News

  • Italian legislator puts a stop to cash salary payments

    From 1 July 2018, Italian government introduces the Budget Law 2018

    From 1 July 2018, the Italian government introduces the Budget Law 2018 which puts limitations on the forms of payment of employee salaries. It will no longer be possible to pay employees in cash.

    The purpose of this new law is to prevent fraud and malpractices. Payments to employees or continuous collaboration contracts (i.e.“collaborazioni coordinate e continuative”) can only be made via traceable methods, such as bank transfer, electronic payment instruments or cash payment at the bank counter with a special payment order on treasury account.

    While excluding that the signature placed by an employee on the payslip constitutes proof of payment of the remuneration, paragraph 912 defines the scope of application of the law, which will affect the following cases:

    - Employment relationships referred to in article 2094 Civil Code;

    - Working relationships originated from coordinated and continuous collaboration relationships;

    - Employment contracts established in any form by cooperatives with their members. 

    The employment relationships established with Public Administrations and those relating to family and domestic services are excluded. In case of violation, an employer can be fined between €1,000 - €5,000. Advanced cash payments on wages can be fined as well.

    It is important for any business with employees based in Italy to take note of this new law coming into effect next week to avoid fines. We believe this absolute novelty in the Italian legislative scenery undoubtedly represents a simplification in the relationship between employer and employee.

     

    Author: Marco Gragnoli and Luca Insabato, Studio Taxlex

     

     

  • Does your business have a client relationship strategy?

    Six tips to building better relationships with your clients

    The way that businesses go about managing their client relationships can vary greatly. Nevertheless, there are a few basic tenets of client relationships that hold true, regardless of the size or primary purpose of your business.

     

    Plan ahead

    Building client relationships is a long-term strategy that requires time, preparation and planning. Every business should have a well-developed approach to client relationship management. This includes a clear understanding of who interacts with clients and under what circumstances – having the right team working alongside the client can also make a positive difference. Managing relationships with new clients is also an important part of the process. For example, who and how new client details are added to your Client Relationship Management (CRM) systems to receive updates, promotional materials, invitations, or other general information, all while making sure you comply with data protection rules. Gathering the right client information provides an understanding when further face-to-face contact might be required. Make sure everyone in the business who has contact with clients – from receptionists to the accounts department and, more specifically, the internal team designated to work closely with the client on an ongoing basis – understands the basics of client interaction, the client’s values, and the steps to take if there are any issues which need to be addressed. Understanding how the client likes to interact is also an important factor.

    Know the client

    It’s important to invest time and resources to ensure the business is positioned to meet client needs. Back in September 2016, Harvard Business Review published an article on Knowing your customers ‘Jobs to be done’, in which the real-life examples illustrated the added value created by researching customers’ needs and understanding what value looks like to them. Knowing your client is crucial to meeting their needs and building a long-lasting client relationship. Also, try to learn what makes the client tick, not just on a business level but also a personal level. Rather you sell products or services, at the end of the day you’re always dealing with people. This might seem tricky in the beginning but will become easier as the relationship evolves. You have to gain their trust, which may take some time. It is also important to note that as the relationship develops over several years, there is potential for those initial needs change. In the long run, asking for regular feedback can be invaluable with regards to understanding how your processes are working and if client needs are being met. These also allow the client an additional opportunity to evaluate your service.

    Keep in touch

    Even if the relationship with clients doesn’t necessarily require regular personal contact, it is worthwhile to find a way to “chat” from time to time. For example, an occasional follow up phone call following completion of work is always a good idea. A phone call or a face-to-face interaction does help build rapport with the client and provides the opportunity to address issues immediately and allows the client to provide additional information they may not express via email. Additional communication tools such as regular newsletters, news alerts, feedback forms further the personal approach and facilitate relationship building. It shows you value your clients, and you are actively seeking feedback on your service. It also helps ensure any problems or misunderstandings are identified early.

    Tailor the approach

    Different clients appreciate different types of service and interaction and it is important to tailor your approach to suit. Some might appreciate a regular phone call to touch base, while others might find this intrusive or irritating. Some might welcome electronic contact by email, while others would find this impersonal. You need to be extra aware of this when dealing with clients in different countries or with different cultural backgrounds from your own, to avoid any miscommunications or unsuitable behaviour. Don’t assume a blanket approach will work for all, and if in any doubt ask clients in your regular dealings with them about their preferences.

    Not just new clients

    A mistake many businesses make is to focus primarily on gaining new clients and forgetting to look after existing ones. According to New York Times best-selling author, speaker and business strategist Fred Reichheld, customer acquisition is 5x more expensive than customer retention. Cultivating ongoing relationships with every client is imperative and takes time – aim to generate deeper and better relationships with all clients at various stages of their relationship with your organisation as this serves both sides of the relationship in the long term. Make the effort to keep existing clients happy and grow the client base from there. Existing clients who are happy with the service are an excellent form of third party endorsement and referral. In other words, investing in existing client relationships pays off.

