Experts Discuss Impact of VAT on Banking and Finance at EIBFS Conference
The Emirates Institute for Banking and Financial Studies (EIBFS) recently hosted a high-level conference dedicated to Value Added Tax (VAT) and its impact primarily on the banking and financial sector. VAT was implemented on 1 January 2018 by the United Arab Emirates (UAE) Government.
Representatives from prominent local and multinational companies including KPMG Lower Gulf, Grant Thornton, TALLY Solutions, Emirates Chartered Accountant Group and Al Tamimi, were present to share insights and discuss some of the latest developments. Held at the EIBFS campus in Dubai, the event drew attendance from more than 200 people, including senior management bankers, branch managers, relationship manager consultants, insurance managers and researchers.
The conference focused on a variety of topics, including an overview of the VAT law, its long-term impact on the banking and financial sector and an analysis on VAT’s post-implementation. Different perspectives of VAT from the accounting, compliance and technology functions were also considered.
Speaking about the event, Jamal Al Jassmi, General Manager of EIBFS, said: “The implementation of VAT in 2018 has been a very important step for the region as we navigate a new environment with a significantly less reliant oil-economy. At EIBFS, our aim is to keep building a high level of awareness on the significant developments surrounding the banking and finance services industry - in this case, VAT’s impact on the sector. Attentiveness and preparedness is key to managing this transition, and this conference aims to build our understanding of its impact.
He added: “The event comes at a good time to take stock of how VAT has been implemented, as well as analyze some of the challenges and progress that has been made post implementation. In the banking and finance services industry, VAT impacts all corporates and small-and-medium enterprises, making it an important for all financial institutions to understand.”
After speaking in a session entitled, ‘An Overview of UAE Vat Law’ during the conference, Robert Dalla Costa – Director, Tax, KPMG Lower Gulf, said: “The EIBFS Conference provided an opportunity for those involved in the financial sector (FS) to better understand the impact of VAT on their businesses. The introduction of VAT in the UAE earlier this year has had a significant impact on FS. While the sector continues to provide a number of services exempted from VAT, this results in the sector bearing VAT on its purchases. This is because businesses making exempt supplies, face restrictions on what VAT they can recover on their purchases. Naturally, this adds to the cost base and puts pressure on the sector to raise its fees and charges to maintain existing profitability. At the same time, consumers and regulators will likely urge limiting any price increases."
Mike Vaughan, Senior Tax Director, Grant Thornton, UAE, who participated in a session called ‘VAT: Impact on Banking and Financial Sector,’ said: “The impact of VAT within the UAE will be profound, particularly given the country has shifted from a non-taxable environment to the introduction and implementation of VAT. Whilst this will drive long-term socio-economic benefits, such systems come with a steep learning curve, which includes the need for a change in mind-set and the acceptance and action to readjust organisational systems, structures and training. The banking industry continues to make strides in respect of regulatory reform which will see it drive international best practice, however, synonymous with most sectors, VAT may have been underestimated in respect of the degree of change and adjustment required.”
A panel-discussion entitled ‘VAT Post Implementation Analysis,’ moderated by Manu Nair, CEO of Emirates Chartered Accountants Group, was also held during the event.
Commenting after the panel discussion, Shiraz Khan, Senior Tax Advisor, Al Tamimi, said: “While most businesses were focused on preparing for the implementation of VAT in 2017, the focus has now shifted to the completion of the first VAT return. Some companies have already filed their VAT return and other companies will file their first VAT return over the next few months. It is important to ensure that the VAT return is as accurate as possible given that the penalties for errors are very high. As the VAT law is still very new, the interpretation and application of the law will present challenges for the Federal Tax Authority, tax advisors and businesses. In the absence of any published practise of the Federal Tax Authority and precedent, there is likely to be considerable uncertainty on the VAT treatment for many transactions. My key message to internal departments within an organisation that are responsible for the VAT function is to proactively manage the VAT risk by documenting the basis for any positions taken.”
EIBFS regularly hosts a combination of technical, professional and soft-skills training sessions along with industry-specific workshops and conferences.
Emirates Institute for Banking and Financial Studies
Established in 1983, the Emirates Institute for Banking and Financial Studies (EIBFS) offers world class education programmes, training sessions and allied services in the area of banking and finance at its three state of the art campuses strategically located in Sharjah, Abu Dhabi and Dubai. Committed to the Emiratisation initiative, EIBFS supports UAE nationals by providing top-notch training facilities and encouraging career growth in the banking and financial services sector.