40 days to go, are Dubai firms ready for VAT?
dubai — The on-time implementation of value added tax (VAT) is a challenge as most companies in Dubai and elsewhere are not yet fully prepared to adapt to the new tax regime, Hamad Buamim, president and CEO of Dubai Chamber of Commerce and Industry, said on Monday.
Speaking to the media on the sidelines of “Meet the CEO” event, organised by Dubai Media Office, Buamim said more preparedness by small and medium-sized enterprises is required for VAT to be successfully implemented.
So far companies registered with the chamber for VAT implementation process are only 450, he said and hoped that VAT would be implemented only after ensuring full preparedness.
“The picture is not clear yet, and it is a real challenge to enforce the tax regime within the 40 days.”
The bills registration system and other pre-requisites for VAT implementation require training process. Out of the total 450,000 companies, those which are required to be VAT-compliant before January 1, 2018 are almost 30,000. On the move to levy a three per cent tax on companies towards corporate social responsibility activities, Buamim said he did not think the time is right for imposing the rule.
“We need to encourage companies to involve in CSR programmes, and this could be through other initiatives aimed at enhancing work ethics and helping employees by facilitating a positive work environment,” said Buamim.
On the issue of hiking fees and service charges, he said Dubai wants to maintain a world class liv- ing and business environment by raising the standard of its services and facilities.
He said the impact from sanctions against Iran is not much as the twoway trade had not been as high as it used to be in the past. The two-way trade had fallen to Dh20 billion from Dh70 billion. It is not significant compared to Dubai’s trade with other regions, for instance, with Central Africa, with which the bilateral trade rose to Dh128 billion.
— With inputs from Issac John
Asia Department, said recently at a media briefing in Dubai.
Infrastructure spending is a prime focus of Dubai government as it registered 27 per cent year-on-year increase in 2017 due to allocations of more funds towards Expo 2020 projects. It is accounted for 17 per cent of total expenditures this year, reflecting the emirate’s concern for the gradual implementation of Expo 2020 developments, according to analysts.
“With the government focus on the Expo 2020, there will be additional government spending which in turn will provide lubrication to the economy. Being a stable and peaceful country in the region, the UAE in general and Dubai in particular, are seen as an investment destination in the region,” Atik Munshi, senior partner at Crowe Horwath — UAE, said.
About the economic growth outlook, he said it is not surprising that the IMF and other international organisations have predicted a higher growth for Dubai GDP backed by the non-oil revenue. He said the main thrust will actually come from the implementation of value-added tax, which is expected to provide a boost to the government exchequer.
“Real estate and construction, which is one of the major sectors for Dubai has also fared better and the same is expected to continue in 2018. I personally feel that the Dubai GDP will be in excess of 3.5 per cent in the next year,” Munshi told Khaleej Times.
Dubai Economy also forecasts that the emirate’s GDP will grow at 3.1 per cent this year and 3.6 per cent in 2018 as it pursuits diversification policy to reduce reliance on trade and trade and focus more on real estate, manufacturing and tourism.
Richard Stolz, head of corporate development at grmc Advisory Services, said Dubai’s tourism sector is ever growing in terms of tourist volumes visiting the city. “For the first nine months of 2017 Dubai’s visitor number grew by 7.5 per cent over the same period last year to a total of 11.58 million overnight visitors. The steady growth in this sector can certainly be regarded as one of the contributors to Dubai’s growing GDP,” Stolz told Khaleej Times.
— muzaffarrizvi@khaleejtimes.com