INSERT INTO `tm_wsal_metadata` (`id`, `occurrence_id`, `name`, `value`) VALUES
(265510, 25690, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"617\" height=\"411\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
(265511, 25690, 'MetaLink', 'content'),
(265512, 25690, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7941&amp;action=edit'),
(265513, 25690, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"617\" height=\"411\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"550\" height=\"367\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
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(265559, 25694, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"668\" height=\"446\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
(265560, 25694, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"550\" height=\"367\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
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(265563, 25694, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"550\" height=\"367\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"668\" height=\"446\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
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(265602, 25698, 'PostTitle', 'Arabian Nights or Northern Lights: Observing Global Anti-Corruption Practices in Full Daylight'),
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(265605, 25698, 'PostDate', '2018-08-01 07:40:48'),
(265606, 25698, 'PostUrl', 'http://www.tamimi.com/law-update-articles/arabian-nights-or-northern-lights-observing-global-anti-corruption-practices-in-full-daylight/'),
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(265609, 25698, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"622\" height=\"415\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.');
INSERT INTO `tm_wsal_metadata` (`id`, `occurrence_id`, `name`, `value`) VALUES
(265610, 25698, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"668\" height=\"446\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
(265611, 25698, 'MetaLink', 'content'),
(265612, 25698, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7941&amp;action=edit'),
(265613, 25698, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"668\" height=\"446\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"622\" height=\"415\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
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(265659, 25702, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"570\" height=\"380\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
(265660, 25702, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"622\" height=\"415\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
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(265663, 25702, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"622\" height=\"415\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8015\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/19.jpg\" alt=\"\" width=\"4573\" height=\"1322\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption is a hot topic across the globe. Scoring on top of international rankings, the Nordic countries (being Denmark, Norway, Sweden, Finland and Iceland) have traditionally been regarded as the global frontrunners when it comes to anti-corruption. In the Middle East, governments are working hard to decrease bribery and increase transparency in society, which ultimately complements the general promotion of civil rights. Research indicates that free speech, independent media, political dissent and an open and engaged civil society, access to information and the non-existence of censorship are the core elements preventing corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The author previously practised law in Finland, advising Finnish and Scandinavian clients, before locating to the UAE. In this article I seek to provide comparative insights on the topic of anti-corruption practices between the Middle East and the Nordic countries, in light of current developments.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>From global harmonisation of laws to local enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Combating corruption on a global level is subject to several international treaties, the provisions of which are then transposed to national laws, harmonising the content thereof. The most important international treaties in this regard are the United Nations Convention Against Corruption of 2003 and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997. In Europe, an intergovernmental body called the Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor its Member States’ compliance with the organisation’s anti-corruption standards.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The intention of international treaties is to establish common worldwide legislative standards for anti-corruption laws through imposing obligations on the Member States to bring their legislation in line with the obligations of the treaties. As a result, the laws of different Member States should include similar provisions criminalising the different forms of bribery, which provisions are locally enforced by national authorities. Despite these developments, it goes without saying that the national anti-corruption laws are far from being harmonised and different geographic regions face different corruption related challenges.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Corruption Perceptions</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Transparency International is a non-governmental watchdog promoting anti-corruption in the world. It publishes an annual Corruption Perception Index, ranking 180 countries and territories by their perceived levels of public sector corruption, predicated on information provided by experts and businesspeople.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Middle East consists of a variety of jurisdictions, many of which are far from homogenous. While some of the countries are still subject to weaker public institutions due to, e.g.; internal conflict, a number of countries in the Middle East, such as Jordan and Lebanon, are taking positive steps towards fighting corruption and increasing transparency and integrity in their societies. The hard work conducted by local governments in the Middle East is gradually attracting the attention of the rest of the world.