UAE’s VAT plans will open up job opportunities
Author: Criselda Diala-McBride | Date: 27 Oct 2015
Government plans to tax products will invigorate tax talent market, says KPMG
The UAE government’s recently unveiled plans to introduce value-added tax (VAT) and corporate tax will open up a range of new opportunities for tax specialists as organisations get to grips with the proposed laws, according to experts at global audit and advisory services firm KPMG.
Plummeting oil prices in the past year have prompted governments across the GCC – not just the UAE – to consider the introduction of a tax system to prop up their economies. This move will naturally lead to a huge demand for specialists as organisations prepare to comply with the region’s new tax regime, says Nilesh Ashar, the UAE-based partner – head of tax at KPMG.
“The introduction of VAT will open up tax job opportunities in the region and there will be a big market for talent in the indirect tax space,” says Ashar. “Businesses and advisers will need to ramp up their teams with professionals who have indirect tax and VAT background, to help companies deal with VAT compliance and other matters related to VAT returns, audits and assessments.”
Imposing VAT and corporate tax in the UAE, and in other parts of the Gulf, is seen as a major shift in policy, especially considering that economies in the region have thrived until now despite the zero-tax environments.
Governments are still discussing the specifics of the proposed law, which is unlikely to be implemented until the six-nation council reaches a consensus on the planned VAT rate, the products and services to be taxed, and the list of exemptions. The International Monetary Fund (IMF) has suggested the UAE adopt a rate of around five per cent.
But Ashar says organisations and employees shouldn’t be alarmed that introducing VAT opens the door for the imposition of income tax as well.
“There is no proposal to introduce personal income tax in the UAE. The country remains a major attraction for global talent, especially when compared to developed and developing countries where personal tax rates are within the 40 to 50 per cent range,” he says.
Ashar adds that VAT itself is unlikely to damage the UAE's reputation as a magnet for expatriates.
“If the government keeps the VAT rate low and organisations keep product prices competitive by absorbing some of the VAT cost instead of passing it on entirely to consumers, I don’t think that will deter expatriates from moving to the UAE. The UAE has a lot more to offer besides no income tax,” he said.