Bridging Gaps in 2019. Joint Italian Arab Chamber of Commerce

Prof. Dr. Roberto Scalia Taw Expert Paves The Path For A Rewarding And Outstanding Year Between Italy And The Gulf

By Mariett Ramm

The Joint Italian Arab Chamber of Commerce promotes and fosters the development of economic and commercial relations with Arab countries, aiding and support to companies wishing to start or has already begun internationalization processes.

JIACC President, Mr. Cesare Trevisani, opening the Welcoming Ceremony of Second Italian Arab Business Forum.
Second Italian Arab Business Forum

“The process of economic growth that, in the course in recent decades, has allowed the Arab countries to become one of the areas of greatest attraction of foreign investment, has created significant opportunities also for Italian companies. Placing itself as a complementary subject to the other institutions with similar aims, the JIAC intends to activate guidance and training services, as well as coordination follow-up activities, providing entrepreneurs with the tools necessary for correct approach with the Arab world and more effective management of daily activity.”-said Cesare Trevisani, Chairman of the Board of Directors of Joint Italian Arab Chamber of Commerce.

Billionaire Chronicle sat down with Tax Committee Chairman of the Joint Italian Arab Chamber of Commerce, Prof. Dr. Roberto Scalia to discover more firstly about bridging gaps between Italy and The Gulf, and secondly about tax changes in the Arab World.

Prof. Dr. Roberto Scalia

BC: Professor Roberto. You are a tax expert in the Middle East. Please tell the readers about your background, and what made you become closely aligned with taxation in the Arab World?

Prof. RS: I am a Tax Lawyer, and I am also Assistant Professor at the University of Bergamo in Italy, where I obtained my Ph.D. in EU and International Tax Law.

As of April 2018, I serve as Chairman of the Joint Italian Arab Chamber of Commerce Tax Commission, and I am also the member of the Scientific Committee of the African Tax Association Forum.

I started my career in Milan practicing International and EU tax law and tackling all aspects of corporate taxation (Corporate income taxes and VAT mainly). I then moved abroad (namely Switzerland and Monaco) and worked primarily in private wealth management dealing extensively with trusts. In 2010 I wrote a monography on trusts’ direct taxation in Italian tax law with foreword of Mr. Giuseppe Vegas (formerly Vice-Ministry of Economy and then Head of the Italian Exchange and Trade Commission).

I started dealing with Middle eastern tax law a little less than eight years ago while supporting International clients investing in and through the Cooperation Council for the Arab States of the Gulf (GCC).

I was quite surprised at how many tax experts underestimated taxation in those countries (frequently saying just “no taxation, that’s all”) and I started conducting extensive studies on GCC States’ tax system. Steadily, I became one of the few (maybe the sole) tax law scholars dealing quite in detail with GCC States’ tax law and drawing – for the first time – a paper addressing the GCC, as an International organization, in a tax law perspective.

This theoretical approach – in conjunction with lectures held on events around the GCC – gave me full visibility and helped me establish one of the most extensive networks of tax experts in the Arab States.

The Gala Dinner, held in Palazzo Brancaccio, was a convivial moment attended by Italian and Arab Ambassadors, politicians, representatives of institutions, entrepreneurs

BC: “Building A Relationship Between The Arab World And Italy”. Where do your strengths and weaknesses?

Prof. RS: “Building bridges” between Italy and the Arab world is a cultural matter.

Italian companies always approach those markets if, in many cases, Italian products and services are consistent with the “Made in Italy” brand that, all over the world, is a synonym for excellence and ingenuity.

However, the weakness, in many cases, does not come from the quality of the products or services themselves as it instead lies in the way that very market is approached underestimating the cultural features (also when it comes to trade) that are specific of the Arab States.

Experts, tax and trade, are vital in helping Italian enterprises correctly approach those markets.

Likewise, Arabs investing in Italy shall choose their partners carefully.

Italy is a country where you can make genuinely fantastic shopping for your private wealth and business as well, but you shall have the right “shopping consultant.”

There are many and reputable Firms that can help Arab investors in undertaking the right investment in Italy and doing it the right way; two of them are, to be straightforward, in our Tax Commission, namely Bonelli Erede and Foglia & Partners.

In many cases, boutique Firms (Foglia & Partners is a clear example of this) in Italy can clearly understand the need of clients and “tailor” and adopt the best solution possible. My sole advice is approaching Italy having in mind that the International rankings available to anyone, such as, e.g., Chambers & Partners are vital in choosing the right counsel.

BC:  Would you reveal more about the Joint Italian Arab Chamber of Commerce to our readers, please?

Prof. RS: The Joint Italian Arab Chamber of Commerce (JIACC) is a not for profit association established in September 2015 thanks to the commitment of prominent representatives of the business community, and thanks to the support of both Italian and Arab institutions.

