The UAE Cabinet's decision to refund value-added tax (VAT) to the meetings, incentives, conferences and exhibitions (Mice) industry will make the country - especially Dubai - retain its competitive edge regionally and help position it as a bigger player on the global level as the refund money will be pumped back into the industry for marketing, generating more economic activity, say industry executives and tax experts.
In addition, the refund will continue to attract more foreign companies and business tourists to Mice events which take place in the UAE all round the year.
Humaid Matar Al Dhaheri, group CEO of the Abu Dhabi National Exhibition Centre (Adnec), said the decision to refund VAT will significantly enhance the competitiveness of the industry and increase the capacity to attract niche global events, exhibitions and conferences.
It will trim costs incurred by organisers and international associations while also enabling local associations to submit more bids to host major international conferences and congresses.
"I am pleased to invite all public and private sector firms, partners, event organisers and specialised associations to make optimum use of such initiatives that will consolidate their presence in the UAE by strengthening the existing exhibitions and conferences portfolio and attracting and conducting new events," Al Dhaheri said.
Satish Khanna, general manager, Al Fajer Information and Services, hailed it as a landmark decision for the industry, which will help the emirates to grow in terms of market size and come closer to other global Mice destinations such as Las Vegas.
He pointed out that exhibition companies will have more money at their disposal as a result of this government initiative and it will be distributed towards marketing the events and generate more activity in the country.
"Whatever we save will go into marketing and this will enhance the size of exhibitions and be beneficial for the Mice industry. Dubai is on the right track to be a global Mice destination. The UAE's will attract more Mice players to the country," Khanna said.
Ahmed Pauwels, CEO of Messe Frankfurt Middle East, said that VAT hasn't noticeably affected their business. "Both in terms of exhibitors and our suppliers, we have not faced any undue hindrance in our business functions. So, with the recent announcement of the refund facility, I am sure the outcome will prove to be extremely positive and welcomed by the market."
UAE's Jewellers Hope for VAT Exemption on Retail Sales
More Than 5,000 VAT Violations Issued in Saudi This Year
Pauwels said most of their business partners who exhibit in the Middle East have not altered their activities due to the VAT levy. It should have a beneficial effect on small businesses and hospitality and logistics providers, who will now be able to pass on savings to clients.
Thomas Vanhee, founding partner, Aurifer Middle East Tax, said the VAT refund will ensure that part of the Mice industry goes back to before January 1, 2018, and is therefore not burdened by VAT. It should restore the competitiveness of the Mice industry in the UAE.
Mayank Sawhney, director, MaxGrowth Consulting, welcomed the move by the UAE Cabinet to allow for refund of VAT on organisations involved in organising and operating exhibitions and conferences to support the Mice industry in order to promote the UAE as a global hub for exhibitions, conferences and meetings.
VAT refund is allowed for any exhibition, conference, meeting etc., held under a licence from a competent local authority in the UAE for a maximum period of 7 days if the recipient of the services does not have a permanent fixed establishment or place of establishment in the UAE (and is not registered or required to register for VAT in the UAE) and have not paid VAT on these services to them.
Reflecting the importance of the UAE's Mice industry in the region, Fikra Labs said the UAE commands a 50 per cent share of the GCC market as the country has an eventful calendar all year round.
According to recent statistics, the Mice sector's annual contribution to the UAE economy stood at Dh2.39 billion and is anticipated to grow to Dh5.1 billion by 2020.
Adnec venues, which include Abu Dhabi National Exhibition Centre and Al Ain Convention Centre, collectively hosted 442 events in 2017 and received more than 2.08 million visitors, registering a growth of 36 per cent over the previous year. Adnec's contribution to the emirate's economy grew by 26.66 per cent last year to Dh3.9 billion compared to Dh3 billion in the previous year and helped create 22,300 jobs. In addition, Abu Dhabi has also jumped ranks in the International Congress and Convention Association by 161 places in 3 years - from 234 in 2012 to 72 by 2015.
The Dubai World Trade Centre hosted 353 Mice events in 2017, an increase of 18 per cent year on year, with annual exhibitors growing 10 per cent to 39,202. Around 3.3 million people visited the DWTC last year, registering an increase of 9 per cent. DWTC data revealed that more than 1.1 million foreign business travellers visited the venue last year.
In 2018, DWTC will host 133 exhibitions in addition to other Mice events, including some of the region's largest expos. Sharjah hosted around 20 exhibitions last year.
Rates can reduce
Al Fajer's GM Khanna called for revising the fees for exhibitions which will improve the UAE's competitiveness.
"The fees for exhibitions can come down; that is also important. Exhibition costs around Dh10 per square metre in Sharjah, Dh17 sqm in Abu Dhabi and Dh32 per sqm in Dubai. Rates determine the success of the exhibition. If the rent is low, there will be more exhibitions," Khanna added.
Al Fajer currently organises 8 exhibition in the UAE and plans to add 4 more in 2019-2020 as proposals have been submitted to authorities for due diligence, he added.
Written by Waheed Abbas
Copyright © 2022 Khaleej Times. All Rights Reserved.