Experts at Emirates Institute for Banking and Financial Studies talk through the affects of VAT on UAE Businesses
Last week, the Emirates Institute for Banking and Financial Studies (EIBFS), a regional leader in banking and finance education and training, hosted a high-level conference to discuss the implications of value-added tax (VAT) on businesses in the UAE. The tax will kick in on January 1, 2018.
Attended by more than 200 senior bankers, management consultants and experts from finance from companies such as Deloitte, Grant Thornton, Thomson Reuters, Algorithm Research and Stuart & Hamlyn Chartered Accountants. The one-day event covered many topics from the economic impact of VAT, to the experiences that have been gained from other countries that already have VAT in place. With six lectures, the speakers explained the intricacies of the new taxation law with a focus on how it will influence the day-to-day operations of financial and business entities.
In light of the fact that the VAT law is yet to be confirmed, companies are finding it difficult to understand the impact of VAT on their business and therefore prepare accordingly.
Jamal Al Jassmi, General Manager of EIBFS which was founded in 1983 and is based in the UAE, explained, “The upcoming implementation of VAT in the countries of the GCC region represents a landmark tax reform, ushering in a new era in the world of public finances and providing a stable revenue base for the future. With the UAE economy maturing and diversifying away from oil dependency, this is the right time for such a step. However, businesses, especially small and medium-sized enterprises, have to adopt certain measures to prepare for the new tax so that January 2018 does not bring any unpleasant surprises.”
He added: “EIBFS works relentlessly to address one of the major challenges anticipated during the early stages of implementation – raising awareness on various laws and issues that impact the financial and business community.”
Providing a strategic overview of the tax, Hisham Farouk, CEO of Grant Thornton UAE, said: “The adoption of VAT across the GCC region will be both exciting and challenging for our regional markets. Not only will it generate new revenue streams for public sector spending, but also align our markets globally and instill greater transparency in our economy. For a successful implementation, it is critical that a significant level of investment is made in awareness and education of all industries, specifically financial institutions. EIBFS is taking some very proactive and necessary steps in providing this awareness to the financial community, and it is fundamental that this is continued by all.”
For his part, Pierre Arman, Market Development Lead for Tax and Accounting at Thomson Reuters, said: “Time is running out for companies to ensure preparedness for the introduction of VAT in the GCC region in 2018. From assessing the impact of VAT on their organizations through to the readiness of their IT landscape, there is a lot to be done in a very limited timeframe. VAT awareness events, such as the one held by EIBFS, are crucial for the business community to understand what considerations different industries need to take into account in a post-VAT world, especially a notoriously challenging industry such as financial services that is typically more complex to manage under VAT due to its special status.”
Speaking on the topic of ‘VAT Demystified’, Justin Whitehouse, Managing Director and Indirect Tax and VAT Leader at Deloitte Middle East, said: “Events such as the EIBFS conference on VAT serve as a great platform for the business community to learn about VAT and support its successful implementation in the UAE. This is an important event for the government and the private sector, and businesses need to take it seriously and use forums such as EIBFS to ensure they understand what they need to do, especially within such an important sector to the UAE economy.”
In the past few years, the UAE has taken visionary steps towards a non-oil-reliant economy with a focus on economic diversification and boosting non-oil revenues. Introducing VAT is another key initiative to enhance the resilience of the national economy. An International Monetary Fund (IMF) analysis has shown that implementing VAT at the nominal rate of 5% will contribute 2.7% to the country’s non-oil GDP.
To hear more on what we do know about VAT, watch our video of Sam Emery, FD of Emrill