UAE businesses must gear up for VAT regime
Delegates attend a technical seminar on VAT organised by the Institute of Chartered Accountants of India UAE (Dubai) chapter in Dubai on Saturday.
dubai - Regulatory framework for the system must be put in place, say chartered accountants
Businesses in the UAE need to gear up for the value added tax (VAT) regime and the regulatory framework for the system ought to be prepared now, said Nimish Makvana, chairman of the Institute of Chartered Accountants of India (ICAI) UAE (Dubai) chapter, at a one-day technical seminar held under the theme 'VAT - Where to go and how to get there'.
Speakers at the seminar included Bruce Hamilton, director of indirect tax, Deloitte Middle East; George Campbell, senior manager of indirect tax, Deloitte Middle East; and Murali Murthy, a motivational speaker.
"With the implementation of VAT getting closer, businesses in the UAE and the rest of the GCC have been advised to take action in order to prepare themselves for the new system. For the past few months, there have been statements by UAE government officials and Press reports indicating that a VAT will be imposed in the UAE from January 1, 2018," informed Makvana.
The International Monetary Fund (IMF) has been recommending fiscal consolidation in the GCC through diversification of government revenues and reduction of subsidies. The introduction of taxation in a region that is used to subsidies and lack of levies requires preparation - this was the consensus at the event held on Saturday.
"It is time people are made to understand that public services need to be priced. Options are limited for governments. Either a viable pricing mechanism needs to be implemented to fund public services or governments can resort to big borrowings, which is not sustainable in the long term," said Makvana.
It may be noted that GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) are expected to sign a common VAT Framework Agreement which will set the VAT principles to be adopted.
"Each individual country is expected to develop its own domestic legislation to implement the framework agreement. Once the framework agreement has been signed, there is expected to be two to three years for implementation across the GCC states. Key sectors such as healthcare and education are likely to be exempted from VAT," said Campbell, who recently moved to the UAE to assist with the implementation of VAT in the GCC.
Campbell is a UK chartered tax adviser and member of the Chartered Institute of Taxation and provides VAT training and coaching to businesses in all sectors to assist them in improving their internal compliance processes and mitigate indirect tax risk through knowledge transfer.
The key drivers for VAT, according to Deloitte Middle East, are rising spending obligations to maintain current levels of economic growth, limited capacity to generate revenues in the face of declining oil prices, uncertain demand and fiscal challenges.
Hamilton said: "Chartered accountants in this region will make it easy for UAE businesses to understand the VAT regime as it may separate a lot of myth from reality."
To promote chartered accountancy courses in this region, the Sahul Foundation of India has offered scholarships to five students every year from registration until completion of CA course. The ICAI - Dubai chapter will shortlist students in coordination with schools and universities in this region.