The United Arab Emirates is the world’s sixth-largest oil producer and one of many richest nations on the earth, with a gross home product per capita of above $43,000 as of 2019, in keeping with the World Financial institution. As per its “Imaginative and prescient 2021,” Iis petroleum- and natural-gas-reliant financial system is dedicated to sustainable growth so as to emerge because the Gulf Cooperation Council’s, or GCC’s, most diversified financial system. This consists of the digitization of the financial system, which has develop into a precedence through the COVID-19 pandemic.
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A inexperienced financial system for sustainable digitization
The primary digital Abu Dhabi Sustainability Week Summit 2021 was broadcast stay all over the world in English and Arabic on YouTube, receiving over 100,000 views through the occasion from contributors hailing from over 175 nations, and it featured over 500 influential world leaders from authorities, enterprise and know-how who explored the social, financial and technological alternatives supporting a sustainable inexperienced restoration from the pandemic.
On the summit, GCC leaders reconfirmed their decarbonization pledges “to save lots of the equal of 354 million barrels of oil by means of the deployment” of renewable energies. This represents a 23% discount in oil consumption to scale back the ability sector’s carbon dioxide emissions by 22%, in keeping with the most recent figures from the Worldwide Renewable Vitality Affiliation.
In his opening tackle, Sultan Ahmed Al Jaber — the UAE’s minister of business and superior know-how, particular envoy for local weather change, and chairman of fresh vitality firm Masdar — identified that with the COVID-19 pandemic, society is now witnessing the implementation of synthetic intelligence, machine studying and the digitization of various spheres of life all around the world. Accordingly, electrification, decarbonization and digitization initiatives have develop into more and more necessary throughout all industries.
Masdar’s photo voltaic vitality initiatives
New digital applied sciences require a excessive consumption of electrical energy, which within the UAE is at present produced predominantly utilizing fossil fuels that adversely affect the setting. Given the UAE’s huge hydrocarbon assets, Masdar is aiming to develop into a significant blue hydrogen producer and contribute to the nation’s efforts to chop polluting carbon emissions by almost 1 / 4. Masdar lately reached an settlement with Abu Dhabi’s Division of Vitality and 5 further establishments to develop clear hydrogen gas options.
However the UAE’s Paris Settlement dedication to zero emissions by 2050 is closely reliant on photo voltaic vitality to diversify Abu Dhabi’s vitality sector into renewable sources. Photo voltaic vitality is seen as an anchor to Masdar’s renewable methods from many views. In Abu Dhabi, it’s constructing the world’s largest solar energy plant, as deserts are a few of the greatest locations to reap solar energy. They’re by no means in need of daylight and are wealthy in silicon — the uncooked materials for the semiconductors from which photo voltaic cells are made. One other profit to putting in photo voltaic panels within the desert, in keeping with a 2018 examine, is that it could create a extra humid setting that causes vegetation to unfold to fight desertification.
Masdar Metropolis: The UAE’s aerospace and inexperienced know-how zone
Developed by Masdar, Abu Dhabi’s Masdar Metropolis is likely one of the world’s most sustainable city communities, providing a strategic base by means of which corporations can construct their networks domestically and globally and might discover a number of funding alternatives and check modern new applied sciences from inception by means of to implementation to assist the UAE diversify its financial system.
Housing a free zone space, town has greater than 900 organizations, from worldwide conglomerates to startups, growing modern applied sciences within the areas of vitality, water effectivity, mobility, area, blockchain know-how and synthetic intelligence to handle the world’s most important sustainability challenges in additional than 30 nations.
UAE Area Company
Primarily based in Masdar Metropolis, the UAE Area Company contributes to supporting a sustainable nationwide financial system by growing satellites utilized in pure useful resource mapping, environmental monitoring, land-use planning and safety, and it has additionally launched a probe to Mars.
Digital financial system
The UAE authorities has made the digitization of its financial system a precedence so as to convey effectivity to authorities, creativity to business, and construct worldwide management. To perform this purpose, the UAE has established in Masdar Metropolis the world’s first graduate-level, research-based synthetic intelligence college, Mohamed bin Zayed College of Synthetic Intelligence, which welcomed its first college students in January 2021.
