New tax laws will be a wake-up call
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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”.