View Full Version : VAT Tax its comming to Dubai, What will happen with the EK package?
uplock
15th Feb 2006, 08:25
This question is mainly directed to those of us who are employed with EK here in Dubai as todays papers (http://213.132.44.184/emiratestoday/)all are running stories on how Dubai Customs and the International Monetary Fund are studying the best way to introduce a new sales tax VAT Value Added Tax
What I notice is the ever increasing cost in real terms of living here in Dubai.
What do you think will happen with our package?
Would this make you rethink staying here here in Dubai?
The basics, Rent,Electricity,Water,Fuel,Gas,Food continue to increase.
The strategy up to date from EK Management has been that we do not have a problem when it comes to salary and conditions.
Emirates announced yesterday a further increase on tickets issued in the UAE by 20 AED for 1 way and 40 AED for 2 way.
The point is that increasing fuel costs are acknowledged and dealt with yet the continued decline in salary and conditions is not.
When VAT is eventually introduced here if EK continues with the present Company policy of not acknowledging that we have inflation in double figures, that costs are in a tail spin,then I don't see how they can "sell" the package to future pilots.
Like it or not market forces have started to kick in, other wise we would not have Pilots resigning in record numbers and recruitment having difficulty in filling slots.
Shortly we will have the annual speculation on Profit Share distribution, what will it be, how much will we get, then we get the company spin Doctors inevitable contribution. To put in perspective though Dubai based EVA Air cargo Staff last year received a 11 month end of year bonus (yes 11x 1 month basic salary) this was based on the increased profits from the cargo operation out of Dubai.
Last year we were told that due to the increase in fuel prices the company would keep more funds and distribute less to employees. Kind of lost me after that one along with the sponsor ship of a Soccer stadium in the UK worth £90 million ($158 million) over 15 years.....
Whats really disappointing though is the continued "Sounds of Silence" that emanate from the Towers of Power in EK, given that over the past year many pilots have given 100% productivity (Maximum Flying Hours reached an in some cases exceeded).
Given the over whelming enthusiastic response and pages of information available on "Rumour Buster " Company Crew Portal, Im not holding my breath for a honest response that cuts through all the B.S. that is flying around these days...
Warlock2000
15th Feb 2006, 08:47
What do you think will happen with our package?
Nothing! So you'll be EVEN MORE out of pocket. :\
Would this make you rethink staying here here in Dubai?
Already have. Not long to go now.... :D
Vorsicht
15th Feb 2006, 10:37
Due to the fact that EK overheads will increase, as a result of the VAT, EK staff will be asked (told) that in order to prepare ourselves for the inevitable bad times ahead, we will all take a small (10%) paycut. Our benevolent management will then magnanimously decide to withold the said paycut in return for a 20% productivity increase. In EK speak this is called a cost neutral solution to the problem of reverse bracket creep. i.e we are all getting paid considerably less today than we were yesterday.
This of course will be offset by the (soon to be predicted by EK) bull run of the US$, giving us a virtual payrise.
So from where i sit all i can see is upside (for the company) of a proposed VAT.
typhoonpilot
15th Feb 2006, 10:57
This of course will be offset by the (soon to be predicted by EK) bull run of the US$, giving us a virtual payrise.
VAT.
That's sarcastic, right ?
The USD is being held up by increasing interest rates in the States. When that cycle ends and the Eurozone starts to raise rates you will see a nose dive in the USD. The USA is building up a huge national debt and an ever increasing trade deficit. If/when Iran gets a Euro based oil trading program in place the USD will suffer even further.
Of course, if I was good at investing I wouldn't be in this line of work.
The question in regards to VAT really should be how much will it be. Apparently it is going to happen at some point in the future. Will it be 5% like Singapore, 17% like Europe, or 6-8% like the USA sales tax ? Will the government then eliminate or lower other fees ? Will they institute a property tax as well ?
I guess either way it will increase our cost of living by some number.
TP
Present expert opinion is that the dollar is at a small high and will most probably fall again in the near future. This might be true especially in the case of an end of the housing boom or a real estate crisis. In the long run the dollar is absolutely low in value. Remember that the dollar is undervalued to most of its counterpart by 20 to 50%. As soon as the Bush administration ends the vaste of their money (or the other way around, the vaste of money ends the Bush administration ;) ), dollar will hike up again.
I suggest that all ME expats to save as much as possible in US$, to invest it in Bonds or other secure ways and wait.
Dani
Saltaire
15th Feb 2006, 13:35
I would be wary of the USD, but I rarely take my own advice. The "twin deficits" will come to roost at some point and they can't just keep printing money at the current rate. We shall see...
Inflation is certainly an issue and this impending VAT will certainly change the atmosphere of this "tax free" haven. Unfortunately, EK looks at a basket of airlines as a comparative, which doesn't take into account the special situation in Dubai. What does a pay package in Manila, as an example have to do with the package in Dubai. You can't have it both ways, wanting explosive growth and expansion out of Dubai, making all the owners very rich, and not accepting huge inflation and giving appropriate pay increases to the workers that help make it happen.
