Media Coverage

Egypt, situated in a strategic geopolitical location which gives it an ideal advantage of access to the markets through various trade agreements i.e. Pan Arab Free Trade Agreement/ Greater Arab Free Trade Agreement (GAFTA), Common Market for Eastern and Southern Africa (COMESA), Egypt-MERCOSUR Free Trade Agreement etc. Being a party to such trade agreements gives Egypt access to 1.5 billion consumers of which 100 million consumers are in Egypt. Further, the international reports indicate that Egypt continues to progress i.e. according to the World Bank Report, Egypt ranked 114th out of 190 countries instead of 120 in 2019. In facilitating start-ups, Egypt ranked 90 in 2020 instead of 109 in 2019; In Protecting Minority Investors, Egypt jumped 15 positions from 72 to 57 due to legislative reforms. The reports, also, expect the Egyptian economy to grow at 6% in 2021 instead of 5.8% in2020. To have a Legal presence in Egypt, one of the following entities may be established:Limited Liability Company “LLC”;Joint Stock Company “JSC”;Sole Individual Limited Company;Branch;Representative Office; We will concentrate on the most common two preferred types by investors:Limited Liability Company’s Characteristics:It should consist of, at least, two partners.Capital shall be divided into allocations.The partners may be individuals or legal entities.It will be managed by a Manager or group of Managers.There is no minimum capital requirement. In the past, the capital should be fully deposited before establishment however, this condition has been lifted to ease the establishment process. Except for certain activities i.e. importation It may be fully owned by foreigners except for importation purposes. In past importations, the purpose was limited to only Egyptians however, the condition has been lifted to encourage investment in Egypt. Currently, foreigners may establish a company with the purpose of which is importation provided that the percentage of foreigners’ participation should not be more than 49%.There is no Egyptian Manager. The liability of the partner vis-à-vis third parties will be limited to his/her allocation.Investors preferred this type to examine the market, first, before expanding. Joint Stock Company “JSC” Characteristics: It should consist of, at least, three shareholders;Capital shall be divided into shares;The shareholders may be individuals or legal entities; It will be managed by a board of directors to be elected by the shareholders;The minimum capital is EGP 250.000 and for certain purposes, the capital should be raised to EGP 500.000. The capital will not fully be deposited upon the establishment. 10% will be added before establishment to be raised to 25% within three months of the establishment to be fully deposited within five years. May be fully owned by foreigners except for importation purposes. The liability of the partner vis-à-vis third parties will be limited to his/her shares.Tax Treatment:Both entities are subject to an annual tax of 22.5 % on the net profits. 

Amazon founder Jeff Bezos has announced that he will be stepping down as CEO of the Seattle-based eCommerce giant this summer. As part of a group of leading business and entrepreneurial figures in the UK, Our CEO, Zain Ali shares his opinion on this transition in an article for Business Leader Magazine. “From starting as an online bookstore to becoming the world’s most valuable company, Jeff Bezos’ reign as founder and CEO of Amazon has been an overwhelming success. Whilst there are a number of question marks surrounding ethics relating to anti-trust and worker conditions, which should not be ignored, the most remarkable features of Amazon have to be its innovation. Under Bezos’ management, Amazon has always been one step ahead, pioneering online retail when people did not know what the internet was, building up mass revenues from behind the scenes with cloud computing, and now dominating the AI smart device market with Alexa. The way Amazon has also tackled international expansion and adapted to local markets such as offering in-store credits for the unbanked to deposit cash in developing regions has always been striking. Bezos’ grit for problem-solving and focusing on the end consumer is a big contributor to the company’s success.The fact that Bezos is stepping down to focus on new ventures may actually mean there is even more innovation to come from Amazon, with time potentially freed up for more creative thinking. Having slogged for almost three decades, and achieved sales exceeding $386 billion in 2020, now is as good a time as any to take a step back, enjoy the success and focus on other passions. It will be interesting to see how Bezos manages to transition from out of a role of absolute control and power after so many years and how his successor will fare.”Read the full article here.

