VAT could double to 10% in some GCC countries.

[BANANASBANANAS]

The article is light on specifics but worrying nonetheless.

https://www.msn.com/en-ae/money/taxes/some-gcc-countries-could-double-vat-to-10percent-report/ar-BBIkNTY?li=BBqrVLO&ocid=mailsignout

[BigGeordie]

The hard part about VAT is setting up the policies and procedures to collect it. Once that is all in place changing (increasing, it never goes down) the rate is very easy. For the government anyway, not so much for the people who have to pay it.

[The Outlaw]

Light on specifics...maybe. Its what is written between the lines which is troublesome.

Since it is a UAE paper and any such news is tightly controlled, I think we can all see what is coming over the horizon, actually the natives have been banging this drum for quite a while. The remittance tax would in effect be a double taxation assuming there would be an income tax as well.

If you run the numbers, for every AED 100,000 earned, you'd send home AED 80750 thus giving AED 19250 to the government...thats not including the effect of the (now) 5 % VAT possibly 10% if they elect to double it.

The impact would be disastrous.

QUOTE:

According to S&P analysts, the rollout of more corporate, personal and remittance taxes GCC countries could boost the government revenues up to 4.5 per cent as the region has some room to broaden the tax base due to low tax revenues by international standards.

"We estimate that even if the GCC authorities were to significantly expand the tax base, for example by implementing a 15 per cent corporate tax, a 15 per cent personal income tax, and a 5 per cent remittance tax, this would increase government revenues only by about three to 4.5 per cent of GDP," Cullinan said in a note released on Sunday.

S&P expects implementation of new corporate tax or income tax on expats and locals will be only gradual because of the economic and social pressures that could ensue.

Some GCC countries may prefer not to roll out fresh taxes to try to gain a competitive economic advantage, it said.

According to International Monetary Fund (IMF) estimates, a 15 per cent corporate tax on all GCC non-oil companies, both domestic-and foreign-owned, could generate government revenues of three per cent of GDP on average.

In addition, a 15 per cent income tax on expatriate workers could generate government revenues of two per cent of GDP on average, depending on the size of their expatriate communities.

[felixthecat]

Personal tax and remittance tax would 100% see me out of this place in a flash. There would be zero reason to be here. It would cause chaos as the expats flocked to leave.

[sealear]

I don't think it would happen, the exodus would be too great.

[nakbin330]

Starting to bang in the last nail.

[Cantbebothered]

They did say VAT will start at 5% 'initially'.
Initially meaning we will raise it every year just like we do with property rent.
They also said they will not VAT basic essentials...changed their minds a few months later.
Also mentioned Income tax will not be implemented 'initially'.......watch this space. This is just the beginning. Once they get the taste of the money rolling in....

[BANANASBANANAS]

I think the issue is not IF additional and higher taxes and fees will be levied as that is pretty much now a given.

The issue, imho, is what, if anything, our employer will do to offset the major reduction in net pay.

If it does nothing, it worsens both the attrition and recruitment problem to such an extent that an embarrassing number of aircraft would be grounded and the brand image would suffer massive negative publicity from the consequent, and forced, scaling back of services. If it does something, it would increase its costs way more than it would wish.

And, would the (remittance) tax apply to Provident Fund payout? If yes, it would certainly trigger the immediate departure of many (most?) of our more senior colleagues who will have a substantial amount invested and a correspondingly large amount to lose. Why risk getting exactly the same net payout from the Prov Fund (after tax) in 5 years time as you could get right now tax free?

[Trader]

The concept of 'remittance' tax has been in the new several times over the last several years. It is also an easy tax to implement - Any financial institution simply applies it during a conversion, a defacto collection. Interestingly enough it was just over a year or so ago that the exchange houses began requiring passport/ID info for exchanges.

I would also guess that in the case of a remittance tax it will implemented with no notice to avoid large transfers that would occur if people knew it was coming.

[BANANASBANANAS]

Entirely agree.

So, in anticipation of the likely incoming bad news, can we expect expat house owners (with substantial equity), those with separate business interests and those with substantial cash held in UAE/GCC to immediately begin winding down their risk of exposure to these taxes?

I would say it is now time to have absolutely minimum assets in UAE/GCC.

[The Turtle]

NOW is the time?!!!

Lol

[BANANASBANANAS]

Yes, point taken. Perhaps it would have been better to have said, if you haven't already got your assets out of GCC, now is probably your very last chance without risking a hefty tax bill.