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This year, the United Arab Emirates (\"UAE\") ranked higher on the index than ever before. The UAE reached the 21st position in the ranking being the frontrunner of the Middle East. According to Transparency International, this may be due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure in the UAE. In 2016, the UAE carried out a significant reform of its criminal laws, which may be reflected in the Index as well.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Nordic countries usually score highest in international anti-corruption rankings. According to the latest Corruption Perceptions Index, Denmark was ranked the 2nd least corrupt country in the world, after New Zealand. Finland and Norway shared 3rd spot and Sweden ranked 6th. Iceland, holding 13th position, appears to be an outlier among Nordic countries.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Considering the rankings, one may ask whether Nordic countries are perhaps a safe-harbour from corruption. Despite the apparently excellent reputation, do corruption related risks still exist for businesses in the Nordics? Are the Nordic Countries the complete opposite to the Middle East?</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Finland: There is a snake in paradise</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite direct bribery being relatively rare in Finland and the rest of the Nordic jurisdictions, the existence of conflicts of interest and the lack of transparency in declaring conflicts of interest have turned out to be a common feature of the Nordic countries. This may be difficult to detect considering it is an inherently subjective evaluation. I suggest corruption does exist in Nordic countries, but that it has taken forms that are relatively difficult to detect by researchers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the aftermath of its evaluation round in September 2017, GRECO issued recommendations to Finland aimed at improving its anti-corruption regime, such recommendations being published in March 2018. Six of the recommendations issued by GRECO concerned senior government officials and ministers, and eight of them law enforcement authorities. Regarding law enforcement agencies, GRECO recommends that the Police and the Border Guard develop a dedicated anti-corruption strategy or policy, compile a code of conduct and specify their guidelines for secondary employment, organise training on the prevention and combating of corruption, and reinforce ethical practices in their career-related processes. In addition, it is recommended that the police enhance their risk management, internal oversight, and procedures to be followed by their officials when taking up secondary employment.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">When it comes to whistleblower protection, GRECO recommends that the Police and the Border Guard be obliged to report suspicions of corruption and that protection of the whistleblowers be enhanced. At the moment, Finnish law does not include all-encompassing provisions protecting whistleblowers, applicable across different industries and, as a result, whistleblowers are practically protected only by the provisions in the Employment Act regulating grounds for dismissal. When it comes to the GRECO anti-corruption recommendations with regards to judges, public prosecutors and Members of Parliament, the Finnish Ministry of Justice announced in May 2018 that it has duly implemented all the recommendations. Also, the current Minister of Labour is strongly promoting enhancing whistleblower protection in Finland according to his political agenda.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8084 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_138713570-1024x683.jpg\" alt=\"\" width=\"570\" height=\"380\" />Sweden: a recent extraterritoriality exercise in the telecommunications sector</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Finland is not the only Nordic jurisdiction that has recently encountered serious corruption allegations. In Sweden, a local leading telecommunications company and its Uzbek subsidiary admitted paying (on multiple occasions between 2007 and 2010) more than USD 331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecommunications industry. The telecommunications operator, which used to be a listed company in New York, used US bank accounts to move the bribery related assets, which triggered the involvement of the US authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In 2017, the company reached a settlement involving the anti-corruption authorities of the United States, the Netherlands and Sweden. In the United States, the company entered a deferred prosecution agreement agreeing to pay the fine, implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals. The U.S. authorities agreed to credit any disgorged profits paid to the Swedish and Dutch authorities as a result of related national proceedings in Sweden and in the Netherlands.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the criminal proceedings faced by the company, the individual directors involved are now being prosecuted in Sweden for bribery. According to the prosecutor, the company paid the authorities to make a preferred decision when considering its operational licenses in Uzbekistan and the prosecuted directors in question were aware of the bribery or even took initiative in the matter.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The loopholes relating to gifts and hospitality in the Middle East</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In Europe and in the United States, there is a common trend of companies becoming extremely cautious when it comes to hospitality and gifts, including business to business relationships. Public officials aside, one of the most common corruption related issues that businesses often struggle with is to understand where to draw the line between illegitimate and legitimate, or sometimes even expected, provision of business gifts and hospitality in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">There are different legislative approaches to private sector bribery in the Middle East. For example, the UAE has explicitly criminalised bribery in business in Article 236 bis of the Federal Law No. 3 of 1987 as amended by the Federal Decree Law No. 7 of 2016 (\"UAE Penal Code\"). Another example can be found in Qatar where passive bribery i.e. accepting illegitimate benefits in the private sector has been criminalised in Article 146 of the Law Number 11 of 2004 (\"Qatar Penal Code\")..