The UK will vote to remain in the EU, Hillary Clinton will be elected the US president and both Theresa May and Angela Merkel will be strengthened after national elections.
These are just a few examples of the predictions I’ve made in the past couple of years that have proved to be spectacularly wrong. So it with some trepidation that I look ahead to the coming weeks and months and try to take an informed guess at how the introduction of VAT will play out in the UAE.
In the first few weeks, I expect there to be a degree of panic as a number of businesses realise that they should have registered for VAT, but haven’t done so. Honestly, they have no excuse. They’ll be hit with penalties. They should be. Failure to register for and charge VAT puts unnecessary pressure on the functioning of the system.
There will be an immediate focus on prices and price increases. Many businesses in the UAE are in a quandary, unable to absorb the VAT cost themselves, but nervous of trying to pass it on to consumers and business customers otherwise unable to recover VAT in full, such as banks and funds. I still expect a number of businesses that are able to recover VAT in full to argue that their suppliers should absorb the VAT, notwithstanding that this would mean a price cut for the supplier, and that the legislation provides that in most cases the price should be treated as VAT exclusive.
There will be a number of cases where a recipient is not being charged VAT by its supplier in circumstances where the recipient thinks that it should be. Although the recipient is not generally required to “police” the VAT compliance of the supplier, this does give rise to some difficult decisions. Should the recipient, particularly one that is able to recover VAT, demand that the supplier charges VAT? Seems a strange request. But addressing up front ensures that the recipient receives a VAT invoice in a timely manner, that it will not receive a later demand for the additional VAT, and that its supplier can focus on supplying rather than being hit with penalties for non-compliance. On the other hand, the consumer or business that it is unable to recover its VAT in full may decide to keep quiet and hope no one notices.
__________
Read more:
Minister on VAT: 'No delay on January 1 - and no favours to anyone'
Trump ups the ante with attacks on 'disgraceful' FBI
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Looking to the first quarter of 2018, I expect businesses to start grappling with some of the more challenging aspects of VAT. Should this mixed supply be standard rated or zero rated, or should the price be apportioned between the supplies? Can I zero rate this export? Is this sale of assets subject to 5 per cent VAT or is it a sale of a business which shouldn’t be treated as a supply at all? Who - on reflection - actually is my customer and where do they belong for VAT purposes?
Businesses are also likely to become more proactive in looking to reduce the overall VAT cost in their structures and transactions. This is less likely than to manifest itself in aggressive tax planning, than an attempt to avoid double taxation or minimise lengthy periods before VAT can be recovered. It will be well worth doing.
Looking towards the end of 2018, I expect some businesses to be recoiling from the extensive penalties that are imposed on them, while wrestling with making the necessary subtle changes in their systems as the remaining GCC countries begin to introduce VAT (hopefully all on the same day). I expect a few businesses to go bust, citing VAT, although it’s unlikely it will finish off any fundamentally strong firms. The FTA might start to get more interested in the informal economy, and actively enquire into “cash in hand” businesses.
The end of 2018 will also be the time I expect the spectre of litigation to arise. Litigation between commercial parties is likely, not least because a number of businesses will fail to make the necessary notifications to their customers to ensure that in appropriate circumstances the consideration can be treated as VAT exclusive - a large number of the communications I’ve seen are technically ineffective under the legislation - and will be scrabbling around for arguments that the contract allows them to. But also around this time I would expect to be threatened by the FTA against taxpayers, and by taxpayers against the FTA. My expectation is that positions will be taken by the FTA in relation to VAT that will be in some cases, capable of challenge and, in others, simply wrong. Don’t accept an incorrect VAT assessment.
But let me not be too pessimistic. Most businesses most of the time will be able to operate VAT without too much bother. Consumers will grumble, but in most cases the price increases are likely to be relatively small and one-off unless the VAT rate is increased.
In respect of which, a final prediction. By 2023, the rate of VAT will be higher than 5 per cent. Much higher.
Merry Christmas.
Jeremy Cape is a tax lawyer at Squire Patton Boggs, which has offices in London, Dubai and Abu Dhabi. Follow him on Twitter @jeremydcape
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The specs
Engine: 3.0-litre twin-turbo flat-six
Power: 480hp at 6,500rpm
Torque: 570Nm from 2,300-5,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 10.4L/100km
Price: from Dh547,600
On sale: now
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Unresolved crisis
Russia and Ukraine have been locked in a bitter conflict since 2014, when Ukraine’s Kremlin-friendly president was ousted, Moscow annexed Crimea and then backed a separatist insurgency in the east.
Fighting between the Russia-backed rebels and Ukrainian forces has killed more than 14,000 people. In 2015, France and Germany helped broker a peace deal, known as the Minsk agreements, that ended large-scale hostilities but failed to bring a political settlement of the conflict.
The Kremlin has repeatedly accused Kiev of sabotaging the deal, and Ukrainian officials in recent weeks said that implementing it in full would hurt Ukraine.
Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Jordan cabinet changes
In
- Raed Mozafar Abu Al Saoud, Minister of Water and Irrigation
- Dr Bassam Samir Al Talhouni, Minister of Justice
- Majd Mohamed Shoueikeh, State Minister of Development of Foundation Performance
- Azmi Mahmud Mohafaza, Minister of Education and Minister of Higher Education and Scientific Research
- Falah Abdalla Al Ammoush, Minister of Public Works and Housing
- Basma Moussa Ishakat, Minister of Social Development
- Dr Ghazi Monawar Al Zein, Minister of Health
- Ibrahim Sobhi Alshahahede, Minister of Agriculture and Minister of Environment
- Dr Mohamed Suleiman Aburamman, Minister of Culture and Minister of Youth
Out
- Dr Adel Issa Al Tawissi, Minister of High Education and Scientific Research
- Hala Noaman “Basiso Lattouf”, Minister of Social Development
- Dr Mahmud Yassin Al Sheyab, Minister of Health
- Yahya Moussa Kasbi, Minister of Public Works and Housing
- Nayef Hamidi Al Fayez, Minister of Environment
- Majd Mohamed Shoueika, Minister of Public Sector Development
- Khalid Moussa Al Huneifat, Minister of Agriculture
- Dr Awad Abu Jarad Al Mushakiba, Minister of Justice
- Mounir Moussa Ouwais, Minister of Water and Agriculture
- Dr Azmi Mahmud Mohafaza, Minister of Education
- Mokarram Mustafa Al Kaysi, Minister of Youth
- Basma Mohamed Al Nousour, Minister of Culture
Company%20profile
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