The UAE and GCC region has traditionally been viewed as a tax-free place, the lack of income tax still makes Dubai an attractive option for those wanting to escape grey skies and build a nest egg. Whilst the introduction of personal income tax is unlikely, the move toward a budget boosting Value Added Tax has already started.
In February 2016 at a joint press conference with Christine Lagarde of the IMF, GCC member states announced their agreement to implement a 5% VAT on goods and services in the region, with the UAE most likely to lead the way as of January 1st 2018. Unlike the UK however, the UAE has suggested it will not tax necessities such as food and education.
VAT presents the financial industry in the region with a huge challenge; how to manage the implementation and ongoing process of tax in countries that historically have had none.
According to experts, VAT will add 5000 new jobs to the UAE financial sector as companies prepare and tax consultants move to prepare clients. Finbarr Sexton, Middle East and North Africa (MENA) Indirect Tax Leader at EY, told Zawya “Staff with the requisite skills in VAT are in short supply as businesses in the region are also competing for new recruits from a limited pool of expertise. In the past, new recruits were sourced from markets such as India and Egypt to meet the skills gap; however, with these two countries also in the middle of VAT initiatives, the availability of staff from these markets is in short supply as well.”
Obviously this bodes extremely well for the UK. Not only will companies look toward accounting firms with tax experience but they could also seek to replace or train existing staff. There is opportunity for financial services firms, recruitment companies, training houses, and even individuals who wish to move to the UAE.
Coming from the UK where tax has been part of everyday life for centuries, we could be forgiven for thinking that VAT is not a big deal and is something that just ‘gets done’. In the UAE, it is going to affect procurement, HR, logistics, accounting, and more. The change will be huge, the opportunity equal.