</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In light of the above, and importantly for companies doing business in the Middle East, it is highly recommended to adopt restrictive hospitality policies in order to avoid bribery risks in relation to both the public and the private sector. It should be noted that the anti-bribery laws in the Middle East do not usually include exceptions when it comes to gifts of only nominal value, if the corrupt intent can be proven. Also, the definition of a public official tends to be relatively broad resulting e.g. employees of many companies subject to (partial) government ownership being regarded as public officials.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8083\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/20-1024x683.jpg\" alt=\"\" width=\"640\" height=\"427\" />Key take home for global businesses: global vigilance</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The above examples indicate that regardless of the jurisdiction - whether the Middle East, the high ranking Nordic countries or elsewhere in the world, no business is entirely safe from corruption related risks. International rankings aside, businesses should pay attention to corruption risks and implement strict compliance policies. As demonstrated above, there is no safe-harbour when it comes to corruption risk management.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Adopting an anti-bribery policy is always advisable irrespective of whether the law so obliges. The policy should be embedded in the business procedures of the company, accompanied by quality training of the personnel at regular intervals to identify and avoid compliance risks.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Similarly to compliance policies, legislators have adopted different approaches to whistleblowing regulations. Businesses should not hesitate to go beyond the statutory requirements and implement independent whistleblowing channels to help foster a compliance culture in their organisations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is important to note that bribery is only one aspect of corruption. As demonstrated above, corruption can take many forms. Detecting and avoiding conflicts of interest in business operations can work against presuming corrupt intent, due to which businesses are advised to include relevant provisions on excluding conflicted employees from decision making in order to manage corruption risks. Even though the examples set out above include significant intentional bribery, in many jurisdictions bribery offences are criminalised even if the offence is not intentionally committed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to local laws and local law enforcement, the extraterritorial effect of certain foreign anti-corruption laws should be observed. For example, US Foreign Corrupt Practices Act (\"FCPA\") is widely known to be enforced also in respect of corruption offences taking place outside the United States. Transacting in US Dollars or employing US citizens may trigger the application of the FCPA and enforcement thereof by US authorities irrespective of the location of the business or any potential bribery activity, including in the Middle East. Businesses are recommended to adopt anti-corruption policies and accounting standards that meet the requirements of all the statutes potentially applicable to their operations. It seems that national authorities are working closely together to resolve cross-border bribery matters making it more difficult for the offenders to escape the jurisdiction of national authorities in an international context.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It seems that the Nordics can no longer take their high ranking in the Transparency International Corruption Perceptions Index for granted. This is partly due not only to international watchdogs, but also legislators and law enforcement authorities realising that the roots of corruption are embedded in conflict of interest which is a prevalent issue in the Nordic countries. At the same time, other countries are also working hard towards efficient enforcement of anti-corruption laws which makes competition at the top level fiercer than ever.</p>\r\nAs Transparency International and intergovernmental bodies, such as the United Nations, do not solely consider the content of laws and enforcement statistics, making general changes in improving transparency and integrity in the public sector may also yield a positive effect on anti-corruption. Importantly for businesses, it should be noted that bribery is widely criminalised in the Middle East and bribery laws actively enforced. The efforts made by the governments in the Middle East are gradually being recognised in the international domain.'),
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(265731, 25708, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n <em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em>');
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At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. 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The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\nFor further information please contact Shiraz Khan, (s.khan@tamimi.com).'),
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(265735, 25708, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. 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At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\nFor further information please contact Shiraz Khan, (s.khan@tamimi.com).|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n <em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em>'),
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(265781, 25712, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n&nbsp; <p dir=\"LTR\" align=\"LEFT\"><em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em></p>'),
