The Gulf Cooperation Countries (GCC) has relied almost entirely on the revenues from oil and gas industry to fund its government financing. The big six that comprise of GCC (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) have a very small fraction of revenues coming in from the other industry verticals. What this means is that they are staring at a highly uncertain future once the depletion kicks in for the oil and gas industry. This is why the government’s financial machinery is working overtime to implement an alternate (and a sustainable) financing option that removes the heavy dependence on the oil and gas resources of the nations.
The members of the GCC are acutely aware of the immense load of relaying on its natural resources for generating government income. In order to move away from this scenario, they need to look at a much bigger picture and bring in other industries to contribute to the government income. And this step has to be in place with complete working frameworks, way before the oil and gas resources start to dry up and incur a big shortfall on the government income.
This is exactly where the new policy implementation of adding a VAT (Value Added Tax) comes into the picture for the GCC nations.
The Birth Of A New Chapter In GCC’s Financial History
The announcement of levying Value Added Tax was made by his Excellency Obaid Humaid Al Tayer on 24th February 2016. Addressing a joint press conference with the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, the minister made this crucial financial announcement. This news is sure to make a profound impact on the sagging government income and provide impetus to the various development projects that are stuck due to lack of funds in the government coffers.
The first draft outlined by the government levies 5% VAT on all goods except major basic services like education, medical, and food items. While the UAE is planning to get this implemented from 1st Jan 2018, the other GCC nations will be most likely to roll out VAT by 1st Jan 2019.
As per the official release, there is an interesting background to this massive step. If you think that this was a sudden or knee-jerk reaction then think again. The need for a common framework for VAT was devised long back. The six nations have already decided on a common VAT framework that will be rolled out to reduce dependency on the oil sector and bring about economic diversification. With this step, the heavy burden on oil to deliver year after year is reduced. Other industries too can add to the income of the government. In turn, this will help give life to multiple socio-economic programs devised by the government but which couldn’t start off due to lack of funds.
How Is The Implementation Progressing?
In order to let the step of VAT move from blueprint to implementation, a lot of measures are being announced. A new government entity is now established to harvest data and numbers about the federal taxes and laws in place. Additionally a declaration by the President of the UAE ensured the inception of a Federal Tax Authority. This new authority will oversee and regulate various activates needed to ensure the success of VAT implementation on a nation-wide basis. These include steps like configuring systems to keep track of taxpayers records, keeping records of the amount of taxes paid by them, and notifying from time to time about the various circulars and announcements made by the government.
How Will It Affect The Talent Sourcing For VAT Experts?
There is expected to be a drastic shortage of financial experts who are skilled at the various aspects of VAT in the UAE. The initial assessment of human capital in the financial domain suggests that a lot of reputed and expert HR sourcing and staffing companies like us will need to throw its full weight of expertise and experience in sourcing a large volume of senior level finance professionals within a short span of time. Since the demand for VAT experts will be high, there is every chance that the quality of recruitment would go down if the sourcing aspect is not delegated to a company like Alliance Recruitment that has a proven track record in executing challenging projects in an exceptional manner.
Impact On Corporates –
It is true that recruitment of talent in VAT laws on such a colossal scale will require diligent planning, a dash of innovation, and superior access to resources to supply the VAT specialists. While the expat workforce will be able to fill up many open positions, it is a fact that many of these would have started their careers with GCC based companies and hence might need to scale up their knowledge to include VAT and indirect taxes — an area that they haven’t yet covered working for the Gulf companies. As such many senior professionals who have started their jobs in GCC will find it difficult to transition from their present roles to a more diverse tax regime.
Impact On Government Functions –
The biggest move will be to ensure that this tax is added to the commercial price of all commodities and services that are delivered in the UAE. The existing accounting systems will need to be updated to ensure that they can record the amount and monetary value of the transactions, as well as the VAT collected from these transactions. This means that the government machinery will need to absorb a lot of professionals in VAT and taxation. They can help in the recording, tracking, managing, and organization of the transaction details that are supplied by commercial businesses across the UAE.
Impact On Technology And Business Consulting –
Along with the finance industry, the workforce in GCC will also need to re-calibrate their existing ERP, accounting software, and CRM systems, since they earlier did not factor in VAT and its impacted areas. Professionals with expertise in technology solutions will also need to be ready to see a jump in demand for technical professionals to overcome this limitation.
This new taxation structure will also see a spurt in demand for business consultants who are equally at ease with the technology aspect of finance as with the functional aspect of the domain. Business consultants can expect the number of open positions to increase exponentially as the date of proposed implementation of VAT regime draws closer. This period can be a time for knowledge enhancement, application to expert recruitment specialists like us, and sharpening the CV to make a positive impact on the employers’ minds.
Connecting With A Recruitment Expert Will Add Immense Value
The finance and taxation teams within a lot of companies will have the demand for a number of positions to cater to the implementation of VAT regime in the UAE. Some of the positions would include
Indirect tax and VAT specialists
Finance managers with experience in VAT
Junior associates in VAT and indirect taxes, and
VAT consultants
The huge volume of open positions across scale and size of companies in the UAE means a tremendous opportunity for recruitment specialists to scale up their extensive portfolio of offerings. This will help them to focus on aligning the best talent in VAT and indirect taxes to the multiple open positions that will come up with the rollout of the VAT taxation system in the UAE. Veteran specialists like us have already built the capabilities, systems, processes and practices to ensure that they are able to satisfy the large scale demand satisfactorily and contribute to successful implementation of the VAT laws in the UAE.
At Alliance Recruitment we know that we need to enable the hiring of top talent at senior levels and at junior levels so that the management hierarchy remains stable and accountable under the new corporate structure. Hence we have already put in place an effective system to expose the experienced talent in VAT and indirect taxes to serve companies in the UAE. They will not only be able to augment the present finance team within the company, but also bring in the expertise necessary to be able to work around with the various guidelines, rules, and regulations of the new VAT system that will roll out soon in 2018.
Do let us at know of your specific requirement. We will be happy to schedule a quick consultation to make sure that the right person with knowledge of VAT laws will be able to fill up the open position in your company with amazing outcomes.
Comments