Deloitte launches a series of whitepapers explaining the impact of VAT on Retail, Automotive, MICE & Financial Services industries
To help businesses in the Gulf Cooperation Council (GCC) countries understand the potential impacts of the implementation of VAT, Deloitte in the Middle East is issuing a series of whitepapers entitled “VAT in the GCC – Insights by industry” designed to provide a greater understanding of the impacts of the tax on specific industry types.
“The progressive implementation of VAT throughout the GCC from 1 January 2018 marks the start of some of the most exciting, dramatic and far-reaching socioeconomic changes in the region since the discovery of oil reserves in commercial quantities during the 1960’s,” explains Justin Whitehouse, Deloitte Middle East VAT leader. “The time does appear to be upon us all to start looking in detail at the potential impacts it will have on businesses, whether from an organizational, operational, commercial or financial perspective.”
For many businesses, tax is a relative unknown. Although some of those operating in Saudi Arabia, Qatar, Oman and Kuwait pay corporate income tax or ZAKAT, VAT requires a very different perspective. Being a transactional tax, its impact across business operations including product pricing, technology, trainings, and others, can be significant.
In the first whitepaper, “VAT in the GCC – Insights by industry”, Deloitte breaks down the impacts of VAT implementation in different categories, allowing readers to understand the upcoming changes, and highlighting the identification of what needs to be done to take a business from its current state, to the post-VAT implementation state.
VAT impact on the retail industry
The introduction of VAT in the GCC poses a serious question for all retailers. According to Deloitte, some retailers may actually be better off only passing a smaller proportion of the increased cost on to their customers and suffering the increase themselves in an effort to retain market share. “Alternatively, many may, as an initial marketing ploy, also offer to cover the full amount of the VAT in order to keep volume of sales at a reasonable level during the settling-in period” according to Bruce Hamilton, Deloitte Middle East Consumer Business Industry VAT leader.
VAT impact on the automotive industry
“A business issue that retailers need to ponder is what will happen on the night of 31 December 2017, and the same applies to automotive,” said George Campbell, the Deloitte Middle East Automotive Industry VAT leader. “The answer to this is that any self-respecting budget conscious shopper will consider perhaps accelerating a purchase, in order to attempt to avoid the VAT cost.”
According to the Deloitte VAT whitepaper, one operational issue will be how dealers respond to a likely spike in demand in the run-up to the introduction of VAT. The other side of this is that there is likely to be a glut of second-hand cars coming onto the market as consumers ‘flip’ them in order to take on their new vehicles.
Dealers will need to make sure that customers are not disappointed when trying to make faster purchasing decisions than normal. Stocking the right vehicles at the right specification will be key – vehicles ordered prior to, but delivered after, implementation are at risk of being subject to a VAT surcharge.
VAT implementation on the Meetings Incentives Conference and Events (MICE) industry
GCC countries are a well know venue for events and conferences and the difficulty for the MICE industry will be when one gets to the smaller sub-contractors in the supply chain as they will either not register for VAT, or not be entitled to do so. What this will mean is that they will incur VAT on their costs, and assuming that they wish to retain their profit margins, this VAT will then be built in with the charges that they make.
Another significant issue for the industry, particularly where conferences and exhibitions are being arranged, is that there may be long lead times between the initial contract date and the actual date of the event – and how VAT will be treated on such early payments for future events.
VAT implementation on the Financial Services & Insurance Industries
There are many challenges associated with taxing the financial and insurance services. “They are perceived to be difficult to tax; the “value” for VAT purposes, particularly in the context of margin-based transactions, is almost impossible to determine accurately and consistently on a transaction-by-transaction basis. As a result, VAT exemption is often a preferred policy approach” said Stuart Halstead, Deloitte Middle east financial and insurance industries VAT leader.
Nevertheless, VAT exemption also creates as many technical problems for businesses as it solves, many of which are listed in the Deloitte report.
To view the full whitepaper, please visit the following link: http://bit.ly/2drNWpE
EU finance chief says UK’s Northern Ireland move a breach of trust
DUBLIN (Reuters) – The European Union’s finance chief said Britain’s decision to make unilateral changes to Northern Irish Brexit arrangements raised questions over whether it can be trusted in future trade negotiations with any partner.
“It does open a question mark about global Britain, if this is how global Britain will negotiate with other partners. Our experience has been not an easy one to put it mildly,” Mairead McGuinness, who is negotiating post-Brexit financial services terms with Britain, told Irish broadcaster RTE on Thursday.
“We have to be very clear that when something happens that is not appropriate and indeed in our view breaches both trust and an international agreement, then we have to call it out. It wasn’t a good day yesterday but this morning we have to work for practical solutions, with the UK, not separately.”