(265782, 25712, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n <em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em>'),
(265783, 25712, 'MetaLink', 'content'),
(265784, 25712, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7942&amp;action=edit');
INSERT INTO `tm_wsal_metadata` (`id`, `occurrence_id`, `name`, `value`) VALUES
(265785, 25712, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n <em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n&nbsp; <p dir=\"LTR\" align=\"LEFT\"><em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em></p>'),
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(265864, 25719, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8050  alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/hgfhf-796x1024.jpg\" alt=\"\" width=\"363\" height=\"467\" />In this month’s special feature of Law Update we focus on our Sports &amp; Events Management Group, as well as our Expo 2020 practice, and the interesting client issues and sector trends that have been brought into focus over the course of the past year and those which we anticipate will arise in the future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Particular highlights of this edition include an in-depth look at the on-going privatization of football clubs in KSA; an overview of the role that blockchain and other FinTech will play in the sports and events sector going forwards; a look at the rapidly developing regulatory concerns in the nascent e-Sports market; and a special focus on the ramp-up to the grand spectacle that will be Expo 2020.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is beyond doubt that the sports and events sector is booming both globally and regionally. Industry reports predict that the global events industry will grow by 44% between 2017- 2020. In Dubai alone, which now hosts over 300 regular sporting events attracting over 1 million attendees, annual expenditure relating to sport has grown to over $1.7bn. Such growth is symptomatic of the ever-increasing appetite of governmental and non-governmental entities to embrace the sector.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For governmental bodies, events (both sporting and non-sporting) can act as powerful drivers of economic development, which positively impact upon tourism, public health, national pride, social progression and, ultimately, a country’s international reputation. One need look no further than KSA to see how sport can be utilised as a conduit for social reform, with women being allowed to attend football games for the first time in 2018. For brands too, events offer an irresistible platform to promote products in an increasingly digital age. In particular, they offer an opportunity to capture the elusive attention of ‘Millennials’ in an increasingly crowded marketplace. This key demographic demands authenticity in the brands they choose and events can help create an authentic brand experience and story, as shown by consumer surveys identifying that 87% of consumers purchase products relating to a brand’s event after attending.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The outlook is not necessarily uniform across the GCC, either in terms of sports and events background or commitment to further development of the sector. We expect that KSA and the UAE will continue to take a lead in these areas, particularly in support of their respective long-term economic development and diversification plans; however, there are significant opportunities elsewhere in the region that will bring opportunities for well-positioned clients, particularly in Qatar (in the build-up to the 2022 World Cup) and Bahrain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">With Expo 2020 on the immediate horizon, the time to turn good planning and mindful preparation into active strategies to position participants, suppliers and stakeholders across the spectrum is squarely upon us as stakeholders in the sector. These are also certainly exciting times for the Sports and Events Management industry in the Middle East. With a history of success built in a short period of time over a wide array of events, there is a level of expectation and diversification that suggests the sports and events landscape remains promising. We will continue to closely monitor these developments with our local presence throughout the region whilst engaging with regulators and stakeholders to ensure our clients are best placed to seize the inevitable opportunities that will arise.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We hope you will find this edition interesting and information. If you have any queries in relation to any of the articles featured or any other aspect of the Sport &amp; Events Management sector, our dedicated team of sector experts across our network of regional offices will be only too happy to assist.</p>'),
(265865, 25719, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8050 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/hgfhf-796x1024.jpg\" alt=\"\" width=\"363\" height=\"467\" />In this month’s special feature of Law Update we focus on our Sports &amp; Events Management Group, as well as our Expo 2020 practice, and the interesting client issues and sector trends that have been brought into focus over the course of the past year and those which we anticipate will arise in the future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Particular highlights of this edition include an in-depth look at the on-going privatization of football clubs in KSA; an overview of the role that blockchain and other FinTech will play in the sports and events sector going forwards; a look at the rapidly developing regulatory concerns in the nascent e-Sports market; and a special focus on the ramp-up to the grand spectacle that will be Expo 2020.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is beyond doubt that the sports and events sector is booming both globally and regionally. Industry reports predict that the global events industry will grow by 44% between 2017- 2020. In Dubai alone, which now hosts over 300 regular sporting events attracting over 1 million attendees, annual expenditure relating to sport has grown to over $1.7bn. Such growth is symptomatic of the ever-increasing appetite of governmental and non-governmental entities to embrace the sector.