I like the 6 lane highway planned right through the Hills.....yup, didn't see that at the sales centre. Of course, it was none of your business ! :eek:
Vorsicht
15th Feb 2006, 13:49
The short to mid term outlook for a weak US dollar can only be good for all of us. Assuming we manage to survive the next few years of appalling exchange rates and increased productivity for the same salary (marginally less than a DEC) we will then only have good things to look forward to as the Dollar soars to levels not seen in recent memory.
Yeah OK, you got me. I was being a little sarcastic.
Mind you, after years of management telling me that I am lucky to be here and that i have take a pay cut, despite the company making record profits, based on some obscure reference to being ready for the tough times, I generally expect the worst, and i am seldom dissapointed.
Desert Diner
15th Feb 2006, 19:04
At the moment I would be more warry of what can happen to the euro as opposed to the dollar.
Wiley
15th Feb 2006, 21:14
My main concern to double edged:
(a) what will happen to the Dollar if the Iranians manage to crank up their new oil bourse using the Euro as the benchmark currency; and
(b)what will the US do to stop this happening?
If the Iranians succeed, the Dollar could take a nosedive that will leave us all gasping. If it loses its position as the currency of oil exchange, who will need it?
There are some pundits who believe the real reason the US went into Iraq in 2003 had nothing to do with WMD. They were nothing more than the excuse (and and something the US mistakenly thought they would surely find to justify the invasion thanks to Saddam Hussein's constant posturing about having them).
The real reason for the invasion was to prevent Saddam Hussein from doing the very same thing the Iranians are now threatening - selling his oil in Euros.
CSilvera
16th Feb 2006, 03:53
Couple other issues: the Fed is looking to raise US interest rate, and the rumors that Iran is to be invaded by the US.
Wiley
16th Feb 2006, 05:52
Here's a name I suspect we'll all be seeing in the headlines soon:
Abu Mousa.
fatigueflyer
16th Feb 2006, 16:34
Vat? Life certainly has changed in this sandpit. We have been taxed indirectly for years....just look at the cost of living, housing fees, fuel etc etc. What will happen to the EK package? Same as it has been for years ie. insignificant pay rises, insufficient housing allowances, layover allowances, extra education fees paid by us, extra medical fees for the family, more time at work, less time at home, little or no savings and living in a polluted, congested city (building site). The package will be eroded each year until you get the sh1ts then leave as been suggested. By this time hopefully they would have got their min 3 yrs out of you (bond period). Good luck with the maths!!!:confused:
zklowrider
17th Feb 2006, 09:59
Just as an aside, and for those of us in the paradise of Dubai...please check your mobile phone accounts to see that our friendly local telecoms provider hasn't "inadvertantly" turned on your GPRS, ie MNET on your account. It was on mine and it would appear reading Seven Days that I am not the only one. When you try to get to the bottom of it with questions like "how was it activated on a day in 2005 when I wasn't even in the country" (with passport entries to prove), the managment at the Commerrcial office of Etisilat deny all knowledge and claim "it is impossible" for that to happen". I smell a rat (or goat) and more money grabbing and totally illegal indirect taxation by the greedy arabs! They will of course reimburse the monies.....not!!
The SH*T bucket is fulleth to overflowing lads....not long until I am out of here now either!!
Off now for a nice DANISH pastery with LURPAK butter...
Keep Discovering!
Aaaaaahhhhhh, I remember the days when there were some great perks that came with living in Dubai. Good pay, good housing allowance, good social life, good times.
Dubai was a blast, but it's always been a somewhat artificial environment in which to live and from what people have said about it here, and judging by the development I've seen over the last few years, Dubai's benefits for expats sadly appear to be dwindling.
Many people who find their comfort zone in Dubai find it very, very difficult to leave, because they reckon nothing else out there will be quite as good. But for Westerners, Dubai is really all about the money, and if it doesn't offer the same generous monetary benefits it once did, you've got to ask yourself, 'what's the point'?
If you're one of those people (like I was), who has settled into their comfort zone there, and often thinks about leaving but always doubts whether life after Dubai will be as good, here's the answer. Yes, it is!
Sure, life outside of Dubai is more 'normal', it may not be so well-paid, you'll miss lots of good times you had in this weird and wonderful city, but if it isn't paying you what you want or what you need, move on. Money isn't everything, but it sure helps if you're in Dubai. So if anyone here is in any doubt, there IS life after Dubai!!!
1972: thanks for the perspective. I needed that....
No problem. Sure, you'll never be quite as spoilt as you are there, but that's partly why it makes life a little artificial and a bit too 'easy'.
And you certainly won't miss the madness of it all. I'm glad I'll never have any more dealings with any UAE government department (especially Etisalat) or have to bite my tongue in situations that involve a dispute with a local, just because they're a local.
And a word of advice to anyone who, like me, hated the many hundreds of thousands of Dubai's incompetent, ignorant, gloriously-oblivious and downright dangerous drivers....