    Say thank you

    Whether it is thanking a long-standing client for their support or for passing your name on to a prospective new client, a simple thank you shows appreciation and recognition as well as an established personal link. Businesses that pay attention to these tenants of client relationships will find they have a better understanding of what clients are looking for from the service provided and will build longer-lasting relationships with clients in the long run.

    Author: Litsa Christodulou, HLB Mann Judd

     

     

  • Real Estate Technology: What is PropTech and How is it Changing the Industry

    PropTech is simply a term that describes a small piece of a large puzzle that can be defined as a large digital transformation in real estate technology.

    If you Google ‘PropTech’ you will find that there are dozens of definitions. Major players in the PropTech, or synonymously used CRETech, space even have their own explanations of what they think it really is.  All things considered, PropTech is simply a term that describes a small piece of a large puzzle that can be defined as a large digital transformation in real estate technology. Over the last few years, PropTech startup companies in the real estate space have been able offer new products that will ultimately change the way business models are formed when it comes to property management and investing.

    Like all other technology advancements, the use of PropTech will transform the real estate industry by using predictive analytics from big data dumps that can be manipulated in ways that will align exactly with respective business models.  What are the benefits? Real estate owners can use this data in real time to solve real world problems, which can increase revenue, create business efficiency, and mitigate risk. These real estate owners can begin to syndicate multiple streams of data, such as tenant and lease information among all properties owned as well as the value of such properties, which in today’s industry, are not tracked simultaneously.  By using PropTech, property managers can enhance building operations, remove antiquated processes, and make business predictions and investments that could ultimately increase the return on investment.

    On the contrary, PropTech has also enabled groups of small investors, who, in the past, could not pay to play, to invest in attractive real estate projects.  Also known as ‘crowdfunding’, this alternative investment option allows these small investors to drive up capital funds in portfolio properties or new construction projects. The real estate industry, which is not known for being on the forefront of technological advancements, is now starting to see the benefits of innovation.  These real estate technologies are transforming the processes of buying and selling property. Securing funding in today’s real estate industry no longer takes months as investor decisions are now secured by accurate data, reports, and property valuations.

    Much like the recent buzzwords FinTech or blockchain, PropTech is the digital trend permeating the real estate industry.  It is currently making a lot of noise, mostly because there is a lot of catching up to do in this industry regarding software and technology applications.  There is fear that this digital application will disrupt the current real estate industry.  Change is inevitable, and if real estate managers and investors do not get ahead of the curve, they may find themselves left behind.

     

    Author: Rebecca Machinga, Withum 

     

  • European Choice for Ukrainian Accountants and Auditors

    Ukraine undertook to harmonize its legislation with European regulations relating to business law, including the scope of financial reporting and auditing.

    By signing the Association Agreement with the EU in 2014, Ukraine undertook to harmonize its legislation with European regulations relating to business law, including the scope of financial reporting and auditing. In 2017, the 3-year transitional period ended as laid down in the Association Agreement for the adaptation of Ukraine’s legislation to the EU Regulation No. 1606/2002 on the transition to IFRS and EU Directive No. 2006/43 / EU on Statutory Audit. The purpose of which is to "create a fully functioning market economy and to stimulate trade" (Article 337 of the Association Agreement).

    In order to meet the commitments, Ukraine will introduce changes to the Law of Ukraine on "Accounting and Financial Reporting " as well as introducing a new law on the "Audit of Financial Reporting and Auditing". These changes will have a significant impact on the activities of accountants and auditors in Ukraine.

    Small enterprises will not be affected by the changes, provided that they comply with at least two out of three indicators as follows: annual revenue does not exceed 8 million euros, aggregate assets do not exceed 4 million euros, staff numbers do not exceed 50. If an enterprise meets these indicators and is not involved in the insurance business, other financial services and also is not an issuer of securities, then there is a high probability (99%) that they will not be affected by the changes. Out of 1 million legal entities in Ukraine it is anticipated that only 1 to 2% will be affected by the new regulations.

    However approximately 10,000 to 15,000 medium size legal entities generating more than 80% of GDP will be affected. Entities registered as LLC or Private Company will no longer be exempt from statutory audit and publication of financial statements. Large enterprises (revenues of 40 million euros and over, 20 million euros of assets as well as 250 staff and over) will have to adopt International Financial Reporting Standards (IFRS) for financial reporting and day-to-day accounting.

    In fact, it is anticipated that the transfer of financial accounting to IFRS will take about one year, during which it is necessary to reconfigure business processes, to finalize accounting policies and accounting systems, to revalue non-current assets and to train staff. This requires investment: the costs for one year may be less than three thousand euros for smaller enterprises, without taking into account the cost of the audit, but may be hundreds of thousands of euros for major domestic industries.

    Enterprises which refuse to be audited and refuse to publish financial reports on their website (also from 2019) can expect significant fines.