[MainFleetSkipper]

Pay 10% VAT here or 50% income tax plus 15% VAT back home. Still a no-brainer for us......:ok:

[felixthecat]

Remittance tax would decimate the already weak housing market. As has been said there would be no point in staying if you have a large provident fund and property here. It would see a HUGE exodus of expats....me included.
If they want to kill the golden goose this would be the fastest way

[outboundjetsetter]

Dubai introduces innovation fee | GulfNews.com (http://gulfnews.com/news/uae/government/dubai-introduces-innovation-fee-1.2164976)

[krismiler]

Income tax was supposed to be a temporary measure to pay for the Napoleonic wars.

Saudi Arabia tried to introduce an income tax but had to back off because of the numbers of threatened departures from expats. They kept income tax free, but made that subject to a minimum of one years service to save face.

Once a GST/VAT is in place it's permanent, the government become dependent on the revenue and the rate only ever goes up.

[K9]

The combined effect of inflation, VAT and essentially what amounts to pilot wage freezes is taking its toll.

Since May 2013 (after a 0.5% pay rise that year) there has been no salary scale increase. Flying pay has gone up marginally giving a captain an extra AED 600 per month assuming an average of 75 hours.

Inflation based on government figures has gone up:
2.35% - 2014
4.07% - 2015
1.77% - 2016
2.07% - 2017

Compounded effect therefore 10.65%. This ignores several items that are not included but nonetheless feature in the inflation experienced by the average middle class worker in the UAE.

VAT has produced a consumer cost of approx 7% due to its cost of implementation and its application in many instances.

The effect of this on disposable income is obviously a lot higher. If disposable income was 18% of income 5 years ago then it is practically zero today. Even assuming an individual could save 50% of salary 5 years ago that has now been reduced by over a third.

If one looks at the cost of commodities and services and the salary scales of the last 20 years it becomes apparent that the salary of a first year FO has approximately doubled numerically but the purchase power has been halved.

Example: A first year FO earned approx AED 16,000 20 years ago. At the then price of gold (Approx 300 USD an ounce he/she could buy 14.5 ounces of gold with the salary. Today a first year FO will earn about AED 30,000 per month (Assuming he/she flies a full roster!) and that will buy them approx 6.1 ounces of gold at today's price. Most other commodities show a similar ratio.

Inflation is estimated to be 2.94% this year making any step we may get null and void. We would need a 7% adjustment to salary scales and a step increase in May to simply put us back to May 2016 when we got the last step.

I suspect that is unlikely.

[cerbus]

Good points K9.
Main Fleet you are disregarding our low salaries compared to the West. So even if you pay 50% where you come from (highly unlikely) you are still better off and have a higher quality of life back home. As K9 pointed out even if we get a 25% pay raise (again highly unlikely) we are still behind we are just 4 years ago.
The exodus has already started. Just look at the planes at DWC.

[fliion]

Good post but slight correction. The OT threshold was reduced from 92-88 in 2015 and the 4.5% would need to be accounted for in analysis.

Anyone who joined after the summer of 2009 signed on for 92 OT thresh and have since seen it reduced to 88. Pre summer ‘09 - 78-92-88 on a 31 day month reduced by three hours for every day short of 31.

[SilverSeated]

Good points K9.
Main Fleet you are disregarding our low salaries compared to the West. So even if you pay 50% where you come from (highly unlikely) you are still better off and have a higher quality of life back home. As K9 pointed out even if we get a 25% pay raise (again highly unlikely) we are still behind we are just 4 years ago.
The exodus has already started. Just look at the planes at DWC.

Unless "home" is working for a legacy carrier in the States where on Earth else would this principle of higher wages apply?

I agree with you on the QOL bit, but as an EASA licence holder...this simply does not apply!

[harry the cod]

cerbus

Completely disagree with your statement on salary and no, this is not another defence of EK by the Cod. Any EK pilot will know what the salary is so it's not an opinion based argument. I'm sure Neptune Spear will tell us how wonderful Delta is but let's stick with Europe for this example.

I know personally of someone in BA who's done 27 years there and is a senior trainer. After tax, his take home is circa £9,000 per month. You've been here long enough to know that even a 12 year line Captain will clear way more than that. I don't give a rat's arse about what the base salary is or what tax band you're in, what bothers me is what ends up in MY bank account. As for higher quality of life, that's very subjective and dependent on your own personal circumstances so is difficult to quantify.

For some, living at 'home' on £3000 a month is better than earning five times that in the desert!

