The Middle East’s travel and tourism sector is likely to reach $246 billion this year, just 8.9 per cent below pre-pandemic levels, according to new research from the World Travel and Tourism Council.
The sector contributed $270bn to the region’s economy in 2019, before the Covid-19 pandemic struck, the global tourism body said on Wednesday.
However, in 2020, when Covid-19 brought international travel to an almost complete standstill, the sector’s contribution dropped 51.1 per cent by more than $138bn, the WTTC said.
The Covid-19 pandemic caused significant losses to the Middle East’s travel and tourism sector, but we now have reason for real optimism
Julia Simpson,
president and chief executive, WTTC
“The Covid-19 pandemic caused significant losses to the Middle East’s travel and tourism sector, but we now have reason for real optimism,” Julia Simpson, WTTC president and chief executive, said.
“Since the start of the pandemic, governments across the Middle East have shown real commitment to travel and tourism. Saudi Arabia, in particular, is making a major investment in travel and tourism.”
Aviation was among the industries hardest-hit by the pandemic ― with a domino effect on other major verticals such as tourism, hospitality and supply chains ― but it is gradually recovering.
Momentum in the recovery of global air travel has gathered pace as more governments ease coronavirus-related restrictions, according to data from the International Air Travel Association.
The global airline industry is “optimistic” about the outlook for air travel in 2022, as Omicron-related restrictions are eased or removed. Annual passenger traffic recovered to 42 per cent of 2019 levels last year and cargo volumes rose 7 per cent from 2019, Iata said in January.
With major markets reopening borders and easing restrictions to travel, the travel and tourism sector’s contribution to employment could almost reach pre-pandemic levels this year in the Middle East, WTTC research found.
If countries continue to roll out vaccination programmes at pace this year and restrictions to international travel are eased around the world, 6.8 million people could be employed in the sector by the end of 2022, just 40,000 behind pre-pandemic levels, the tourism council said.
More than 62 million tourism jobs were lost in 2020, leaving just 272 million employed across the industry globally, compared with 334 million in 2019.
Those jobs could return by 2022 if the global vaccine rollout continues and travel restrictions are relaxed, the WTTC said in a report last March.
The sector's contribution to global gross domestic product could almost reach pre-pandemic levels in 2022, with a further year-on-year rise of 25.3 per cent next year, the council added.
The travel and tourism sector’s contribution to global GDP nearly halved in 2020. It fell 49.1 per cent in 2020 to $4.7 trillion (5.5 per cent of the global economy) from nearly $9.2tn during the previous year (10.4 per cent of the global economy), the WTTC said.
This year “is poised for a strong recovery if governments across the region continue to open up their borders and remove restrictions to travel, which will have a massive positive effect on the economy, the society and jobs", Ms Simpson said.
To reach close to pre-pandemic levels this year, governments around the world must continue focusing on the vaccine rollout and allowing fully vaccinated travellers to move freely, the WTTC recommended.
Governments in the Middle East and around the world must ditch the “patchwork of restrictions” and enable international travel using digital solutions that allow travellers to prove their vaccinated status in a fast way, the global tourism body said.
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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
The Details
Article 15
Produced by: Carnival Cinemas, Zee Studios
Directed by: Anubhav Sinha
Starring: Ayushmann Khurrana, Kumud Mishra, Manoj Pahwa, Sayani Gupta, Zeeshan Ayyub
Our rating: 4/5
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
Scoreline
Syria 1-1 Australia
Syria Al Somah 85'
Australia Kruse 40'
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
