Fueling Innovation and Investment
In today's rapidly evolving regulatory landscape, technology plays a crucial role in allowing businesses to outperform. Governments worldwide are recognising the significance of supporting tech advancements, leading to the introduction of the Reg Tech Super Deduction Scheme. This groundbreaking tax incentive aims to encourage investment in regulatory technology (reg tech).
The new scheme has been introduced by the Jersey government. It provides a 150% deduction for the years 2024-2027, providing £450,000 in annual tax relief to regulated entities investing in technology to meet regulatory obligations. This includes investments on hardware, software, and training related to RegTech, to support enhanced regulatory compliance.
Eligible companies must:
- be a financial services company under Article 123D of the Income Tax (Jersey) Law 1961
- be a regulated financial services business under Schedule 2 of the Proceeds of Crime (Jersey) Law 1999
- have incurred qualifying operating expenditures related to regulatory compliance activity
Further details on the scheme can be found here. In this article, we will explore the key features and benefits of this scheme, its impact on businesses, and its potential to reshape the reg tech industry.
Understanding the Reg Tech Super Deduction Scheme:
The Reg Tech Super Deduction Scheme is an innovative tax incentive designed to incentivise businesses to invest in cutting-edge reg tech solutions like those from KYC360. This scheme offers enhanced tax deductions on qualifying expenses related to the development and implementation of reg tech. By providing substantial tax relief, governments aim to foster the adoption of reg tech solutions and drive innovation in compliance and regulatory processes.
Key Features and Benefits:
- Enhanced Tax Deductions: Businesses can claim an enhanced deduction of a specified percentage on qualifying reg tech expenditure. This deduction provides a significant financial incentive for organisations to invest in advanced reg tech solutions, reducing their tax liability.
- Driving Innovation: The Reg Tech Super Deduction Scheme encourages businesses to develop and implement innovative reg tech solutions. By offering financial support, governments stimulate the creation of sophisticated tools and technologies that streamline compliance processes and enhance regulatory efficiency.
- Cost Reduction: Adopting reg tech solutions can help businesses reduce costs associated with compliance and regulatory activities. Solutions like ours, digitise processes such as onboarding, screening, pKYC and remediation, driving huge operational efficiencies.
- Improved Compliance: Reg tech solutions enable businesses to stay updated with ever-changing regulations and comply with complex compliance requirements. These tools provide on-going KYC monitoring, data analysis, and reporting capabilities, ensuring organisations can proactively address compliance issues and mitigate risks.
Impact on Businesses:
- Enhanced Competitiveness: Businesses embracing reg tech solutions gain a competitive edge by effectively managing regulatory challenges. By fully understanding the risk of your customers and prospects, you are able to do more, better business, faster. Using a risk-based approach, you are able to lean in to the risk and outperform your competitors.
- Advanced Risk Management: Reg tech solutions offer advanced risk management capabilities, allowing businesses to identify, assess, and mitigate regulatory risks promptly. By leveraging data analytics and predictive models, organisations can make informed decisions and minimise the potential impact of non-compliance.
- Scalability and Flexibility: Adopting reg tech solutions enables businesses to scale operations and adapt to evolving regulatory requirements. Our solutions can be customised to your exact needs, all from a user interface. Meaning as your business evolves you can adapt your processes without using developers and length change programs.
Potential to Revolutionize the Reg Tech Industry:
The introduction of the Reg Tech Super Deduction Scheme has the potential to revolutionize the reg tech industry in several ways:
- Accelerated Innovation: The scheme promotes investment in research and development, encouraging reg tech companies to develop ground-breaking solutions. This influx of funding can fuel technological advancements and foster collaboration between businesses and technology providers.
- Industry Collaboration: The scheme encourages collaboration between businesses, regulatory authorities, and reg tech providers. By working together, stakeholders can identify common regulatory challenges, develop standardised solutions, and establish best practices for compliance.
- Global Adoption: As governments worldwide recognize the importance of reg tech solutions, the Reg Tech Super Deduction Scheme may inspire similar initiatives in other countries. This global adoption can create a harmonized approach to compliance and facilitate international business operations.
The Reg Tech Super Deduction Scheme presents a unique opportunity for businesses to embrace tech innovation and enhance regulatory efficiency. By providing enhanced tax deductions, this scheme incentivises investment in reg tech solutions, benefiting businesses, consumers, and regulatory authorities alike. As the reg tech industry continues to evolve, the scheme has the potential to revolutionise compliance processes, improve risk management, and foster collaboration among stakeholders. By leveraging advanced technologies, businesses can navigate complex regulatory landscapes with ease, ensuring long-term success and sustainable growth.
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