    It is expected that the new standards will increase the transparency of business and reduce the “shadow” sector, which is estimated by the International Monetary Fund to be 45% in Ukraine against 18 to 22% in the Baltic countries and 7 to 15% in Japan, the USA, Switzerland and Singapore.

     

    Serhii ROHOZNYI
    Deputy General Director of Audit - HLB Ukraine
    Member of Board of Ukrainian Federation of Professional Accountants and Auditors – a Full Member of IFAC
    (from an interview for Ukrainian business media ubr.ua)

  • 3 Reasons why you should invest in the Dominican Republic

    The country has so much more to offer. Especially for foreign investors looking to find new business opportunities in the Caribbean region.

    At only a two-hour flight south of Miami, we often think of the Dominican Republic as a Caribbean paradise for luxurious beach vacations. However, the country has so much more to offer. Especially for foreign investors looking to find new business opportunities in the Caribbean region. Here are 3 reasons why you should invest in the Dominican Republic:

    1.Political and economic social stability

    The Dominican Republic has seen substantial GDP growth and significant reduction of poverty over the past two decades. The country’s solid legal framework and various incentives for business, as well as other forms of support from Government entities, provide a political and economically stable business environment. The Dominican Republic has trade agreements with almost 50 countries. Since the 1990s, the Government of the Dominican Republic has been carrying out important reforms in trade policy with the task of increasing the competitiveness of the economy and achieving greater participation in international markets. The main functions of the agreements are trade liberalisation, and the elimination of a wide variety of tariff and para‐tariff restrictions that contribute to expanding and strengthening the country's export capacity. While the domestic language is Spanish, English and French are commonly spoken business languages. The country’s geographical location and strong infrastructure to North and Latin America and the rest of the Caribbean, make for a strategic location to establish foreign branches.  

    2.Real estate investment opportunities

    Across many industries, various advantages are put in place to level the playing field for foreign businesses, such as fair treatment for local and foreign investors, repatriation of 100 percent of profits, free conversion of funds, free access to international currency in local commercial banks and the Central Bank and a fast and easy registration process. The real estate industry is not an exception and foreign investors are treated the same as local investors. They can buy real estate throughout the Dominican territory, including in touristic and maritime locations. The only exception is for the border region. To purchase property in the Dominican Republic, do not residency nor need a local partner. Property purchases can be carried out through a natural person or a local or offshore company. Once the purchase is complete, the alien citizen has the full and absolute ownership of the property, with all the same use and disposition rights as to which Dominican citizens are entitled. 

    Furthermore, according with Law 171-07 on incentives to retired people and foreign source renters, the real estate investors can obtain a resident permission in 45 days.

    The real estate industry has been promoted significantly by several government measures to stimulate tourism and give significant tax incentives to the investors on Tourist Development Promotion. The goal is to develop the tourism industry in a reasonable and sustained manner, by offering investors several tax incentives. It is worth to highlight the tax exemption for 10 years of 100% on the taxes for income, capital gain, company incorporation and capital increase, real estate transfer and real estate property.  Such law exonerates 100% of custom taxes or goods importation taxes, movables estates, equipment and those material needed for building and setting up the real estate facilities purchased.

    3.Attractive tax incentives

    Over the past 2 decades, the Dominican Republic has opened its borders to international business as part of its strategy for economic growth. For example, tax incentives exist where the Dominican State recognizes that a foreign investment and technology transfer contributes to domestic economic growth and social development. This has been reflected in the current legal framework as well as in the international agreements that have recently been signed.  Some of these tax incentives include:  Law No. 16-95: On Foreign Investment, where the Dominican State recognizes that foreign investment and technology transfer contribute to the economic growth and social development of the country;   Law No. 84-99: On Reactivation and Promotion of Exports whose interest of the State is to establish new mechanisms and modernize existing ones in order to promote a reactivation and sustained expansion of exports of goods and services;  Law No. 8-90:  Promotion of the Free Trade Zones of Exportation. This law exonerates all the taxes of exportation, import, re-export, of all the goods and services necessary to perform different types of activities. Law No. 56-07: Declares the sectors belonging to the textile, clothing and accessory chain as a national priority; skins, manufacture of footwear and leather and creates a national regulatory regime for these industries which includes the exempt from payment of the Tax on the Transfer of Industrialized Goods and Services (ITBIS) and other taxes; Law No. 480-08: On International Financial Zones. The purpose of this Law is to create the legal framework for the establishment of International Financial Zones in certain geographical areas. In 2010, the DR Government promulgated the Law for the promotion of cinematographic activity (Law 108-10), which provides various tax incentives for the development of this economic activity.

    In short, the Dominican Republic offers numerous opportunities for foreign investors and international businesses looking for new opportunities. We believe the domestic business environment in dynamic and ever evolving for the better. For a more in-depth discussion about investment opportunities and doing business in the Dominican Republic, contact one of our local offices. Our professionals are trained to offer a wide range of integrated Audit, Tax, Advisory and Business services to both local and international clients, focused on the variety of industries operating in the Dominican Republic and Haiti.

     

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