22 May 2017
Business and finance professionals across the United Arab Emirates (UAE) have not implemented a strategy for the new value-added tax (VAT) that is expected to start in the Gulf Cooperation Council by January 2018, a new survey showed.
Over 60 percent of 100 senior decision makers and finance professionals in both the public and private sectors in the UAE said they have not allocated a budget for the new tax’s application, while 52 percent said they have not set an implementation strategy for the new tax, according to a survey
by Dubai-based recruitment consultancy firm Hays.
The survey showed that 61 percent of the respondents plan to introduce the new tax using their current workforce, without increasing headcount. Others set a spending budget for the implementation process of up to 100,000 dirhams ($27,225), while only 5 percent said they expect to spend more than 100,000 dirhams.
“With UAE VAT law yet to be fully announced, it is difficult for businesses to anticipate exactly how they will implement VAT and the subsequent costs involved,” Chris Greaves, managing director of Hays in the Gulf, said in a press statement.
“What is clear however, is that organisations need to be understanding the implications now and realising that the introduction of VAT is not just a finance issue. Key support functions, such as IT will certainly be affected, as well as operations,” he added.
UAE president, Sheikh Khalifa bin Zayed Al Nahyan, is expected to issue the VAT law by the end of summer, a source familiar with the procedures told Zawya
All six countries of the Gulf Cooperation Council (GCC), which include the UAE, have agreed in 2016 to introduce a 5 percent VAT as a means to diversify their revenues and reduce reliance on hydrocarbons, following the steep decline in oil prices that started in mid-2014. None of the GCC countries have officially announced details about the new tax. But the Saudi Arabian General Authority for Zakat and Tax
announced on Sunday that the 5 percent VAT will be implemented starting January 2018 with no exceptions, The Saudi Gazette newspaper
Younis Al Khouri, under-secretary at the finance ministry told Zawya
in an interview earlier this year that the new VAT is expected to be implemented simultaneously across the GCC starting January 1, 2018. He said some strategic sectors in the UAE might get tax reductions or exemptions. The sectors that could get special treatment were: education, healthcare, renewable energy, water, space, transportation and technology.
Click here for Zawya's VAT special coverage