Infrastructure
News
Against this backdrop, the Association of Chartered Certified
Accountants (ACCA) and aafaq
Islamic Finance recently hosted
a panel to discuss about the impact of Value-Added Tax (VAT)
on businesses in the UAE.
ACCA’s global head of taxation,
Chas Roy Chowdhury was the
keynote speaker. Addressing
over 100 finance professionals,
Chowdhury shared his views on
how Europe has witnessed VAT
since the 1970s as a truly renaissance taxation that was able
to pass on the ultimate burden
of tax on value adding supply
chain to the final consumer.
Chaired by Chowdhury, the
panel
discussion
featured
views from Hisham Farouk,
CEO for Grant Thortnon UAE;
Farooq Ladha, International
Tax Partner at Crowe Horwath
UAE; Mujtaba Naseem, CFO
& Deputy CEO for AAFAQ Islamic Finance; Shady Shaher
Elborno, Head of Macro Strategy Research at Emirates NBD;
and Tobias Lintvelt, Partner
Transaction
Tax/International Tax Services for EY UAE.
Key insights from the panel were
that whilst there may be some
concerns that the introduction
of VAT in the UAE may intensify
the cost of doing business in the
country, the anticipated low rate
of 5% should mitigate this. What
will help businesses to prepare
is early sight of the detail of the
legislation so that organisations
have time to build management
and financial reporting systems
to support the detail of the requirements. The panel felt that
the simpler the system; the fewer
exemptions and the greater the
consistency there is across the
GCC the easier it will be for all.
A key area that will be critical to
the implementation of the VAT
system will be the judicial system to support this specifically a
clear appeals and enforcement
system.This is likely to take some
time to develop and implement.
It was also heard that the anticipated low rate of taxation is
unlikely to deter foreign direct
investment given the country’s
overall inverstment attractiveness: its excellent infrastructure,
geographical location and political and economic stability. Also
foreign investors are typically familiar with these types of taxes.
The imminent arrival of corporation tax is understandably
causing concern for small and
medium enterprises (SMEs) in
the UAE who have been used
to operating tax-free. The panel highlighted the potential for
tax reliefs and the likelihood
of revenue threshold exemptions to be brought to support
SMEs. In any event, SME’s
prepardenss to adopt to a
new tax reality is paramount.
There is a key role that professional bodies and advisory firms can play in building the knowledge, skills and
awareness of those who will
be impacted asd and when
the detail of the legislation is
finalised and made available.
Lindsay Degouve de Nuncques,
head of ACCA Middle East
commented “We believe that
ACCA members possess the
right competences to get GCC
February 2016
19