Covid infection rates and vaccine trials have dominated news headlines. Yet, our intense focus on the pandemic has overshadowed the progress being made in other areas. One important news item that may have an enormous impact on the world is the Regional Comprehensive Economic Partnership Agreement (RCEP).RCEP is a free trade agreement between the Association of Southeast Asian Nations (ASEAN) members and six other regional countries: Australia, China, India, Japan, New Zealand, and the Republic of Korea.Notably, RCEP is the first multilateral trade agreement in which China has participated. India had initially been in the negotiations but subsequently pulled back, although the members have indicated that India still has the potential to join in the future.The agreement was signed in November of 2020 and is the largest trade deal globally, outsizing the EU and the US-Mexico-Canada Agreement. RCEP signatories also represent one-third of the world population and almost 30% of global GDP, percentages that would increase significantly should India come on board.And while many of the member countries have existing bi-lateral trade agreements, under RCEP each country is treated equally across the trading block, breaking down barriers and complications. That in and of itself should make negotiations easier and help to lower costs.Additionally, by reducing complicated tariffs between members, RCEP has the potential to increase intra-Asian trade and investment. The favourable treatment of “Common Rules of Origin” written into the pact should also encourage foreign investors to enter the region. Overall, RCEP will make doing business within Asia easier and more beneficial to all parties involved.The true impact of RCEP will become clearer over time, although it is expected that the “big three” East Asian countries of China, Japan, and the ROK will benefit most in the short term, with a combined potential export gain of over USD 400 billion.Members will also wait to see if the new Biden administration can move quickly to assert more influence on the world stage. If the US does decide to join the pact at a later point, it would represent an effective counterbalance to China, however at the same time serve to dilute the overall regional impact of the agreement. For the time being, all eyes are on the ratification process expected to conclude later this year, with approval needed by six ASEAN countries and three non-ASEAN members.More information can be found here: https://rcepsec.org/  

Concession for Visas Expired During Lockdown and Permanent ResidentsAs per an extended Ministerial exemption, no-one whose visa has expired during or shortly before the lockdown will be penalized. Persons with visas that have expired after 15 February are permitted to stay in the country, leave the country or make an application for a new visa, until 31 January 2021 without being declared illegal, undesirable or having to be legalized first. Short-term visitors (or “tourist”) visas that have expired during this time will not be extended again. Such tourist visa extensions are only granted to persons who arrived in the country after the re-opening of borders in September. Due to high volumes of applications and limited capacity under Covid-10 restrictions, securing appointments for applications or collections of outcomes has become increasingly difficult. You are welcome to contact us should you require assistance.Others affected by the travel restrictions and the health risks of travelling during the pandemic may also benefit from concessions. According to information received by Imcosa, permanent residents who have spent an extended time outside the country and were prevented from returning to South Africa during 2020 to avoid the lapsing of their permits (usually the case after an absence from the country of longer than 3 years), will not lose their status. Similarly, persons who have received their permanent residence, but not been able to take up residence in South Africa within the specified period, will not lose their status. Official confirmation of this concession is still being awaited.Visa Applications Open, Permanent Residence and Citizenship (Largely) NotThe Department of Home Affairs, its service provider VFS Global and most South African Embassies and Consulates abroad are open for short- and long-term visa applications, waivers and appeals. In fact, local visa applications are being processed comparatively fast. Permanent residence results are being issued and can be collected. However, due to the restrictions of Covid-19 regulations, offices can only work with a much-reduced staff contingent and thus at a lower capacity. Thus, applications for permanent residence and citizenship are not yet possible (with few exceptions which accept citizenship applications). Understandably, managing large numbers of people safe during this time is a challenge. Every Covid case on-premise leads to the closing of an office for 7-10 days, which further increases the pressure on the system. We, therefore, feel that the appeal for our patience is a reasonable one. We are hoping that further applications will open during the first term of 2021.Visa Concessions for Seconded WorkersTo promote economic growth and accommodate persons currently seconded to South Africa, holders of intra-company transfer visas may now apply to have their visas extended locally by another two years! This comes as a great relief to seconded experts and their families who can now avoid having to return to their home countries and awaiting an outcome there. The concession applies to those whose visas expired during a lockdown or will expire by the end of June 2021. For further information and assistance, you are welcome to contact our team. Go Global by Centuro GlobalFor those looking to expand their business into South Africa, Go Global is a free revolutionary new global expansion platform that empowers companies with the knowledge and expertise to trade in any jurisdiction globally.Our easy to use, self-service portal will grant access to a database of South African business expansion blueprints, a global network of experts & actionable support. Sign up for your free account and start your global expansion journey today.