(Reporting by Padraic Halpin; editing by John Stonestreet)
The Benefits of Starting A US Non-Profit: The Latest Tax Regulations
Starting a nonprofit organisation can be a very effective way of significantly improving your society’s welfare, and truly assisting those in need. Ultimately, however, understanding all the prerequisite steps mandated to start a nonprofit– as well as the legal obligations and privileges that can be associated with such a process, is crucial before fully committing to and moving forward with your business plan.
Growing a prolific, successful, and impactful non-profit can be a very tedious process and can commonly involve years of consistent effort, diligence, and determination. Consequently, this article will take a deep dive into the relative statutory and federal legislation and critically analyse the plethora of economic, monetary, and social benefits that starting a nonprofit can bring in for you.
Non-profit Organisations: A Quick Overview
Regardless of whether your goal is to address a particular societal issue, form a trade organisation or perhaps create a social club, if you are looking for the opportunity to earn a profit on top of accomplishing your stipulated goals, forming and operating a nonprofit organisation may be the way to go.
Contrary to most social clubs- which are formed to solely provide benefits for their specific members, nonprofits are generally created to provide benefits to the general public. These can include corporations created for educational, scientific and charitable purposes and- as we will further analyse below, are commonly exempt from paying corporate income taxation in accordance with Section 501(c)(3) of the Internal Revenue Code.
The Financial and Structural Benefits of Starting a Non-profit
As briefly touched on above, forming a nonprofit organisation can provide a plethora of benefits for you, these include:
- Tax Exemptions- companies that are categorized as ‘public charities’ in accordance with section 501(c) of the Internal Revenue Code are generally exempt from paying corporate income tax on a state and on a federal level. Additionally, after a company has obtained their aforementioned ‘tax exempt’ legal status, a person’s or company’s monetary donations to them is tax-deductible.
- Grant Opportunities- There’s a prolific amount of both public and private bodies that unilaterally limit their charitable donations and grants to public charities only. This is because nonprofits can- and commonly do, offer tax deductions to such individuals or corporate entities on an exclusive basis.
- Unique Corporate Structure- A nonprofit organisation operates as its own unique legal entity- completely separate from its owners and founders, and consequently is in a position to place its own interests and corporate ethos above the interests of the persons that may be associated with it.
- Limited Liability & Perpetual Existence- On top of having a statutory right to exist in perpetuity, nonprofits also have limited liability under the law. Therefore, any damages that may arise from potential legal disputes are limited to the real assets of the actual nonprofit, and not the assets of its founders and/or owners (subject to specific legal exemptions).
Final Overview: The Potential Disadvantages of Forming a Nonprofit
Despite all the advantages laid out above, it should be duly noted that there are a couple of potential disadvantages to forming a nonprofit that you may want to consider before moving forward with your plan.
Firstly, the process of forming a nonprofit can take a significantly long period of time and this is commonly associated with a great deal of both effort and capital. Moreover, in order to apply for some of the benefits listed above- including federal tax exemption, a monetary fee is required and the process also often needs a present attorney or corporate accountant to serve as a corporate consultant.
Furthermore, there are a couple of practical disadvantages to starting a non-profit organisation. These include: a) excessive paperwork- as all nonprofits are legally required to keep detailed analytical records of their practices and submit them to their relevant state de[artment and to the IRS, and b) limited personal control over the organisation- this is particularly the case in states that require nonprofit organisations to have more than one director.
Finally, nonprofits are commonly subject to prolific levels of public scrutiny- especially in relation to their finances, which may act as a disincentive for some private individuals.
Overall, starting a nonprofit can bring in a plethora of economic, monetary, and social privileges for the individuals involved, and- although the process can come with a few potential inconveniences, they are arguably a small price to pay. Companies like TRUiC advise on the varying benefits of different states when it comes to US formations. It is worth conducting thorough research before making your next move.
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Bitcoin rises 5% to $50,942.58
(Reuters) – Bitcoin rose 5% to $50,942.58 on Wednesday, adding $2,426.23 to its previous close.
Bitcoin, the world’s biggest and best-known cryptocurrency, has risen 83.7% from the year’s low of $27,734 on Jan. 4.
Bitcoin has fallen 12.7% from the year’s high of $58,354.14 on Feb. 21.
Bitcoin’s price soared this year as major firms, such as BNY Mellon, asset manager BlackRock Inc, credit card giant Mastercard Inc, backed cryptocurrencies, while those such as Tesla Inc Square Inc and MicroStrategy Inc invested in bitcoin.
Ether, the coin linked to the ethereum blockchain network, rose 7.18 % to $1,595.64 on Wednesday, adding $106.84 to its previous close.
(Reporting by Bhargav Acharya in Bengaluru; Editing by Chris Reese)
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