Plans to phase in value added tax in the GCC are likely to be delayed, say tax experts. Jeff Topping / The National
Plans to phase in value added tax in the GCC are likely to be delayed, say tax experts. Jeff Topping / The National

Value-added tax plan for GCC on backburner



GCC governments are likely to delay plans to roll out a value-added tax (VAT) in the region as the Arab Spring and the financial crisis sap political will for the levy, says a top regional tax expert.

The 2015 target date for the introduction of the tax was "optimistic", said Finbarr Sexton, a tax partner at Ernst & Young in the Middle East and North Africa.

"We have had the Arab Spring and the global financial crisis, and since [then] most governments are reluctant to introduce tax regulation, which impose an additional cost burden," he said.

Governments in the region have been mulling the introduction of VAT in recent years to widen their revenue income to pay for public services. Most recently 2015 was discussed as a potential launch date, according to UAE Ministry of Finance officials. But governments have bolstered their public spending in the past two years. The global financial crisis led many states to roll out big stimulus plans to support their economies.

Instability in parts of the wider Middle East also prompted a rise in government handouts to citizens. Saudi Arabia last year unveiled spending packages of US$129 billion (Dh473.85bn), including funds for housing loans and aid for the jobless.

As a consumption tax on certain goods and services, VAT may appear at odds with recent efforts to help citizens, said tax experts. Companies would also face the initial cost of implementing the system. Mr Sexton said the 2015 deadline was also unlikely as at least two years would be needed for a public awareness campaign about VAT and to allow firms time to prepare their IT systems.

Officials at the IMF have long urged GCC states to introduce the tax as a way of ensuring a reliable inflow of government revenues, safeguarding against volatility in oil prices. But while many experts still expect VAT to happen at some point, they say the time frame is increasingly hazy.

"In light of the recent political and economic circumstances, it's increasingly difficult to predict what will happen with fiscal reform in the region," said Dean Rolfe, PwC's Middle East tax leader. "With the absence of political will it may be pushed back in the short-term."

Governments have indicated they would like to impose VAT at a GCC level. But differences between states mean most states would likely bring in the tax at a country level.

"Some will focus on oil and others on financial services. One size does not fit all and they have to decide what the impact will be on their national citizens and to make sure they are still attractive as a destination for foreign direct investment," said Sherif El Kilany, a regional tax expert at Ernst & Young.

Governments also have to decide which goods and services would apply to the VAT. Petrol and other goods are subsidised by some governments.

"I don't think it would be as controversial as some people have suggested, said Giyas Gokkent, the chief economist at National Bank of Abu Dhabi. "The core commodities would likely be excluded, like food items and medicine, and if it was introduced it would likely be phased in."

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What is Genes in Space?

Genes in Space is an annual competition first launched by the UAE Space Agency, The National and Boeing in 2015.

It challenges school pupils to design experiments to be conducted in space and it aims to encourage future talent for the UAE’s fledgling space industry. It is the first of its kind in the UAE and, as well as encouraging talent, it also aims to raise interest and awareness among the general population about space exploration. 

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The Two Popes

Director: Fernando Meirelles

Stars: Anthony Hopkins, Jonathan Pryce 

Four out of five stars

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Final scores

18 under: Tyrrell Hatton (ENG)

- 14: Jason Scrivener (AUS)

-13: Rory McIlroy (NIR)

-12: Rafa Cabrera Bello (ESP)

-11: David Lipsky (USA), Marc Warren (SCO)

-10: Tommy Fleetwood (ENG), Chris Paisley (ENG), Matt Wallace (ENG), Fabrizio Zanotti (PAR)

The specs

Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now

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Pakistan T20 series squad

Sarfraz Ahmed (captain), Fakhar Zaman, Ahmed Shahzad, Babar Azam, Shoaib Malik, Mohammed Hafeez, Imad Wasim, Shadab Khan, Mohammed Nawaz, Faheem Ashraf, Hasan Ali, Amir Yamin, Mohammed Amir (subject to fitness clearance), Rumman Raees, Usman Shinwari, Umar Amin

SQUADS

South Africa:
JP Duminy (capt), Hashim Amla, Farhaan Behardien, Quinton de Kock (wkt), AB de Villiers, Robbie Frylinck, Beuran Hendricks, David Miller, Mangaliso Mosehle (wkt), Dane Paterson, Aaron Phangiso, Andile Phehlukwayo, Dwaine Pretorius, Tabraiz Shamsi

Bangladesh
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Fixtures
Oct 26: Bloemfontein
Oct 29: Potchefstroom

The specs
 
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Moon Music

Artist: Coldplay

Label: Parlophone/Atlantic

Number of tracks: 10

Rating: 3/5

THREE
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COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
 
 
 
 
 
 
 
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Mia Man’s tips for fermentation

- Start with a simple recipe such as yogurt or sauerkraut

- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.

- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.

- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.

 

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