Since joining the EU in May 2004 and the Eurozone in 2008, Malta has become an attractive financial services centre which serves as a base for international investors for their activities. Malta offers various benefits to companies that are either resident or registered in Malta including a skilled workforce, low operational costs, various tax incentives and a double tax treaty network with over seventy countries.Company Tax RateIn terms of Maltese income tax legislation, a company is a resident in Malta if it is incorporated in Malta. If the company is incorporated outside Malta, it is still resident in Malta, if its effective management and control are exercised in Malta. Companies are subject to tax in Malta at the standard corporate tax rate of 35%.Full Imputation SystemMalta adopts the full imputation system, which means that shareholders of a Malta company, will be entitled to a tax credit equivalent to the tax paid by the company upon a distribution of profits. The purpose of the imputation system is to eliminate any economic double taxation that might arise on the distribution of dividends, meaning that company profits will not be subject to tax twice, first at the corporate level, then at the shareholder level. The highest rate of tax applicable to individual shareholders is equivalent to the corporate rate of tax (35%), meaning that no further tax will be due on the distribution of profits.Tax Accounting for CompaniesCompanies must allocate their profits to one of the following tax accounts:Foreign Income Account (FIA) - royalties, dividends, capital gains, interest and other passive income arising outside Malta are allocated to this account.Maltese Taxed Account (MTA) - profits of a company which are not allocated to the FIA and which have suffered Malta tax are allocated to this account.Immovable Property Account (IPA) - profits derived from transfers of immovable property situated in Malta and from other activities which are related directly or indirectly to immovable property situated in Malta are allocated to this account.Final Tax Account (FTA) - profits which are exempt from tax and which are also exempt in the hands of the shareholders upon distribution are allocated to this account.Untaxed Account (UA) – the difference between the company’s accounting profits (or losses) and the total amounts allocated to the above four tax accounts are allocated to this account.The proper allocation of profits to the correct tax accounts is of utmost importance in view of the refundable tax credit system explained below. Refunds of tax by shareholders can only be claimed in respect of dividends which are distributed from the FIA and MTA. Distributions from the FTA, IPA and UA do not entitle the shareholders to a tax refund.Tax refunds can only be claimed by shareholders who are registered to receive them and the number of refunds received will depend on the nature and source of income derived by the Malta distributing company.Refundable Tax Credit SystemShareholders of companies registered in Malta are entitled to a tax refund upon the distribution of profits. In general, the tax refund amounts to 6/7ths of the tax paid by the company resulting in a maximum effective tax rate of 5% after-tax refunds. Where double taxation relief is claimed by the company in respect of foreign tax suffered, the effective tax rate can be reduced further to 0%.In the circumstances where the profits distributed are made up of passive interest or royalties, the tax refund is reduced to 5/7ths of the tax charge, resulting in a maximum net tax paid in Malta of 10% after-tax refunds. Passive interest and royalty income is income which has not been derived directly or indirectly from a trade or business and where such interest or royalty income has not suffered or suffered any foreign tax, directly, by way of withholding or otherwise, at a rate of tax which is less than 5%.Where the company has opted to claim relief from double taxation on its income which stands to be allocated to its foreign income account, refunds to shareholders will amount to 2/3rds of the total tax paid (including foreign tax). If the relief from double taxation claimed is the Flat Rate Foreign Tax Credit (refer to the section on Double Taxation Relief) the tax refund will amount to 2/3rds of the Malta tax paid.In general, the tax refunds are calculated on the total tax paid including foreign tax, subject to the tax refund not exceeding the Malta tax suffered. The only exception is where the FRFTC is claimed, as mentioned above.The following is an example illustrating the 6/7ths refund:CompanyProfit before tax                                                                                                               €1,000Tax at 35%                                                                                                                             (€ 35 0)     Profit after tax                                                                                                                     €650ShareholderRefund on the distribution (6/7ths tax refund)                                                      €300 Effective rate of tax on profit before tax                                                               5%           Double Tax Relief in MaltaUnder the Malta Tax regime, relief from double taxation is available under various mechanisms.Double Tax AgreementsTo date, Malta has