Global Trade and Tourism Growth show positive impacts on UAE Economy

Global Trade and Tourism Growth show positive impacts on UAE Economy

According to the ‘The ICAEW Economic Insight’ report by Oxford Economics, the UAE economy is benefitting the most from the growth in global tourism and rebound in global trade flows of all the GCC countries. The report says that the UAE is the most diversified economy among all GCC countries and has better economic outlook. The country’s economic system is much bigger than the fuel, which only contributes 22 per cent to the total export revenue of the UAE.

In the past year, UAE’s economy has witnessed a bigger contribution from the non-oil industries, which is likely to result in up to 1.7 per cent growth in the country’s GDP in 2017. The GDP rate is expected to grow further as much as 3.3 per cent in 2018.

One of the main reasons behind this economic growth is the solid infrastructure investments in the country. With the world’s third biggest Airport and the ninth most used container port, UAE’s infrastructure is one of the best for business.

The global traffic received at the Dubai International Airport increased by over 7 per cent in the first quarter of 2017, which resulted in the further growth of the non-oil sector. UAE’s economy is witnessing several new important infrastructure projects, mainly because of Expo 2020. The total number of constructions performed in the first quarter of the year were 26 per cent more as compared to the first quarter of 2016.

The banking system in the country witnessed less liquidity pressure because of the stabilization in oil prices, sovereign debt issuance, and the soothing pace of austerity over the past year and so. Private bank deposits grew by almost 9 per cent in the year so far, which resulted in 7 per cent growth in the lending rate during this period.

Michael Armstrong, FCA and ICAEW regional director for the MEASA, also confirmed the ICAEW report and said, “The UAE is in a stronger position than other countries in the region due to its diversified economy, excellent infrastructure, political stability and ample foreign assets. Its reputation as a trade hub has helped the country to benefit from the rebound in the world economy more immediately than other economies in the GCC.”

The new value added tax (VAT), which is expected to be launched in GCC countries in the beginning of 2018, may push inflation to up to 4 per cent. UAE consumers are likely to feel the pressure to spend less after the launch of VAT in the country. The government’s decision to charge excise duties on tobacco products and soft drinks will further increase this pressure. This may overall affect the spending capabilities of the consumers despite the growth in the economy.

A proactive approach to VAT implementation in GCC Countries

A proactive approach to VAT implementation in GCC Countries

All the GCC countries have collectively signed on the VAT framework agreement to implement a simpler and more unified Value Added Tax (VAT) in the Gulf region. The new tax system is expected to have a positive impact on the economic system to change the fiscal reform process. Even several foreign businesses and investors are also looking at the region with great future opportunities, interest, and promise. VAT rate will be fixed at 5% for most of the goods and services with the exception of those products/services that are tax-free.

Since essential basic items like food, education, health, etc, are likely to be VAT-exempted, it may have a positive impact on consumer spending. The low tax rate is also expected to have positive effects on the inflation. Under VAT, businesses will be responsible for collecting tax on behalf of the government, and the tax will be ultimately paid by the end consumer. Read More

GCC businesses become more VAT aware as the deadline approaches

GCC businesses improve awareness for VAT

Ever since the news of VAT (value added tax) being implemented in the UAE has surfaced, GCC businesses have been trying to prepare themselves for the new tax regime. The UAE Finance Minister had earlier this year stated that VAT will be applied at the rate of 5% in the UAE from January 1, 2018. The major effect of the change will be faced by the business sector where businesses will have to get aware of the new tax methods if they want to continue to make the profit.

According to a series of surveys conducted by accounting firm Deloitte for the businesses and executives in the Gulf region, more than 60 per cent of GCC companies are getting more familiar with the rules and methods of VAT as the scheduled date of implementation is approaching. Deloitte has been conducting regular surveys of the Gulf businesses ever since the first news of the next VAT based system was revealed. As compared to the initial survey results, the latest ones show a drastic improvement in the views of businesses towards VAT. They are becoming more aware and informed of the rules and impacts of the indirect tax system. Read More

VAT in GCC: The case for e-invoicing and e-archiving solutions

VAT in GCC- E-invoicing and e-archiving solutions

VAT (Value Added Tax), a tax regime, which is believed to completely transform the way of business transactions used by trading companies across the GCC, either it is an SME/ SMB or a large enterprise. The upcoming tax regime in UAE depends on IT solutions like e-invoice suite and e-archive suite, which makes sure the smooth transactions under the new tax landscape and also guarantees on-going VAT compliance. Read More

UAE Federal National Council Approves Changes To Tax Procedure Bill

UAE FNC Approves Change to Federal Tax Procedures Law

The Federal National Council (FNC) of UAE, on Tuesday, affirmed changes to a draft law that is required for issuing tax-related laws and for the smoother implementation of the upcoming VAT taxation system in the country. The Tax Procedure Bill is aimed at evaluating, collecting and controlling public revenue it applies to, in addition to setting out the rights and commitments of taxpayers, enrollment of taxpayers, and tax offenses and infringement. This draft law will also apply to fines, interest on the basis of due but unpaid tax and the expenses of the enforced collection. Read More

Impact of VAT on Household Budget

VAT impact on Household Budget

Value Added Tax is all set to begin its regime in the UAE region from January 1, 2018. It is expected that the new tax system will strengthen the nation by generating more revenues from non-oil businesses.

VAT is an indirect tax that is not based on the income but works with expenditure. It is applicable to goods and services within the value chain based on the value each state till it reached the end consumer, which the final taxation level. Read More