JIACC is the sole Italian Arab Chamber officially recognized by the Arab League, the Union of Arab Chambers, the Arab Embassies in Italy, as well as the Italian Ministry of Foreign Affairs, the Italian Ministry of Development and the Italian Union of Chambers of Commerce.

The Chamber prides itself with a robust and verified network available to its members. Since its inception, JIACC has made every effort to assist companies in their daily activities, as well as to be of service both to the Public and the Private sectors in reaching out to international players and stakeholders.

H.E. Sultan Bin Said Al Mansoori, Minister of Economy of the United Arab Emirates, gave his remarks in the Keynotes on Italian-UAE economic relations.

Indeed, JIACC offers a wide array of value-added and tailor-made services to its members and provides useful information and consultancy to companies interested in the market of the member states.

In April 2018 we set-up a Tax Commission that rapidly grew. It is now formed of 28 skilled tax experts coming from Academia such as Prof. Sacchetto (dean of Italian International Tax Professors) and Leopoldo Parada; leading Firms such as Al Tamimi and Aurifer (in the GCC), Bonelli Erede and Foglia & Partners (in Italy); Multinational enterprises (to name a few: Salini Impregilo, Valentino, BP, A.P. Moeller Maersk, GE, Ericsson, Siemens, BAE System, Facebook) and Banks (Bank Al Jazira and Al Jazira Bank). Proudly, I wish to stress that many of them are Arab.

The third Memorandum of Understanding was signed with the Chambre de Commerce et Industrie de la Région Rabat-Salé-Kénitra, represented by Mr. Abdallah Abbad, President of the Chamber.

BC: Regarding the complexity of Taxation Law, what have been your most significant achievements? Tell me about a difficult situation that you have been involved regarding the Arab World and how you overcame it.

Prof. RS: I must confess that when it comes to Arab States’ tax law (better, GCC States’ tax law), the significant achievement is being consistent with the law in action and being aware of State (and tax authorities) approach and targets.

Law in action (i.e., how tax law is “applied” notwithstanding written rules) has always been a significant feature of GCC States; almost all of them having a Corporate Income Tax law however in some cases the law is not applied.

This requires experts to be able to tell the client how the law “should be” and how it “is” in practical terms.

However, this is not enough.

In the last 10 to 15 years, most of GCC States have been undertaking heroic efforts to fully comply with International standards in several aspects, such as transparency and exchange of information, lifting (or introducing Corporate income taxes, introducing VAT).

At a closer sight, this process was undertaken with a quite stringent “western approach” whereas the significant objectives of Tax Authorities are creating fair and efficient Tax systems, in line with International standards, where clarity and predictability of Tax Authorities approach is not left to the sole tax official but is ensured by the State tax authority. To make an example; VAT was introduced in January 2018 in some GCC States, such as UAE and Saudi Arabia. Since then many Guidelines in English were issued on the most critical aspects of VAT, and International investors are now familiar with the problems and solutions.

In some cases, when it comes to VAT, the UAE and Saudi approach are much friendlier than some European States regarding clarity and predictability.

In my personal experience, assisting clients in their VAT identification process and afterward, in re-drafting their supply chain in the GCC, I facilitated a rapid growth of Tax Authorities that became a primary filter of Tax Authorities approach to ensure consistency and clarity.

Since many of the businesses existing around in the GCC are family-led businesses, and VAT has been an indirect issue, these families have had to restructure their way of possessing wealth and running businesses.

The latest challenge, of course, affects non-GCC individuals and families concerning transparency and, namely, exchange of information.

BC: Risks, general feeling, policies, and approaches in tax law regarding in the Middle East. What is your advice to our readers?

Prof. RS: My main project in the forthcoming five to ten years, is playing an active part in ensuring Arab States’ tax experts network growing and being an “active” part in the discussion around taxation in those States.

My feeling is that the GCC States have been supported in “redrafting” their tax systems by tax experts that, in many cases, were missing some of the critical features of these States’ tax system and Constitutional framework.

One above all, the critical importance of Shariah Law that is embedded in the Constitution and shall prevail over other rules and regulation (with some clarifications that I cannot deal in more details with here) and that has an essential impact on family businesses as it affects, widely, family law. Shariah Law is also at the heart of Islamic Finance, whose importance is now self -evident all over Europe, and will have increasingly important even in Italy, soon.

Our network can start giving the Arab States significant support in their efforts to have modern, efficient and friendly tax systems.

This will, in turn, be key in helping both foreign investors in better understanding Arab States’ tax systems and, the other way around, Arab families to be approached in the right direction by Italian experts having a clear understanding of their needs, considering the cultural, legal and tax framework where they come from.

Prof. Dr. Roberto Scalia

Assistant Professor of Tax Law

University of Bergamo (Italy)

Chairman of the Joint Italian Arab Chamber of Commerce (JIACC) Tax Commission

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