THE coronavirus has led to unprecedented health and humanitarian crisis. Some of the most important measures considered crucial for containing the virus have served well for communities across the world. But they have also triggered a complete economic downturn. So the point has come when there is huge uncertainty regarding the length and the severity of the COVID-19 pandemic.
The latest reports from the Global Financial Stability department show that the asset and financial management systems have been dramatically affected by the pandemic. It is also being envisaged that if the crisis further intensifies, it might have a significant impact on the universal financial stability and management. The Swiss director of GmbH/Sàrl also has similar thoughts surrounding this subject.
Challenges Faced in Trade and Tax
Ever since the pandemic broke out in different parts of the world, including Switzerland, prices of various financial tools and risk assets have sharply gone down. The majority of the equity markets- in both small and large economies- have reported 30% declines and more. There has been a considerable jump in credit spreads, especially for low-rated companies.
Symptoms of stress and worries have also started emerging in different short-term financial markets, which include the universal US dollars market. The Swiss Financial Company & Trust Ltd that mainly offers services in the field of tax preparation in Switzerland for international firms have also shown concerns regarding a setback to the asset and financial management market because of the COVID-19 outbreak.
The company reports that capital markets across the world would become less accessible if things and situations continue to behave in the same way. Lending standards might also tighten, and it might get quite impractical and expensive for firms to issue or refinance new shares.
Since there are a large number of employees working from home, apportionment of earnings, payroll taxes withholding, and permanent establishments need to be thoroughly reviewed. The company further lays down that asset managers will have to come up with geographic plans for disaster recovery and business continuity in jurisdictions handling their workforce.
For making assets and financial management stable, you need to develop strategies for addressing important redemption requests. Procedures and plans need to be created for freezing tax redemptions. Investor communication should also be included most prominently in all these plans and processes.
The Swiss Financial Company & Trust Ltd is looking forward to discussing how extraordinary expenditures can be handled with its tax teams. It also lays great emphasis on tracking and analysing imbalances of costs and revenues.
Staff movement routing should also be used for determining whether the main tax locations of the workers have been affected or not. Continuing with the process of tracking tax jurisdictions for all tax incentives can greatly benefit companies engaged in financial and asset management.
What about the Weakening of Different Non-Monetary Assets?
Because of large scale chaos in the stock market, the market capitalisation of different companies has blown out completely. It has gradually declined and reached a point where it has gone lower than equity or the book value of assets. What needs to be done in this context is formal impairment examination of the entity of all non-financial assets.
Companies and firms need to get back to their core principles or their mission. They must start with the process of determining some of the most exclusive potentials they will need to thrive in the market. They will have to double-down on the things that make them exclusive.
The strain on the market
Volatility has greatly spiked, resulting in financial crises across the world. Still, there are many uncertainties regarding the economic influence of this outbreak. With volatility spiking up, there has been a decline in market liquidity, including in the markets conventionally considered deep. This had led to an abrupt move in asset prices.
These are critical times when the investment professionals are being forced into operating sub-optimally because of the lack of current information. The impact of this pandemic is evolving rapidly on organisations, communities, and people. Experts recommend that companies, especially the ones in financial and asset management fields, should take proper steps to handle the uncertainties.
Eventually, the COVID-19 pandemic might present some scopes for asset and financial management industries to excel and even transform. With the dust settling down in the future, finance and asset managers will find it fiscally attractive to outsource non-core functions along with tax compliance and other middle-office and legal activities.