[cerbus]

Well if we’re talking Europe as has been mentioned many times before there are 7-8 good airlines to work for on the continent. The rest don’t pay as much as EK but they don’t work as hard as we do and they live and work in a socialist society that doesn’t allow for blatant abuse, something that we are all to familiar with.
The 7-8 airlines that most of us would love to work for pay similar as us and work less not to mention the better QOL we all crave as Pilots. 15% less work is huge especially at the high end of hours worked. 80 hrs vs 92 hrs is a lot worse then it seems on paper then you consider 6 continents and flying at all hours of the clock that we do.
I haven’t seen BAs schedule in a while but I’m pretty sure their flights leave around the same time. The NA flying leaves mid morning while the east bound long haul leaves late. We go to NA at three separate and disparaging times. 2am 8am and 2pm. East bound the same. 2am 8am and 6pm so we as pilots are all over the place. So we are overworked overwhelmed and time zone abused.
We haven’t even talked about QF CX or the NA airlines which you alluded to have it pretty good. If you as a trainer bring home 50,000 dhs I personally would rather have the 9,000 quid at BA but obviously that’s not an option so I will in my fog based mind dream of the unattainable.

[h3dxb]

what you guys expect ?

A shiny world and not to pay for ?

I for myself decided to move me and my company out now. with all the hidden taxes like DEWA and SALIK, it is not feasible anymore.

not to speak about the legal in UAE.

You have fun if it comes to this.

H3DXB

[fatbus]

If anyone thinks things are going to drastically change , keep dreaming! Profit share LOL, big pay raise LOL , 15 % reduction in monthly hours LOL . Leave awarded LOL. Management that cares !!! LOL

[harry the cod]

fatbus

We'll get profit share and we'll get a pay rise, although it might not be as big as we'd want or deserve. Caring management? Well, they have been helpful to me in my time here as they have for close friends of mine with family issues/health. Very supportive in fact. If you're an asshole, expect to be treated like one.

As for the monthly hours and leave.....probably going to agree with you on that.

Harry

[motley flight crue]

Harry, were the management supportive when you had your lips removed from their asses!!

[harry the cod]

Motley

Here since 2010 and still unhappy?

Mate, I'm not naive enough to realise that AAR & TC make decisions here that our management have no control over but if you're reasonable with them and pick your battles, the results are far less confrontational. Unfortunately, some people feel the need to fight every one. Sad too that you've not heard of at least one positive tale in your unhappy time here. I'm not going to do the details but a close friend of ours had his wife diagnosed with some rare and serious cancer. He went to see his CP & the Company give him unconditional time off, as well as covering all of the very expensive treatment for her abroad. FJ, Boeing manager, has been great as was CPB. This is not an isolated case.

As I said, if you're an asshole, they'll treat you like one.

Harry

[motley flight crue]

Actually here since 2007. Not unhappy, kind of agree with half what you say. I’m just kidding with you!!

[SOPS]

fatbus

We'll get profit share and we'll get a pay rise, although it might not be as big as we'd want or deserve. Caring management? Well, they have been helpful to me in my time here as they have for close friends of mine with family issues/health. Very supportive in fact. If you're an asshole, expect to be treated like one.

As for the monthly hours and leave.....probably going to agree with you on that.

Harry

Thats a big call Harry... ( I'm talking about the prediction of a pay rise and profit share

[Talparc]

Quote: He went to see his CP & the Company give him unconditional time off, as well as covering all of the very expensive treatment for her abroad. FJ, Boeing manager, has been great as was CPB. This is not an isolated case.

He will get his warning letter from the same people who gave him now unconditional time off

Harry better play with your Bentley!

[harry the cod]

Talparc

Another one of your completely pointless and childish posts. You're consistent, I'll give you that.

So, my question again. When are you leaving this airline you despise so much?

Harry

[Capn Rex Havoc]

Very interesting article

Money exchange with links to Dubai Government identified as hub for billion-dollar laundering empire - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2018-02-06/khanani-network-laundered-money-through-wall-street-exchange/9398148)

[Jack D]

The point is Harry although commendable the helpful behavior you describe is perfectly normal in most companies in Europe & not only airlines, some locos excepted no doubt . It really shouldn’t be viewed as exceptional & remember if more than 12 mts sick your employment is terminated and you’re out on the street .. not so helpful perhaps .

[harry the cod]

Jack D

I agree, and that was the reason for the post.

We can all be quick to criticise at times, often justified, but I think credit should be given where due. I don't think it's reasonable that those managers who do a commendable job should be tarred with the same brush as the lazy and incompetent ones.

Harry

[BANANASBANANAS]

Harry, I am sure there is some truth in what you say but most of the managers who are willing and able to do 'commendable' work lack the authority to make the necessary decisions - and are invariably rebuffed by those above them.