PHOTO
27 June 2016
Gulf Arab states’ introduction of value-added tax (VAT) in 2018 will create more than 5,000 new jobs for tax and accountancy executives, with some large consultancy firms already starting to increase their headcount, according to industry experts.
Finance ministers from the six Gulf Cooperation Council (GCC) countries formally agreed on June 16 at a meeting in Jeddah to introduce tax across the bloc from 2018. The full details of the process have not been announced and it is not yet clear whether all the countries will introduce VAT on January 2018.
The United Arab Emirates (UAE) and Qatar will be the first to adopt the new tax regime, but all six members of the GCC, which also includes Kuwait, Saudi Arabia, Oman and Bahrain, are expected to implement VAT by the end of 2018, according to a tax alert issued in February by consultancy firm EY.
In preparation for this, many of the ‘Big 4’ international accountancy firms – including PwC, Deloitte, EY and KPMG – have already started hiring in order to have enough staff in place to manage their clients’ tax obligations.
“Competition for recruitment on staff with VAT expertise is heating up in the region,” Finbarr Sexton, Middle East and North Africa (MENA) Indirect Tax Leader at EY, told Zawya in an email interview.
“Staff with the requisite skills in VAT are in short supply as businesses in the region are also competing for new recruits from a limited pool of expertise. In the past, new recruits were sourced from markets such as India and Egypt to meet the skills gap; however, with these two countries also in the middle of VAT initiatives, the availability of staff from these markets is in short supply as well,” he said.
Ahead of the January 2018 deadline when the first phase will be rolled out, Trefor Murphy, managing director of Dubai-based recruitment firm Morgan McKinley, estimated that thousands of new jobs will be created.
“If you look at a big four firm [in the GCC], tax would be less than 5 percent of the total population. In somewhere like the UK, it is probably half tax and half audit, so there will be massive growth… We are predicting that by 2018 alone there will be a minimum of 5,000 new jobs created in tax alone in the GCC,” Murphy said in a phone interview.
“It could be even more,” added Viacheslav Shakhov, a consultant specialising in accounting, finance and taxation at Morgan McKinley. “The effect on businesses will be massive as it will change invoicing, logistics, procurement, training and HR.”
Learning from Malaysia
Many GCC companies are looking at the experience in Malaysia, which introduced Goods and Services Tax (GST) on April 1, 2015. “They don’t want to repeat the Malaysian experience last year when they were understaffed when GST was introduced. [The GCC] will be a similar experience to Malaysia but on a larger scale,” Shakhov said.
Sexton said the recruitment would happen in two phases: During the first phase companies will be looking to hire senior advisors with knowledge of how VAT will impact organisation’s entire supply chain and get them ready to incorporate the collection of VAT.
“Phase 2, which relates to the post go-live period, will require more compliance related skillsets and staff can be trained up internally to handle these requirements under the supervision of a new VAT function that organisations will put in place as part of the Phase 1 requirements,” Sexton said.
EY, like many of other ‘Big 4’ accountancy firms, will initially look to hire staff from its internal network and over the next 18 months it is also planning to hold regular VAT training classes for its clients.
Jeanine Daou, Middle East indirect taxes partner at PwC, advised that companies across the GCC “should take action now, if they have not already, to prepare for the implementation of the new tax systems and be ready by go-live date.”
While she declined to comment on her firm’s recruitment activity at present, she said VAT would mean that companies will be required to start keeping better bookkeeping records.
“Businesses in the UAE do not have a bookkeeping obligation. Yes, this is new and it is a new requirement and it will be very important to keep books, and documentation and records will be essential for an efficient system.”
The UAE introduction of VAT in 2018 was announced at a joint press conference between the finance ministry and the International Monetary Fund (IMF) in February. The IMF has been pushing the oil-exporting GCC bloc to reform its tax regimes and introduce new taxation in order to compensate for the drop in revenues as a result of the sharp fall in oil prices.
The IMF has estimated that if oil prices remain low the fiscal deficits of the GCC and Algeria will total almost $900 billion between 2016 and 2021. The introduction of VAT in 2018 aims to go some way to reduce this, with the UAE forecast to earn up to 12 billion dirhams ($3.2 billion) in revenue during the first year, according to a report by UAE daily Gulf News.
