Companies in Dubai expect business conditions to improve in the third quarter of 2021 as investor confidence grows ahead of Expo 2020, according to a survey by Dubai Chamber of Commerce & Industry.
Two-thirds of the business leaders questioned said they expect to see a better business environment during the third quarter, compared to 51 per cent who said the same in the previous quarter, according to the Business Leaders’ Outlook for Q3 2021 survey released on Sunday. About 66 per cent were more optimistic about the business environment, compared to 48 per cent in the second quarter.
These were the most optimistic survey readings since the last quarter of 2014, according to Dubai Chamber.
"The findings demonstrate Dubai’s success in minimising the impact of the Covid-19 pandemic through a series of policies, initiatives and measures that have ensured a favourable business environment and addressed new challenges created by the pandemic," Hamad Buamim, president and chief executive of Dubai Chamber, said in a statement. "Expo 2020 Dubai is expected to fast-track Dubai’s economic recovery and boost the emirate’s appeal among foreign companies and investors."
Business activity in Dubai’s non-oil private sector economy expanded in June, supported by a seventh monthly rise in output and an upturn in construction and tourism activity, according to the IHS Markit Purchasing Managers' Index released on Sunday. Widespread testing and high vaccination rates have helped the UAE to boost business confidence as its economy continues to recover from the coronavirus-induced slowdown.
The survey of company executives in the emirate showed that factors seen as affecting business conditions in the third quarter have improved on the previous quarter, with the most significant pick-up seen in the "financial transactions" category, Dubai Chamber said.
About 57 per cent of business leaders said they expect a recovery in oil prices to improve the environment in the third quarter.
Some 62 per cent of respondents said global restrictions on trade and travel may risk impacting business conditions in the emirate, according to the Dubai Chamber survey.
The overall increase in business confidence is due to growing domestic demand, economic stimulus initiatives and the progress of the vaccination drive, it said.
Small-and-medium-enterprises (SMEs) were particularly optimistic about Dubai’s short-term economic outlook, compared to large companies serving regional and global markets, the survey showed.
However, late payments, debt collection, strong price competition and the high cost of raw materials were identified as key challenges and risks that could potentially impact the economic situation, Dubai Chamber said.
SMEs make up about 95 per cent of all companies in Dubai, employ 42 per cent of the workforce and contribute about 40 per cent of the emirate's gross domestic product, according to government agency Dubai SME.
On June 28, Sheikh Mohammed bin Rashid, UAE Prime Minister and Ruler of Dubai, announced new initiatives aimed at supporting family companies, helping start-ups and attracting more skilled workers to the UAE.
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Dominic Rubin, Oxford
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
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- Field operator: Dh5,000 to Dh7,000
The biog
Most memorable achievement: Leading my first city-wide charity campaign in Toronto holds a special place in my heart. It was for Amnesty International’s Stop Violence Against Women program and showed me the power of how communities can come together in the smallest ways to have such wide impact.
Favourite film: Childhood favourite would be Disney’s Jungle Book and classic favourite Gone With The Wind.
Favourite book: To Kill A Mockingbird for a timeless story on justice and courage and Harry Potters for my love of all things magical.
Favourite quote: “We make a living by what we get, but we make a life by what we give.” — Winston Churchill
Favourite food: Dim sum
Favourite place to travel to: Anywhere with natural beauty, wildlife and awe-inspiring sunsets.