concluded more than 72 double taxation agreements for the avoidance of double taxation with various countries.Malta’s double tax treaties are largely based on the OECD Model Convention and grants relief from double taxation using the credit method.Unilateral ReliefMalta grants also relief from double taxation under unilateral relief whereby overseas tax incurred on income received from a country with which Malta does not have a tax treaty can be claimed as a credit against the tax due in Malta. The credit cannot exceed the total of Maltese tax payable.To claim the unilateral relief, the recipient of the income must prove the following to the satisfaction of the Commissioner:That the income arose from overseas;That the income was subject to tax outside of Malta; andProof of tax paid abroad.Unilateral relief is only available in cases where there is no double taxation relief.Flat-rate foreign tax credit (FRFTC)The flat-rate foreign tax credit can be claimed by Maltese companies which receive income or capital gains from overseas and which income is allocated to the Foreign Income Account of the company.The FRFTC is calculated at 25% of the amount of the overseas income or gain received by the company, before allowable expenses.The income along with the credit less deductible expenses will be subject to full Maltese income tax with relief for the estimated credit (up to a maximum of 85% of the Malta tax payable).Participation ExemptionMalta Holding companies that are in receipt of dividend income or capital gains from a ‘participating holding’ or from income arising from the disposal of that same holding may benefit from the participation exemption.Malta's participation exemption on capital gains is also extended to domestic holdings of shares, hence capital gains arising from the transfer of a participating holding in a Malta company are also eligible for the exemption.A participating holding arises when a company holds equity shares in a company or a qualifying body of persons which does not own immovable property and which give it any two of the right to vote, the right to receive a dividend and right over assets upon the liquidation of the company. Moreover, a participating holding must meet one of the following criteria:Has at least 5% of the equity shares in the other company; orIs an equity shareholder in a company and the equity shareholder company is entitled to the option to call for and acquire the entire balance of the equity shares of the non-resident company and is entitled to the Right to the first refusal to purchase such shares; orIs an equity shareholder in a company and is entitled to sit on the Board or appoint a person to sit on the Board of that company as a director; orIs an equity shareholder in a company which invests a minimum sum of €1,164,000 and suchinvestment is held for an uninterrupted period of 183 days; orHolds the shares in the company for the continuance of its own business and the holding is not held as trading stock for the purpose of a trade.As per the Malta tax structure, Dividends resulting from a participating holding in an EU resident company is exempted from tax in Malta in all cases.Tax on dividends received from a participating holding in a non-EU resident company are exempt in Malta provided at least one of the following additional criteria is fulfilled:The said non-resident company is subject to a foreign tax of a minimum of 15%; orThe said non-resident company does not derive more than 50% of its income from passive interest and royalties; orThe shares in the non-resident company are not a portfolio investment and the non-resident company or its passive interest or royalties have been subject to tax at a rate which is not less than 5%.Two Tier StructuresTo take maximum advantage of the refundable tax credit system, it is very common for a Malta trading company to be owned by a Malta holding company. The Malta holding company will serve as a dividend feeder company, receiving dividends from the Maltese trading company and tax refunds from the Maltese tax authorities. This avoids the problem of classification of income in those foreign countries which consider the tax refund as a dividend or any other income.Any dividends and tax refunds received by the Malta holding company can be either distributed to the ultimate beneficial owners in the form of dividends or reinvested in the operating company. Malta does not impose any withholding tax on the distribution of dividends and due to its full imputation system of taxation, the tax suffered at the level of the Malta trading company will be granted as a credit against the tax due by the Malta holding company upon receipt of a dividend. Therefore the Malta holding company will not incur any further tax on the dividends received from the Malta trading company.Exemption from Stamp DutyCompanies whose business activities are mainly carried out outside Malta are eligible for an exemption from stamp duty on the transfer of shares. This exemption from duty also applies where more than half of the ordinary share capital, voting rights and rights to profits are held by persons who are not resident in Malta. Stamp duty is paid by the person acquiring the shares. The above-mentioned exemption also applies to the transfer of shares by/to such companies.No Withholding TaxMalta does not impose any withholding tax on the outbound payment of dividends, interest and royalties. 

