(MENAFN- Khaleej Times) The UAE business community is voicing concerns about the general readiness of its members to adapt to the new tax regime in less than 40 days. The latest to raise doubts on the preparedness in embracing the region's landmark tax reform is the head of the influential UAE Banks Federation.
AbdulAziz Al Ghurair, chairman of the UBF and CEO of Mashreq, on Wednesday called for deferring the implementation of the value added tax (VAT), which is scheduled to be implemented from January 1, 2018. He argued that various economic sectors in the country, especially banks and insurance companies, are not fully prepared for the enforcement of the tax reform.
Replying to a question from an Arabic newspaper on the sidelines of the Middle East Banking Forum in Abu Dhabi, Al Ghurair said: "We need at least six months after the issuance of the executive regulation, provided that the measures for online implementation have been finalised."
Hamad Buamim, president and CEO of the Dubai Chamber of Commerce and Industry, also raised the same concern on Monday, saying that the on-time implementation of VAT remained a challenge as most companies in Dubai and elsewhere are not yet fully prepared to adapt to the new tax regime.
Buamim, speaking to the media on the sidelines of 'Meet the CEO' event, said more preparedness from the side of small and medium companies is required for VAT to be successfully implemented.
He pointed out that companies registered with the Dubai Chamber for VAT implementation process are only 450 so far, and hoped that VAT would be implemented only after ensuring full preparedness. "The picture is not clear yet, and it is a real challenge to enforce the tax regime within the 40 days."
Ahmed bin Sulayem, executive chairman of the Dubai Multi Commodities Centre, earlier said there is a sincere feeling of uncertainty about VAT rollout.
"The introduction of VAT here in the UAE next year - though lowest in the world - leaves our member companies and even industry generally concerned," he said. An official of the International Monetary Fund also raised doubt about the possibility of a harmonious introduction of the levy in the GCC.
Abdelhak Senhadji, deputy director of the Fiscal Affairs Department at the IMF, said the implementation of GCC-wide value-added tax could be delayed due coordination and preparatory work requirements needed to introduce the five per cent tariff at the beginning 2018. "We are sceptical about whether this [implementation of VAT in the first quarter of next year] can be achieved in the sense that the preparatory and coordination work may not be completed on time," said Senhadji.
"Countries should not necessarily rely on the laggards to delay the reforms that are necessary for them to restore fiscal sustainability," the IMF officials said.
The IMF is supporting Gulf countries on the introduction of VAT through technical assistance.
Only Saudi Arabia and the UAE have published VAT laws and committed to implementing the levy on January 1, 2018.
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Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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