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For governmental bodies, events (both sporting and non-sporting) can act as powerful drivers of economic development, which positively impact upon tourism, public health, national pride, social progression and, ultimately, a country’s international reputation. One need look no further than KSA to see how sport can be utilised as a conduit for social reform, with women being allowed to attend football games for the first time in 2018. For brands too, events offer an irresistible platform to promote products in an increasingly digital age. In particular, they offer an opportunity to capture the elusive attention of ‘Millennials’ in an increasingly crowded marketplace. This key demographic demands authenticity in the brands they choose and events can help create an authentic brand experience and story, as shown by consumer surveys identifying that 87% of consumers purchase products relating to a brand’s event after attending.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The outlook is not necessarily uniform across the GCC, either in terms of sports and events background or commitment to further development of the sector. We expect that KSA and the UAE will continue to take a lead in these areas, particularly in support of their respective long-term economic development and diversification plans; however, there are significant opportunities elsewhere in the region that will bring opportunities for well-positioned clients, particularly in Qatar (in the build-up to the 2022 World Cup) and Bahrain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">With Expo 2020 on the immediate horizon, the time to turn good planning and mindful preparation into active strategies to position participants, suppliers and stakeholders across the spectrum is squarely upon us as stakeholders in the sector. These are also certainly exciting times for the Sports and Events Management industry in the Middle East. With a history of success built in a short period of time over a wide array of events, there is a level of expectation and diversification that suggests the sports and events landscape remains promising. We will continue to closely monitor these developments with our local presence throughout the region whilst engaging with regulators and stakeholders to ensure our clients are best placed to seize the inevitable opportunities that will arise.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We hope you will find this edition interesting and information. If you have any queries in relation to any of the articles featured or any other aspect of the Sport &amp; Events Management sector, our dedicated team of sector experts across our network of regional offices will be only too happy to assist.</p>'),
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(265868, 25719, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8050 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/hgfhf-796x1024.jpg\" alt=\"\" width=\"363\" height=\"467\" />In this month’s special feature of Law Update we focus on our Sports &amp; Events Management Group, as well as our Expo 2020 practice, and the interesting client issues and sector trends that have been brought into focus over the course of the past year and those which we anticipate will arise in the future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Particular highlights of this edition include an in-depth look at the on-going privatization of football clubs in KSA; an overview of the role that blockchain and other FinTech will play in the sports and events sector going forwards; a look at the rapidly developing regulatory concerns in the nascent e-Sports market; and a special focus on the ramp-up to the grand spectacle that will be Expo 2020.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is beyond doubt that the sports and events sector is booming both globally and regionally. Industry reports predict that the global events industry will grow by 44% between 2017- 2020. In Dubai alone, which now hosts over 300 regular sporting events attracting over 1 million attendees, annual expenditure relating to sport has grown to over $1.7bn. Such growth is symptomatic of the ever-increasing appetite of governmental and non-governmental entities to embrace the sector.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For governmental bodies, events (both sporting and non-sporting) can act as powerful drivers of economic development, which positively impact upon tourism, public health, national pride, social progression and, ultimately, a country’s international reputation. One need look no further than KSA to see how sport can be utilised as a conduit for social reform, with women being allowed to attend football games for the first time in 2018. For brands too, events offer an irresistible platform to promote products in an increasingly digital age. In particular, they offer an opportunity to capture the elusive attention of ‘Millennials’ in an increasingly crowded marketplace. This key demographic demands authenticity in the brands they choose and events can help create an authentic brand experience and story, as shown by consumer surveys identifying that 87% of consumers purchase products relating to a brand’s event after attending.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The outlook is not necessarily uniform across the GCC, either in terms of sports and events background or commitment to further development of the sector. We expect that KSA and the UAE will continue to take a lead in these areas, particularly in support of their respective long-term economic development and diversification plans; however, there are significant opportunities elsewhere in the region that will bring opportunities for well-positioned clients, particularly in Qatar (in the build-up to the 2022 World Cup) and Bahrain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">With Expo 2020 on the immediate horizon, the time to turn good planning and mindful preparation into active strategies to position participants, suppliers and stakeholders across the spectrum is squarely upon us as stakeholders in the sector. These are also certainly exciting times for the Sports and Events Management industry in the Middle East. With a history of success built in a short period of time over a wide array of events, there is a level of expectation and diversification that suggests the sports and events landscape remains promising. We will continue to closely monitor these developments with our local presence throughout the region whilst engaging with regulators and stakeholders to ensure our clients are best placed to seize the inevitable opportunities that will arise.