As mentioned in our last Cannabis Update dated November 20, 2020, finally on January 12, 2021, Mexico issued the Regulations to the General Health Law regarding the Sanitary Control for the Production, Research and Medical Use of Cannabis and its derivatives (the “Regulations”). The General Health Law was amended in June 2017 precisely to regulate the medical use of Cannabis but, so far, no secondary legislation was implemented despite the Supreme Court resolution issued in August 2019.The Regulations establish specific rules for the research; production; medical purposes; manufacture and destruction of raw material, pharmacology derivatives and Cannabis-based medicines. Quality and manufacture controls will be guaranteed as holders of a sanitary registry must have as well a quality control laboratory, duly authorized by the Federal Commission for the Protection against Sanitary Risks (“Cofepris”).Raw material, pharmacology derivatives and Cannabis-based medicines can be imported into Mexico. Only pharmacology derivatives and Cannabis-based medicines may be exported to other countries. Sowing, cultivation and harvest of Cannabis must be done in restricted areas with special authorizations.Besides granting legal certainty to the medical cannabis industry, the Regulations will also clarify the current situation of those permits granted under the Guidelines issued by Cofepris on October 30, 2018, but revoked later by the current administration on March 27, 2019.The Regulations, in no manner whatsoever, interfere with the Federal Law for the Regulation of Cannabis which awaits approval by the Lower Chamber of the Mexican Congress and will regulate adult-use cannabis and hemp industry.For further information please contact:Juan Daniel Rodriguez drodriguez@rrsc.com.mxAna Laura Gurria agurria@rrsc.com.mx

Immigration to Mexico from the US, Canada and other locations, such as Argentina, is increasing. Mexico’s immigrant population is diverse and everyone has their own reasons for doing it. For some, it’s more about leaving their old lives behind in their home country. For others, Mexico specifically, is an attractive land of opportunity. In this article, we explore who is likely to leave the US and Canada for Mexico and why.Who Immigrates to Mexico?RetireesMexico is a hot spot for retirees from the US and Canada who want their pension to go further. The cost of living in other North American countries compared to Mexico is significantly higher. Many pensioners are struggling to survive on their pensions and their quality of life is decreasing at home. In Mexico, that all changes. A US pension will generally allow for better value accommodation and utilities, regular socializing, quality healthcare, and some financial flexibility. Pensioners who relocate to Mexico find themselves in the company of many similarly aged and minded people. And with cheap flights back to the US and Canada, the family is never too far away.SnowbirdsAlthough many retirees fit into this category, snowbirds can be any age.  Snowbirds come from countries with cold climates that they escape from during the winter. Mexico’s warm coasts are popular destinations for snowbirds who leave the cold behind for up to six months of the year. If you hold temporary or permanent Mexican residency you can enter and exit the country unconditionally. The maximum stay for tourists is 180 days.FamiliesMore and more US and Canadian families with young children are also immigrating to Mexico. There are many private and international schools in popular ex-pat locations. They are often bilingual and fees are generally significantly less than in the rest of North America. Parents value the unique cultural experience their children gain by living in a foreign country. The lower cost of living also means many families enjoy a better quality of life and can spend more time together.EntrepreneursAccording to the World Bank, Mexico is the second-largest economy in Latin America. It is a strong worldwide player in the real estate, tourism and fintech industries, and a supporter of start-ups and innovation. Many entrepreneurs from the US and Canada see Mexico as a promising market for investment and development. Its low cost of living also makes it an attractive base for those starting out on a new venture. Quintana Roo specifically has been targeting the so-called digital nomad market. Popular initiatives that attract mobile, online workers are co-working spaces and ‘nomad’ events. Needless to say, there are many reasons to immigrate to Mexico; the food, warm, welcoming people, and outstanding nature are all attractions. We have listed a few more in our blog: 10 Simple Reasons to Move to Mexico. If you are also curious about immigration to Mexico or would like a personal consultation, email Adriana Vela at info@immigrationtomexico.mx.Go Global by Centuro GlobalFor those looking for more information regarding Mexican immigration (or other information including tax, accounting, legal, and more) Go Global is a free revolutionary new global expansion platform that empowers companies with the knowledge and expertise to trade in any jurisdiction globally.Our easy to use, self-service portal will grant access to a database of crucial information provided by local experts, expansion playbooks, a global network & actionable support. Sign up for your free account and start your global expansion journey today.