.... NEVER hang out of the window to give another driver the bird, even if they've just nearly killed you by driving you off the road. And especially not when they're a local, and a female local at that. They always know a police chief, they'll always find you, and they'll always make you grovel!
zklowrider
21st Feb 2006, 07:15
Sounds like you speak from experience '72.....Now that was a GOOD year!
Still thanks for the words of encouragement....148 days to go.....:)
Interesting article here ( http://energybulletin.net/12125.html ) that lends some weight to Wiley's earlier comments.
...here we go again. Another conspiracy theory about Bush and his war(s). This guy might have a PhD in economics, but also a very very unbalanced view of the world. If any OPEC country ever wanted to be paid in other-than-$ currencies, they would have done so already. Even European countries like Norway or UK are paid in US$. This is simply because the whole market is processed in $. Transactions costs with several curriencies would make international trading much more difficult. I remember a time when some countries where very happy to be paid in US$ (in the 90's, when it was on a all time high).
Being taught economics myself, I see some flaws in Mr. Petrows arguments: Altough Bretton-Woods had a major influence in oil prices, it hasn't been done because of it, but because all countries of the world wouldn't have been able to secure their currencies with gold, thus giving it up. Oil is just one small portion of the US economy and having a stable price policiy is much more "worth" than some cheap oil. Some of you remember that this became very clear after OPEC stopped their oil delivery some months later.
I think it's also wrong to think that Bush depreciated the $ because he wants to have cheap oil. He wants to increase exports. And China doesn't buy dollars because they need oil, they buy Bush's debts because they need a high dollar - also to increase their own exports.
All in all Mr. Petrow seems to stretch a lot of arguments to promote his anti-US view instead of the real economical facts.
Dani
(not a Bush fan at all)
Sounds like you speak from experience '72.....Now that was a GOOD year!
Still thanks for the words of encouragement....148 days to go.....:)
Yup, ALL that advice comes from personal experience lowrider! But I couldn't button my lip when the nutter very nearly killed me. All my usual decorum went out the window at the very same time my hand did to allow me to extend my middle finger and scream a barrage of expletives at her!
I was dragged over the coals for that, but Mr Police Chief couldn't care less about her driving. What a weird and wacky place!
Enjoy life after DXB. Now, back to the matter in hand....
Wiley
22nd Feb 2006, 05:42
dani, I can't speak for the politics of the writer of the article 410 posted the link to, but for myself, I'm not being anti-American in commenting on the negative effect on the USD if it loses its position as the currency for oil purchase. I've seen the same comments in the mainstream press. (I'm certainly not clever enough to have thought of it myself.)
I think the journalists and pundits are merely stating a fact - that the USD (and therefore the US economy) will suffer if foreign governments aren't required to purchase and hold large reserves of US dollars to buy oil. And on a purely selfish note, as a Dubai resident who is paid in a currency tied directly to the USD and whose pension benefits (such as they are) are all in USD, I wouldn't be particularly happy to see the USD fall to where I think it will fall if the Iranians go ahead with their planned Euro-based oil borse.
The big question for anyone living in Dubai, (and perhaps even moreso, planning to move to Dubai), is what lengths the US will go to to defend the USD, and what effect that will have on life in Dubai. (Dare I add, "particularly for an American".)
I don't have an economics degree (as you appear to have), but I must say that you are the first person with any knowledge of economics that I have heard in recent times lightly dismiss the USD's current weakness as being nothing to worry about.
but I must say that you are the first person with any knowledge of economics that I have heard in recent times lightly dismiss the USD's current weakness as being nothing to worry about.
Wiley, thanks for your input. On the contrary, I do think that the dollar weakness is something to worry about. I'm stating merely that the all time low of dollar at present is not because of some sort of a "tax" strategy but because of some very stupid decisions made by one administration. If we should run into a recession in the US everyone will have to pay a high price. If we get away with it, the dollar will recover and the Euro will go back where it belongs. That will be the moment when nobody wants to have Euro for oil anymore ;)
Dani
chinawladi
22nd Feb 2006, 07:25
Guys, go and play Greenspan Jr. in another sandpit, please. This thread is about VAT in UAE and what it might do for the EK package. In my humble oppinion they couldn't care less concerning the package, however the ticket prices will be raised, like all other prices around here. It has been going on like that for years now. Any more optimistic voices?
chinawladi, you have a very shortsighted view of the topic. This is all interconnected with each other, and one reason why UAE might start VAT is because of the low dollar.
Over and out.
chinawladi
22nd Feb 2006, 15:35
Yeah, and when the dollar goes up again they'll abolish the VAT, - dream on!
We can blah, blah as long as you want, even Swiss economic gurus can't predict what's next under the dishdash's. So let us continue to wonder what impact this will have, if any, on our EK package.
616200
22nd Feb 2006, 16:30
Well China dude don't worry...
I predict it won't impact at all on the package since we're gonna receive 20% pay increase this May...:mad: :mad: