Over 5,000 jobs will be created in GCC with VAT introduction, tax law expert says

Saudi Arabia and the United Arab Emirates will be the first GCC member states to introduce VAT, as of January 1, 2018. (Courtesy Shutterstock)
Updated 11 October 2017

Over 5,000 jobs will be created in GCC with VAT introduction, tax law expert says

DUBAI: Around 5,000 finance and accounting jobs would be generated with the introduction of the Value Added Tax (VAT) in the Gulf region, a tax law expert said on Wednesday.
Paul Drum, Head of Policy at CPA Australia and an expert in taxation laws, in a Dubai tax workshop said that “VAT brings good news to current finance and accounting students and graduates as this form of taxation will create ample employment opportunities.”
The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, which was signed by the six member states of the Gulf Cooperation Council, required signatories to enact domestic legislation that would introduce a 5 percent VAT on certain transactions.
Gulf states have been looking at other ways to reduce dependency on oil revenues, as well as create new income streams to fund government services including public health services, public owned or funded schools, parks and transport infrastructure.
It is estimated that the VAT’s imposition will raise between $7 billion and $21 billion annually — or between 0.5 percent and 1.5 percent of regional GDP.
The IMF has said the returns could reach around 2 percent of region’s output.
Saudi Arabia and the UAE are expected to be the first Arabian Gulf countries to introduce the GCC-wide VAT on January 1, 2018, while other member states Kuwait, Qatar, Bahrain, and Oman have committed to implement their own VAT taxation by next year.
“The UAE will apply a VAT rate of 5 percent on taxable supplies which is very low in comparison to the average tax rate of 19 percent globally. However, not everything will be charged VAT as the law makes provision for zero rated and tax exempted goods and services to ensure that the impact of VAT on consumers is kept to a minimum,” Drum said.
Among the goods and service that would be subjected to VAT include electronics, smartphones, cars, jewelry, certain beverages, financial and accounting services, legal services, dining out and entertainment.
Certain services and goods such as nearly 100 food items, basic health services, transport and public education will be exempted from VAT.
The UAE has separately started to collect excise taxes at a rate of 100 percent on tobacco and energy drinks and 50 percent on fizzy drinks on October 1.

OECD forecast sees global growth at decade low

Updated 22 November 2019

OECD forecast sees global growth at decade low

  • Governments failing to get to grips with challenges, outlook says

PARIS: The global economy is growing at the slowest pace since the financial crisis as governments leave it to central banks to revive investment, the OECD said on Thursday in an update of its forecasts.

The world economy is projected to grow by a decade-low 2.9 percent this year and next, the Organization for Economic Cooperation and Development said in its Economic Outlook, trimming its 2020 forecast from an estimate of 3 percent in September.

Offering meagre consolation, the Paris-based policy forum forecast growth would edge up to 3 percent in 2021, but only if a myriad of risks ranging from trade wars to an unexpectedly sharp Chinese slowdown is contained.

A bigger concern, however, is that governments are failing to get to grips with global challenges such as climate change, the digitalization of their economies and the crumbling of the multilateral order that emerged after the fall of Communism.

“It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural,” OECD chief economist Laurence Boone wrote in the report.

Without clear policy direction on these issues, “uncertainty will continue to loom high, damaging growth prospects,” she added.

Among the major economies, US growth was forecast at 2.3 percent this year, trimmed from 2.4 percent in September as the fiscal impulse from a 2017 tax cut waned and amid weakness among US trading partners.

With the world’s biggest economy seen growing 2 percent in 2020 and 2021, the OECD said further interest rate cuts would be warranted only if growth turned weaker.

China, which is not an OECD member but is tracked by it, was forecast to grow marginally faster in 2019 than had been expected in September, with growth of 6.2 percent rather than 6.1 percent.

However, the OECD said that China would keep losing momentum, with growth of 5.7 percent expected in 2020 and 5.5 percent in 2021 in the face of trade tensions and a gradual rebalancing of activity away from exports to the domestic economy.

In the euro area, growth was seen at 1.2 percent in 2019 and 1.1 percent in 2020, up both years by 0.1 percentage point on the September forecast. It is seen at 1.2 percent in 2021.

The OECD warned that the relaunch of bond buying at the European Central Bank would have a limited impact if euro area countries did not boost investment.

The outlook for Britain improved marginally from September as the prospect of a no-deal exit from the EU recedes.

British growth was upgraded to 1.2 percent this year from 1 percent previously and was seen at 1 percent in 2020.