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We hope you will find this edition interesting and information. If you have any queries in relation to any of the articles featured or any other aspect of the Sport &amp; Events Management sector, our dedicated team of sector experts across our network of regional offices will be only too happy to assist.</p>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8050  alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/hgfhf-796x1024.jpg\" alt=\"\" width=\"363\" height=\"467\" />In this month’s special feature of Law Update we focus on our Sports &amp; Events Management Group, as well as our Expo 2020 practice, and the interesting client issues and sector trends that have been brought into focus over the course of the past year and those which we anticipate will arise in the future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Particular highlights of this edition include an in-depth look at the on-going privatization of football clubs in KSA; an overview of the role that blockchain and other FinTech will play in the sports and events sector going forwards; a look at the rapidly developing regulatory concerns in the nascent e-Sports market; and a special focus on the ramp-up to the grand spectacle that will be Expo 2020.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is beyond doubt that the sports and events sector is booming both globally and regionally. Industry reports predict that the global events industry will grow by 44% between 2017- 2020. In Dubai alone, which now hosts over 300 regular sporting events attracting over 1 million attendees, annual expenditure relating to sport has grown to over $1.7bn. Such growth is symptomatic of the ever-increasing appetite of governmental and non-governmental entities to embrace the sector.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For governmental bodies, events (both sporting and non-sporting) can act as powerful drivers of economic development, which positively impact upon tourism, public health, national pride, social progression and, ultimately, a country’s international reputation. One need look no further than KSA to see how sport can be utilised as a conduit for social reform, with women being allowed to attend football games for the first time in 2018. For brands too, events offer an irresistible platform to promote products in an increasingly digital age. In particular, they offer an opportunity to capture the elusive attention of ‘Millennials’ in an increasingly crowded marketplace. This key demographic demands authenticity in the brands they choose and events can help create an authentic brand experience and story, as shown by consumer surveys identifying that 87% of consumers purchase products relating to a brand’s event after attending.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The outlook is not necessarily uniform across the GCC, either in terms of sports and events background or commitment to further development of the sector. We expect that KSA and the UAE will continue to take a lead in these areas, particularly in support of their respective long-term economic development and diversification plans; however, there are significant opportunities elsewhere in the region that will bring opportunities for well-positioned clients, particularly in Qatar (in the build-up to the 2022 World Cup) and Bahrain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">With Expo 2020 on the immediate horizon, the time to turn good planning and mindful preparation into active strategies to position participants, suppliers and stakeholders across the spectrum is squarely upon us as stakeholders in the sector. These are also certainly exciting times for the Sports and Events Management industry in the Middle East. With a history of success built in a short period of time over a wide array of events, there is a level of expectation and diversification that suggests the sports and events landscape remains promising. We will continue to closely monitor these developments with our local presence throughout the region whilst engaging with regulators and stakeholders to ensure our clients are best placed to seize the inevitable opportunities that will arise.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We hope you will find this edition interesting and information. If you have any queries in relation to any of the articles featured or any other aspect of the Sport &amp; Events Management sector, our dedicated team of sector experts across our network of regional offices will be only too happy to assist.</p>'),
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(265921, 25724, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-large wp-image-8085\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/shutterstock_727827781-Converted-01-1024x724.png\" alt=\"\" width=\"640\" height=\"453\" />The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em></p>'),
