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.
The event convened more than 200 senior bankers, management consultants and experts from finance. Attendees included representatives of prominent local and global establishments such as Deloitte, Grant Thornton, Thomson Reuters, Algorithm Research and Stuart & Hamlyn Chartered Accountants.
The one-day conference addressed a variety of topics including the economic impact of VAT, learning experiences from other countries that have implemented the tax, and new regulations affecting the financial sector and businesses in general. Across 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.
Since the VAT law is not yet out in the public domain, companies find it difficult to ascertain the impact of the new tax on their business and prepare for it accordingly. In addition, the limited time between passing the final law and the implementation date may also pose a challenge.
Explaining the background of the event, Jamal Al Jassmi, General Manager of EIBFS, said: “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 instil 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 five percent will contribute 2.7 percent to the country’s non-oil GDP.