© Zawya 2016
Gulf Arab states’ introduction of value-added tax (VAT) in 2018 will create more than 5,000 new jobs for tax and accountancy executives, with some large consultancy firms already starting to increase their headcount, according to industry experts.
Finance ministers from the six Gulf Cooperation Council (GCC) countries formally agreed on June 16 at a meeting in Jeddah to introduce tax across the bloc from 2018. The full details of the process have not been announced and it is not yet clear whether all the countries will introduce VAT on January 2018.
The United Arab Emirates (UAE) and Qatar will be the first to adopt the new tax regime, but all six members of the GCC, which also includes Kuwait, Saudi Arabia, Oman and Bahrain, are expected to implement VAT by the end of 2018, according to a tax alert issued in February by consultancy firm EY.
In preparation for this, many of the ‘Big 4’ international accountancy firms – including PwC, Deloitte, EY and KPMG – have already started hiring in order to have enough staff in place to manage their clients’ tax obligations.
“Competition for recruitment on staff with VAT expertise is heating up in the region,” Finbarr Sexton, Middle East and North Africa (MENA) Indirect Tax Leader at EY, told Zawya in an email interview.
“Staff with the requisite skills in VAT are in short supply as businesses in the region are also competing for new recruits from a limited pool of expertise. In the past, new recruits were sourced from markets such as India and Egypt to meet the skills gap; however, with these two countries also in the middle of VAT initiatives, the availability of staff from these markets is in short supply as well,” he said.
Ahead of the January 2018 deadline when the first phase will be rolled out, Trefor Murphy, managing director of Dubai-based recruitment firm Morgan McKinley, estimated that thousands of new jobs will be created.
“If you look at a big four firm [in the GCC], tax would be less than 5 percent of the total population. In somewhere like the UK, it is probably half tax and half audit, so there will be massive growth… We are predicting that by 2018 alone there will be a minimum of 5,000 new jobs created in tax alone in the GCC,” Murphy said in a phone interview.
“It could be even more,” added Viacheslav Shakhov, a consultant specialising in accounting, finance and taxation at Morgan McKinley. “The effect on businesses will be massive as it will change invoicing, logistics, procurement, training and HR.”
Learning from Malaysia
Many GCC companies are looking at the experience in Malaysia, which introduced Goods and Services Tax (GST) on April 1, 2015. “They don’t want to repeat the Malaysian experience last year when they were understaffed when GST was introduced. [The GCC] will be a similar experience to Malaysia but on a larger scale,” Shakhov said.
Sexton said the recruitment would happen in two phases: During the first phase companies will be looking to hire senior advisors with knowledge of how VAT will impact organisation’s entire supply chain and get them ready to incorporate the collection of VAT.
“Phase 2, which relates to the post go-live period, will require more compliance related skillsets and staff can be trained up internally to handle these requirements under the supervision of a new VAT function that organisations will put in place as part of the Phase 1 requirements,” Sexton said.
EY, like many of other ‘Big 4’ accountancy firms, will initially look to hire staff from its internal network and over the next 18 months it is also planning to hold regular VAT training classes for its clients.
Jeanine Daou, Middle East indirect taxes partner at PwC, advised that companies across the GCC “should take action now, if they have not already, to prepare for the implementation of the new tax systems and be ready by go-live date.”
While she declined to comment on her firm’s recruitment activity at present, she said VAT would mean that companies will be required to start keeping better bookkeeping records.
“Businesses in the UAE do not have a bookkeeping obligation. Yes, this is new and it is a new requirement and it will be very important to keep books, and documentation and records will be essential for an efficient system.”
The UAE introduction of VAT in 2018 was announced at a joint press conference between the finance ministry and the International Monetary Fund (IMF) in February. The IMF has been pushing the oil-exporting GCC bloc to reform its tax regimes and introduce new taxation in order to compensate for the drop in revenues as a result of the sharp fall in oil prices.
The IMF has estimated that if oil prices remain low the fiscal deficits of the GCC and Algeria will total almost $900 billion between 2016 and 2021. The introduction of VAT in 2018 aims to go some way to reduce this, with the UAE forecast to earn up to 12 billion dirhams ($3.2 billion) in revenue during the first year, according to a report by UAE daily Gulf News.
© Zawya 2016