(265922, 25724, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright wp-image-8016 \" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/21-379x1024.jpg\" alt=\"\" width=\"305\" height=\"824\" />The introduction of VAT in the UAE at the start of 2018, was a major change for businesses, Shiraz Khan of Al Tamimi &amp; Company looks back on how they should have tackled the implementation phase and what their priorities should be going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The UAE’s VAT system is broadly based on common prin-ciples that have been agreed by all GCC countries in the Uniﬁed GCC VAT Agreement. These include certain ar-eas which all the individual GCC countries are required to follow. For example, the mandatory and voluntary registration thresholds were set by the GCC VAT Agreement. The standard VAT rate of 5% was also ﬁxed by the GCC VAT Agreement across the GCC. However, individual GCC countries do have some freedom to determine the application of VAT on some matters such as the VAT treatment of certain sectors and industries.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>UAE Legislation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">UAE VAT legislation is made up of Federal Decree Law No. 8/2017 on VAT (the VAT Law) and Cabinet Decision No. 52/2017 on the Executive Regulations to the VAT Law (VAT Executive Regula-tions). The Federal Decree-Law No. 8/2017, which was published in August 2017, sets out the UAE VAT rules. The Executive Regula-tions which were issued in November 2017 deal with the detailed application of the VAT Law’s provisions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, the Federal Tax Authority (FTA), which was formed under Federal Decree-Law No. 13/ 2016 on the Establishment of the FTA is responsible for the administration, management, collection and enforcement of VAT and all other current and future Federal taxes. At present VAT and excise tax are the only taxes at the Federal level. Federal Law No. 7/2017 for Tax Procedures and Cabinet Decision No. 36/2017 on the Executive Regulations on Tax Procedures are also relevant in this context as they provide a procedural framework that is applied across all Federal Taxes. This includes details and requirements related to tax registra-tion, ﬁling of tax returns and settlement of taxes, tax audits, appeals and penalties as well as FTA and taxpayers’ rights and obligations.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Implementation Challenges</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of VAT was a major change for businesses operating in the UAE. In order to prepare for it, busi-nesses had to complete a number of steps before VAT came into force. These included analysing the impact of VAT on their operations and across many diﬀer-ent functions including Legal, Finance, IT, Human Resources, Procurement, Sales, Marketing and Strategy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Businesses had to review and deter-mine the VAT treatment of all their sales and purchase transactions and understand their resulting compli-ance obligations. In addition, they had to assess the capability of their existing IT system or software to produce auto-matic VAT reporting and consider if an upgrade would be suﬃcient or they would need a whole new system. It was also important for organisa-tions to make changes to their business processes, including invoicing and record keeping so they were compliant with the new VAT legislation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a legal perspective, it was necessary to review existing contracts with customers to check if they needed to renegotiate contracts which had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order to achieve this objective and manage relationships with customers, communication with customers was required. It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices which would facilitate the recovery of VAT. Finally, businesses had to evaluate the cash ﬂow implications and their working capital requirements as a result of now having to pay VAT before they received payments from customers.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">All in all, a signiﬁcant amount of work had to be undertaken by businesses to be ready for VAT. In other jurisdictions such as Malaysia when a similar goods or services tax (known as GST) was implemented, companies there typically needed around six to 18 months to prepare for the change depending on the size and complexity of their operations and transactions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparation Time</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Although some of the large multinational groups in the UAE began their preparations in 2016 or in the beginning of 2017, many busi-nesses in the UAE took a reactive approach instead and decided to wait until the publication of the complete VAT legislation in November before taking any action. There was also an expectation or possibly a hope in the UAE business community that the imple-mentation of VAT would be delayed by the UAE Government based on previous experience in the UAE. (Although, this was despite an indication from the FTA in early 2017 that VAT would be imple-mented on 1 January 2018 and the fact the VAT Law also conﬁrmed that VAT would be implemented by this date when it was published in August 2017.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In hindsight, once the UAE Government had taken a decision to implement VAT on 1 January 2018 and this fact was conﬁrmed by the VAT law, businesses could have done more and been more proactive with their VAT preparations. VAT is not a new tax and it or a similar tax exists in more than 160 other countries around the globe. In addition, the UAE VAT law is is largely based on the EU VAT rules and Malaysian GST system. In addition, the GCC VAT Agreement on which UAE VAT legislation was based was also published in the ﬁrst half of 2017. So as far as the UAE is concerned, although the ﬁnal VAT Executive Regulations were not published until November 2017, most of the information in these regulations had already been made available by the FTA earlier in the year as part of an awareness campaign. So, a signiﬁcant amount of information was already available in the public domain even before the VAT Executive Regulations were published and it was suﬃcient to enable businesses to begin their preparations. In fact, most of the information in the VAT Executive Regulations was already known before these Regulations were issued. It would have been better for businesses to begin preparation before the VAT Executive Regulations were issued based on the known information at that time and then validate any assumptions or conﬁrm positions after the regulations were issued in November 2017. Unfortunately, in the UAE, many businesses took the wrong approach and instead waited for the regulations before even beginning this work which meant they only had one month to get ready. A few businesses were even taken by surprise by the introduction of VAT despite the fact the FTA, tax advisers and the local and business press had conducted an awareness campaign throughout 2017.