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VAT expected to benefit UAE bourses, ADX CEO says

VAT could boost earnings, dividends of listed companies

Gulf News

Abu Dhabi: The implementation of Value-Added Tax (VAT) in the UAE in 2018 is expected to benefit the country’s financial markets by boosting the earnings of publicly-listed companies, according to a top spokesman from the Abu Dhabi bourse.

Rashed Al Beloushi, chief executive officer of Abu Dhabi Securities Exchange (ADX), told reporters he was bullish on the impact of VAT on the UAE’s overall economy and on financial markets.

“We’re talking about nearly Dh12 billion [in government revenues] that will be gained from the implementation of VAT, and this Dh12 billion will be reinvested into the UAE’s infrastructure. As a financial market, we have public companies whose investments are in that very infrastructure be it in real estate, health, or other sectors.

So, public companies will inevitably be part of these new investments, which will then translate to higher corporate profitability and higher dividends to shareholders,” he said.

Asked whether he expected the tax to impact liquidity in the markets, Al Beloushi said he did not expect a major change.

“People still buy, invest, and shop in London even though their VAT is at [double digits], so it’s not the presence of VAT that will stop people from buying. We see VAT as a step forward,” the CEO said.

Officials had said VAT in the UAE will be at a five per cent rate.

Earlier this year, Younis Al Khouri, undersecretary at the UAE’s Ministry of Finance, said that GCC (Gulf Cooperation Council) countries have approved a tentative policy for the implementation of VAT in 2018. He said that in the first year of implementation the UAE is expected to generate Dh10 billion to Dh12 billion as a result of introducing VAT.

The news this year on the introduction of the tax comes after experts including the International Monetary Fund (IMF) urged the GCC to implement new reforms to increase government revenues amid growing challenges on the back of lower oil prices.