology continues to promote cross-border collaboration Urbanisation: including supercities and the promotion of smart growth to improve the environment and reduce wealth disparities Finance and capital markets: FinTech, financial inclusion, and change in trade and investment flows Climate: promoting a sustainable future in light of the threat posed by rising temperatures and sea levels Inclusion: looking at how public-private solutions to the increasing inequalities caused by protectionism and labour-saving technologies. Following the forum, more than 70 organisations have committed to forming a New Economy Forum ‘SolutionsLab’, with the aim of bringing together leaders and experts to take action over the coming year on the key solutions discussed. The second New Economy Forum will be held in Beijing, China, in November 2019


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