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Real Estate Technology: What is PropTech and How is it Changing the Industry May 25, 2018
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 May 21, 2018
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 April 23, 2018
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.