Introduction  With the now fast-paced world in the fifth industrial revolution, the legal sector is at the forefront of current global technological growth which makes for a powerful force to enable sustainable change and high levels of accountability and transparency. It is therefore no surprise that the District of New South Wales, Australia has made an unparalleled finding involving the use of social media’s ‘emoji.’ In 2002, Kirby J made remarks in the case of Dow Jones & Company Inc. v Gutnick (2002) 210 CLR 575 which still hold true today in 2020 as they did then. At the time, the whole concept of social media was in its initial phase and Facebook, Twitter and Instagram did not yet exist. Within this time, social media has made strides in a manner which has been unforeseeable, making it easy for defamation as a result of defamatory remarks to be published or accessed in ways which are unprecedented. Facts of the matter On 27 August 2020, in what appears to be the first of its kind, Australian judge Gibson J confirmed the unprecedented decision in Burrows v Houda [2020] NSWDC 485, that the use of an emoji is capable of breeding defamatory meanings. In this case, the plaintiff brought defamation proceedings from an exchange on Twitter with the defendant who was her employer. The defendant in response to a question “but what happened to her since?” responded with the ‘zipper-mouth face’ emoji and continued to use other emojis in three other tweets. The first part of the analysis Gibson J had to make was twofold. Firstly, she had to question whether it was appropriate to determine a meaning based on an emoji without the benefit of expert evidence, jury or input. The court concluded that it was unnecessary in this case because there had already been rulings on the meaning of emoji in other areas of the law without this requirement. It also added that there had been prior rulings made on liability for publication and, or, defamatory meaning for non-verbal internet tools. In light of this, it was unlikely that the court would rely on linguistics or communication experts for the interpretation of emojis. Secondly, she noted that on Emojipedia the zipper-mouth face emoji carried the meaning of a “secret” or to “stop talking” in events where it was implied that the person knew the answer but was reluctant to give it. Furthermore, she accentuated this particular argument on the finding in the case of the School of Excellence Pty Ltd v Trendy Rhino Pty Ltd [2018] VSC 541 [25] where it was confirmed that an emoji has the ability to convey a set meaning. In opposition to her findings, the use of Emojipedia has resulted in the academic criticism of judges (Smyth 2018: 211). However, the nature of modern communication makes it absolutely necessary to consult internet dictionaries such as Emojipedia to determine what the ordinary reasonable person would make of these symbols. Applicable principles Central to this case is the question of whether the defendant’s zipper-mouth face emoji together with other emojis in corresponding tweets as a reply to a request for updates on disciplinary proceedings constitutes defamation. The following claims were made:The “zipper-mouth face” emoji is worth a thousand words and that it implies a finding which may be damaging to the plaintiff but the defendant may not disclose the result and must hint at it by posting the emoji.The post which refers to the swearing of false affidavits would infer that a reasonable social media reader would think that the plaintiff signed the false affidavits and would therefore also assume responsibility for the part played in the presentation of the affidavits to the court.In cases where the tweets that identify a prosecution as a result of the signing of false affidavits, the reasonable social reader would assume that the plaintiff is also likely to be prosecuted. All these claims were found to constitute defamation. Conclusion What does this mean for South African law? South African law authorises its courts to merely consider foreign law in interpreting the Bill of Rights in the Constitution where it states in section 39(1)(c) that a court may consider foreign law. As the use of emoji increases and social media continues to become a dominant form of communication, a case similar to this may make an appearance in South Africa and therefore it is important to prepare for these instances before they occur.  Directors, board members and employers in companies should therefore address the use of social media in the workplace and on social media platforms.