New tax laws will be a wake-up call

Fol­low 7DAYS at GITEX...

7 Days in Dubai - - BUSINESS - @shab­nam­bashiri

Af­ter fall­ing 11 per cent fol­low­ing the UK’s Brexit vote in June, the Bri­tish pound’s tur­moil con­tin­ued last week when Ster­ling fell to a 30year low. Neil Ste­wart, Se­nior Fi­nan­cial Plan­ner and UK markets ex­pert at Guardian Wealth Man­age­ment, gives us the do’s and don’ts.

How can peo­ple take ad­van­tage of the cur­rent sit­u­a­tion liv­ing abroad? It is ob­vi­ously a re­ally good time to con­vert money from dirhams to pounds. Peo­ple in the UAE will get 20-25 per cent more money than they did a cou­ple of years ago, so clear­ing debts like credit card bills back in the UK is much eas­ier now.

What other ways can peo­ple in­vest in? The best way to in­vest money cur­rently is in stocks, shares and mu­tual funds. If you go to the likes of JP Mor­gan or Gold­man Sachs and the emerg­ing markets they are in­vest­ing in, it is a great time to buy shares. Al­though you would be buy­ing them in dol­lars or dirhams, the share class would be in pounds.

GITEX Tech­nol­ogy Week 2016 starts to­day and the 7DAYS team will be there cov­er­ing the news across the show’s 1.4 mil­lion square feet of space at Dubai World Trade Cen­tre. For the lat­est tech up­dates you can fol­low us on so­cial me­dia @7DAYSUAE or on­line at 7days.ae What are the key things to keep in mind while pick­ing an in­vest­ment? If you have a prop­erty al­ready in the UK, it is best not to buy more, be­cause there are a num­ber of tax bar­ri­ers on UK res­i­den­tial prop­er­ties which can be con­sid­er­ably higher for the for­eign in­vestor or a non-res­i­dent na­tional. If you have a prop­erty, in­vest in shares or mu­tual funds.

In case the pound falls fur­ther down, how does that af­fect in­vestors? No one has a crys­tal ball, all we know is cur­rently in­vestors will get prop­er­ties at al­most 70 per cent, or two thirds of the value from a year or two ago. So it is def­i­nitely a good time to do so.

What is the best way to trans­fer money with min­i­mal loss? Banks will charge three to four per cent of the amount you are send­ing as a trans­fer fee. If you go through a cur­rency trader, it will make a big dif­fer­ence, as they charge al­most half of that on the spot rate which gives you a lot more pounds on your dirhams. SMEs and fam­ily-run firms in par­tic­u­lar face a sig­nif­i­cant chal­lenge to get ready for the in­tro­duc­tion of value added tax ( VAT) in the next 15 months, a ma­jor au­di­tor has said.

New leg­is­la­tion will re­quire most re­tail­ers and other busi­nesses to charge a 5 per cent VAT on goods from Jan­uary 2018, with the ex­emp­tion of es­sen­tial ser­vices.

The move could in­crease GDP by about 1.5 per cent, ac­cord­ing to an In­ter­na­tional Mon­e­tary Fund (IMF) re­port, gen­er­at­ing bil­lions for the econ­omy.

But ac­cord­ing to re­search by au­dit­ing gi­ant EY, for­merly Ernst & Young, some 50 per cent of chief fi­nan­cial of­fi­cers in the Gulf have a “min­i­mal un­der­stand­ing” of the im­pact of the new tax on their busi­ness.

Saulius Ado­maitis, a part­ner in per­for­mance im­prove­ment ad­vi­sory ser­vices at EY, said in­ter­na­tional firms op­er­at­ing here should find it eas­ier to ad­just, but that lo­cally-based and fam­ily-run firms need a wake-up call.

He said: “For lo­cal busi­nesses, it’s a completely new thing. In some of the GCC coun­tries, busi­nesses have very lit­tle ex­po­sure to any tax. Some of the busi­nesses don’t even have their own tax depart­ment.”

Ado­maitis said this could mean IT up­grades, hir­ing new staff and en­sur­ing they un­der­stand the new laws need to be­gin now.

He said: “If planned prop­erly, such tran­si­tion may take 12 to 18 months, so ev­ery­one should By Shab­nam Bashiri start pre­par­ing now.” Firms will be able to reg­is­ter their VAT ar­range­ments with the gov­ern­ment three months be­fore the in­tro­duc­tion of VAT on Jan­uary 1, 2018, but need to be ready well be­fore then, he said. As VAT will af­fect most trans­ac­tions, busi­nesses will need to make sure that each and sin­gle in­voice they get or is­sue is com­pli­ant or they will not be able to claim VAT back. For each type of sup­plier, goods and ser­vices cat­e­gories they will need to be able to as­sign and ver­ify VAT code. Ado­maitis added: “The big­gest im­pact will be on the in­voices. So far in­voices have been pro­cessed through sys­tems such as Mi­crosoft, so com­pa­nies will need to make their sys­tems VAT com­pli­ant. “In other words, they will need to en­sure that those sys­tems can store nec­es­sary key codes, in­voice, and can also track the VAT across their value chain.” EY is among the au­di­tors of­fer­ing an as­sess­ment for firms to un­der­stand what each needs to do to get ready, and of­fer “pre­scrip­tive ad­vice unique to each com­pany on how to en­sure their tran­si­tion to op­er­at­ing within a VAT frame­work is seam­less”.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.