Experts at the Chartered Accountants in England and Wales (ICAEW) roundtable in Dubai concluded the recent implementation of five percent VAT in the UAE and Saudi Arabia has not affected deal flow in the GCC.
Businesses are slowly warming up to the new VAT system. Michael Armstrong, FCA and ICAEW regional director for the Middle East, Africa and South Asia (MEASA), said: “We are living in a very exciting period. There is no doubt that VAT implementation will improve business conditions and create more stable economies over the long run.”
However, concerns arise as several businesses lack VAT expertise for varied reasons. This mainly impacts small-scale enterprises, which struggle due to limited or low access to expert advice. In addition, the panelists included short-term issues such as errors during implementation of VAT by businesses can lead to negative customer reaction, and in turn, shadow its long-term economic impact.
The sectors largely affected by VAT are construction, real estate and export industries because of long tenure projects and contracts which hadn’t considered VAT prior to its implementation.
But the panellists acknowledged the UAE government’s efforts to ensure smooth implementation of tax. “As a young legislative body, it’s tough for the UAE tax authority to address all concerns raised by businesses,” Armstrong added.