The pandemic has hit questions on businesses. From every directions. But here is the fact : " The key to success is to start before you are ready" !!
Businesses all around the world have been witnessing and experiencing their share of the impact of the COVID-19.
The limelight is on the leaders, who are expected to navigate around a wide range of short term and long term plans from targeting towards availing the support from complicated government support programs, shoring-up the cash and liquidity, reorienting and redirecting the operations to keeping the employees and customers health to the center point.
In addition to creating a sense of fear for their health amongst UAE residents, the rise of this pandemic has also led to a sense of uncertainty among businesses.
The range of measures from shutting down of nurseries, cancellation of events, issuing travel advisories, requiring travel declarations, quarantine and port checks, closure of flight routes – UAE Government has been actively taking measures to limit the spread of the virus.
THE IMPRESSIVE ROLE OF UAE GOVERNMENT
The UAE's Federal Government and its free zones have made moves to relieve pressures on onshore and offshore businesses during the COVID-19 pandemic.
Heavy focus has been given on onshore businesses in the UAE, Abu Dhabi Global Market (the ADGM) and the Dubai International Financial Centre (the DIFC) free zones specifically, other than specific measures being taken by the Federal Government, each Emirate and each free zone.
The common theme of such measures being:
(a) reduced licensing fees,
(b) rent reductions and
(c) increased flexibility with employees as regards the free zones.
VAT AND CORPORATE TAX
With the exception of corporate tax on oil and gas companies and branches of foreign banks, the UAE does not impose corporate tax on businesses registered onshore.
Businesses registered in free zones are exempt from corporate tax for certain specified time periods which vary between free zones.
VAT of 5% was introduced in the UAE a few years ago to diversify their economy and reduce their dependence on oil.
Businesses heaved a sigh of relief when the UAE Finance Ministry denied the rumors and clarified that they had no plans to increase value-added tax in the wake of the coronavirus pandemic that has tipped the global economy into a recession.
The United Arab Emirates' Federal Tax Authority had announced changes to value-added tax filing and payment deadlines, for tax periods that ended on March 31. The new deadline was set as 28 May. The original deadline was 28 April. This was applied for Q1 returns, and monthly filings reporting transactions for March.
The UAE Federal Government is incentivizing banks to moderate any potential enforcement actions that they might be considering against SME borrowers in particular. Talking of SME Sectors - SMEs are crucial to the UAE. In most of the world's developed economies, they have established themselves as the backbone for growth, employment and innovation, as well as a bulwark against economic shocks. The UAE government's strategy to diversify the economy ultimately depends on the creation of a healthy and vibrant SME sector.
The Central Bank of the UAE (CBUAE) has been proactive in rolling out stimulus packages. It has announced a comprehensive AED 256 billion 'Targeted Economic Support Scheme' to contain the repercussions of the coronavirus pandemic.
Despite the challenges presented by the pandemic, we can see an increasing focus on open, connected banking: successful organizations tend to be those that put their customers at the heart of their strategy. Banks across the UAE are also embracing blockchain, which offers benefits including operational efficiencies, reduction of intermediary costs, and a culture of transparency.
HIGHER EDUCATION SECTOR
The Covid-19 pandemic has like in other sectors disrupted the higher education sector worldwide. Almost overnight, universities shifted face-to-face education to remote learning. After the first phase of implementation, UAE universities have expanded into the new educational territory.
There has been a great deal of chatter around whether universities should completely transform into online campuses, post Covid-19.
A federation of seven emirates, United Arab Emirates (UAE) is a charismatic country on the Eastern side of the Arabian Peninsula. Washed with a suave glimmer of urban life, UAE is the modern hub of shopping, culture and iconic architectural structures. UAE is a melting pot of cultures and also an ideal destination. Tourism, like any other industry, was shaken. However, "Pre-COVID-19 in late 2021" is a hopeful statement.
The GCC could lose up to $50.7 billion of its GDP due to the impact of the Coronavirus pandemic on tourism, while the UAE may lose up to $30.5 billion.
But the sector will reach a decent recovery in Q1 2021 and achieve pre-COVID-19 levels only in later part of 2021, say local and global tourism industry executives.
With restrictions surrounding social distance in place in busses and hotels, it will be more of private tourism rather than mass tourism.
With the world's one of the largest proven crude oil reserves, the UAE is a responsible producer and critical partner in global energy markets.
The exceptional strength of the government's net asset position provides a buffer to counteract the effect of oil price swings and COVID-19 on economic growth, government revenue, and the external account, as well as the effect of increasing geopolitical uncertainty in the Gulf region," S&P Global Ratings said.
Hospitals and clinics are now facing a significant loss of revenue because of a sharp drop in outpatient visits for non-COVID-19 ailments and in the number of elective surgeries getting done at healthcare facilities across the UAE.
UAE healthcare operators will be tuning into "telemedicine" services that can be delivered online as one of the solutions in a post-COVID-19 world. It is being identified that this will be the right time to transform into a digital health organization
UAE has directed its resources and attention to:
• Restructuring the health system to focus on prevention and accelerate digital trends.
• Drawing on lessons learned and technology to combat pre-existing health challenges.
• Allocating resources and investment towards medical R&D and innovation
THE REAL ESTATE SECTOR:
Even before the pandemic, the real estate industry had been moving toward digitizing the processes and creating digitally enabled services for tenants and users.
With the closing of borders, physical distancing and the lockdown has thrown a sharper focus on the importance of digitization, particularly when it comes to tenant and customer experience.
Residential real estate developers will need to make more significant investments in digital sales and leasing processes and look at conducting virtual open houses and showings that employ augmented reality.
US EXPAT TAXES:
Many Americans living in the US or away from their country have also been hit hard by the economic impact of the coronavirus pandemic. US Citizens and the Expats living abroad are eligible for a stimulus payment by the US Government to help ease this financial burden during the unprecedented times of Covid – 19.
Expats who have filed their US Taxes are eligible for the payment. US Expats who live overseas and haven’t filed their 2019 taxes, might still be eligible for a stimulus payment based on their 2018 return. However, if they haven’t filed their 2018 or 2019 return, they are supposed to file those shortly.
We recommend getting started today with US Expat Tax Consultant as the filing process for multiple years of returns can take longer to complete.
Martin Luther King, has rightfully said, “ You don’t have to see the whole staircase, Just take the first step”!
The UAE, as an emerging hub for international trade, with several free trade zones and additional zones in construction, can take advantage of weakening international trade cooperation and position itself as a champion of free trade, especially at the regional level.
According to the World Economic Forum, the UAE had improved to be 25th globally in the 2019 Global Competitiveness Report and continues to maintain position as the most competitive economy in the Middle East and North Africa (World Economic Forum, 2019). This puts the UAE in a position to seek to position itself as the leader of the supply chain for GCC and MENA Regional.
UAE is already on the path to diversification, with significant investments into sectors such as infrastructure, education, healthcare, and renewable energy.
UAE has made great progress in meeting its Vision 2021 National Agenda, especially
in the areas of education, health, infrastructure and competitive economy. As
the post-COVID-19 pandemic debate continues, especially concerning the role of
globalization, a scenario-based analysis of the potential future path for the
UAE can offer on significant contribution to the discussion, especially on the
problems and opportunities the pandemic presents.
For More, MSATC | Your Tax Consultant in Abu Dhabi, UAE | MS-CA.Com
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