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The Role of the Federal Tax Authority</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Many businesses operating in the UAE appear to have misun-derstood the role of the FTA. The FTA is a new tax authority, the legislation establishing it was published towards the end of 2016 and it only began recruiting staﬀ in the middle of 2017.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">As with any tax authority in mature tax jurisdictions, the FTA’s primary role is to administer, collect and enforce Federal taxes and apply procedures which are related to these taxes. Although it will issue technical guidance to the public on tax matters, like any tax authority, it is not responsible for advising businesses on their tax obligations or on the VAT implications of their transac-tions. Unfortunately, a number of businesses have not understood what the responsiblities of the FTA are and are currently trying to contact the FTA helpline or meet FTA representatives to obtain tax advice, although this is not part of their role. Like many tax authorities in other countries, the FTA, particularly as it is a new body, has very limited resources. With over 300,000 businesses now registered for VAT in the UAE, clearly it is not possible for the FTA to engage directly with all of them and provide tax advice particularly as this is not a part of their remit. As is the case in all other tax jurisdictions, businesses should seek tax advice from a reputable professional services ﬁrm rather than tax authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The FTA have conducted a country-wide campaign to increase awareness, through a series of seminars on VAT introduction in 2017. Given their limited resources, the scale of this campaign has been impressive and is unprecedented even by the standards of more mature tax jurisdictions. Although, some businesses may disagree, it was never realistic to expect a new tax authority like the FTA to personally visit every registered business just to tell them VAT was being introduced. The onus was also on these busi-nesses to speak to advisers and read the many articles which have been published in newspapers and business magazines on the subject.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Interpretation</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is easy to mistakenly assume that since the VAT legislation has been issued now, its interpretation will be straightforward and the VAT treatment of all transactions will be clear. In many countries where VAT has been in place for some time, guidance tends to be sought from the published practice of the tax authority in the form of public notices and circulars. Case law precedent is also relied on to check how the courts have decided cases with similar facts in the past. In such countries, VAT law continues to evolve and even decades after its implementation uncertainty remains, as such, the tax authorities in these countries continue to be involved in disputes with businesses, new cases on complex VAT issues continue to be heard by the courts and new schemes are introduced to take into account unique circumstances and industry speciﬁc issues. Similar developments can be expected in the UAE as the UAE VAT legisla-tion has only been eﬀective for just over three months and there is currently no case law from which guidance can be obtained. It will also take time for the FTA’s practice to develop as they audit businesses’ VAT returns and encounter diﬀerent situations. In the future, the FTA will no doubt make further guidance available and new schemes may be announced to take account of diﬀerent industries issues. Any disputes with the FTA will be subject to a three-tier appeal system. Businesses who have a dispute with the FTA, will have the right to ask them to reconsider their decision, and the matter will then be referred to another inspector. An objec-tion against the FTA’s reconsideration decision may then be made to an independent tax disputes resolution committee made up of a judge and two tax experts. Appeals may be made against that committee’s decision to a competent court.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What should businesses do now?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As VAT has been implemented and ﬁling deadlines are approach-ing, the focus for businesses has shifted from VAT implementa-tion to the preparation of their ﬁrst VAT return. Companies are currently trying to identify and conﬁrm the VAT treatment of their transactions so they are able to ﬁle a complete and correct tax return. The completion of the tax return may seem a simple, straightforward task, but the department (and in some cases the individual) within the organisation who ﬁles the return on behalf of the business will be held responsible for the tax positions taken in that return regardless of whether the compliance work was outsourced. The relevant department will usually be the tax department, but it could be the legal or ﬁnance department. Given VAT is a new law, there may be uncertainty on many technical posi-tions which could create risk and this has to be taken seriously as penalties for non-compliance, including incorrect tax returns, could be as high as 300% of the tax amount due. Therefore the person responsible for this area must proactively manage this risk by obtaining professional tax advice from a reputable ﬁrm if there are uncertainties and should also document this advice for internal risk management. Going forward, it will be a challenge for FTA, tax advisers and businesses to interpret and apply the provisions of the new VAT legislation. Although VAT will involve a compliance cost for businesses, given the potential risks and penalties, it is important when ever there is uncertainty, busi-nesses work with a trusted tax adviser and navigate logically through any areas of doubt.</p>\r\n&nbsp; <p dir=\"LTR\" align=\"LEFT\"><em>For further information please contact Shiraz Khan, (s.khan@tamimi.com).</em></p>'),
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