The UAE additionally adopted the Emirates Blockchain Technique 2021 and The Dubai Blockchain Technique, which have undertaken a number of blockchain tasks. SustVest is a crowd-investing blockchain-based platform that lets individuals spend money on photo voltaic tasks and earn returns from customers who use their funding to put in photo voltaic panels. The corporate relies within the Dubai Silicon Oasis Authority and has constructed its resolution on the Nem blockchain. Its founder, Hardik Bhatia, defined:
“The worldwide rooftop photo voltaic section is booming with alternatives, and is valued at over $66 billion. Rising economies need to transition to photo voltaic because it affords a inexperienced and low cost various to standard vitality sources. SustVest permits this transition in rising economies by crowdfunding rooftop photo voltaic tasks in rising economies on its platform. We tokenize photo voltaic tasks granular to the extent of particular person photo voltaic cells, and buyers buying these tokens can earn dividends generated by the sale of electrical energy from these particular person photo voltaic cells. We’re opening the gates for retail funding into photo voltaic area, and we accomplish that by tokenizing the tasks to scale back the barrier of entry and making a secondary market for offering liquidity to buyers.”
The Central Financial institution of the United Arab Emirates, together with the Saudi Central Financial institution, is growing a state-backed bilateral central financial institution digital foreign money, “Aber.” Aber is initially set to assist the UAE and Saudi Arabia make cheaper bank-to-bank, cross-border funds and monetary settlements utilizing blockchain know-how on a probationary foundation, and in keeping with official statements, it will likely be completely accessible to a restricted variety of banks. Finally, Aber shall be used globally on China’s blockchain-based service community, or BSN, which is able to assist future CBDCs from numerous nations such because the UAE.
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Crypto-asset rules within the UAE
The UAE prioritizes blockchain and distributed ledger know-how and has launched numerous associated ventures, particularly for the reason that COVID-19 pandemic. Nonetheless, cryptocurrency regulation within the nation stays restricted.
Towards the top of 2020, the UAE’s Securities and Commodities Authority, or SCA, printed “The Authority’s Chairman of the Board of Administrators Determination No. (21/R.M) of 2020 Regarding the Regulation of Crypto Belongings.” The SCA’s choice lays out its licensing regime for anybody who needs to supply crypto belongings inside the UAE, together with exchanges, crowdfunding platforms, preliminary coin choices, custodians, and different providers that use crypto belongings.
The Monetary Companies Regulatory Authority, or FSRA, of the Abu Dhabi International Market considers crypto belongings to have traits like these of shares, that means they’re to be handled as securities and are topic to info disclosure necessities associated to danger and transactions. However, utility tokens and non-fiat cryptocurrencies are thought-about commodities and should not topic to market rules. Regulation No. 20 of 2018 on Anti-Cash Laundering defines laundered funds to be belongings in no matter kind, together with digital currencies. Article 3 of Regulation No. 8 of 2017 on value-added tax imposes a 5% tax on imported and exported commodities. This tax might apply to utility tokens and non-fiat cryptocurrencies, because the FSRA considers them to be commodities.
The UAE doesn’t have a signed tax treaty settlement with the USA. Nonetheless, in keeping with the Conduct of Enterprise Rulebook, crypto-asset companies are obligated to declare worldwide revenue for tax functions in keeping with the necessities of the intergovernmental Overseas Account Tax Compliance Act settlement between the UAE and the USA.
A inexperienced restoration is an absolute crucial for a sustainable social and financial future within the post-pandemic world, as identified by Alok Sharma, president of the twenty sixth United Nations Local weather Change Convention of the Events — higher often called COP26 — who praised Masdar’s undertakings in growing inexperienced vitality applied sciences.
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Discovering financing for this inexperienced transition will possible not be too difficult, in keeping with Khaldoon Khalifa Al Mubarak, managing director and group CEO of Mubadala Funding Company. As a result of a tectonic paradigm shift has occurred for the reason that COVID-19 pandemic, with the markets pricing local weather danger into the worth of securities, there’s a elementary reallocation of capital towards sustainable investing to make sure a inexperienced restoration in a post-COVID-19 world. As Laurence Fink, chairman and CEO of BlackRock — the world’s largest asset supervisor — identified:
“I imagine that the pandemic has introduced such an existential disaster — such a stark reminder of our fragility — that it has pushed us to confront the worldwide risk of local weather change extra forcefully and to think about how, just like the pandemic, it can alter our lives. It has reminded us how the most important crises, whether or not medical or environmental, demand a world and bold response.”
The views, ideas and opinions expressed listed here are the creator’s alone and don’t essentially mirror or symbolize the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is a world tax lawyer and authorized public accountant who continuously writes about tax, authorized and accounting points for Tax Notes, Bloomberg BNA, different publications and the OECD.