VAT a sign of mature economy, expert says

The introduction of a value added tax (VAT) system is a sign of a mature and diversified economy, and will build on a county's resilience in uncertain times, experts at a seminar organised by BDO UAE said.
The seminar brought together over 100 leading businessmen, who had the opportunity to expand their knowledge and gain international experience from the BDO speakers: Ivor Feerick, chair of the BDO International VAT Centre of Excellence; and Gerard Rahman, CEO of BDO UAE.
"VAT signals a further maturity in the economy to bring about diversification, which continues to build confidence in its resilience and sustainability in an uncertain global economy. The idea of value added tax is also consistent with our vision of a diversified economy built by adding value to products and services as we participate in a global economy. We see an important step with the introduction of VAT in terms of realising the UAE's vision of a world class nation," said Gerard Rahman.
"VAT is intrinsic in delivering our vision for the UAE - a diversified world class economy. The key to a diversified economy is the capability of an industrial and business sector to add value to a product or service and participate in the global economy. It takes innovative, visionary and creative people to add value. These people are attracted to and developed within an encouraging multicultural society - where there is a feeling of community, a feeling of pride and a sense of belonging," he said.
There are 195 countries in the world, and around 170 countries have VAT or a similar form of indirect tax. The International Monetary Fund (IMF) has been recommending fiscal consolidation in the GCC through diversification of government revenues and reduction of subsidies. 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.
"The introduction of a VAT system in the UAE and the other GCC States represents a very significant opportunity for businesses in the region to review their operations and internal procedures with a view to ensuring that they maximise the potential to introduce greater efficiencies, and to enable their businesses to cope with the expected scrutiny from the authorities," said Ivor Feerick.
Rahman also noted that attracting and developing talent to add value doesn't occur overnight, and that it takes several years of foresight, commitment, and consistency. An infrastructure, he explained, has to be built which includes world class airports, airlines, road networks, ports, and mass transit systems; followed by tourism, retail, logistical networks, health, education, parks, and real estate.
"From here you have the development of financial centres and stock exchanges; the provision of fine arts, entertainment and sports - think about it - a Formula 1 fixture, horse racing, an opera house, and art galleries such as the Louvre and the Guggenheim. The growth of universities with international links incubate talent. This environment is protected by world class security. It is an ambitious vision to build a community, but it is from this environment that we build excellence and innovation - real value addition for a diversified economy," he said.
- rohma@khaleejtimes.com