Mohammed Alardhi is the executive chairman of Investcorp, chairman of Muscat Stock Exchange MSX and chairman of Royal Jet
March 12, 2024
The world is at an interesting juncture, with nations around the globe working hard to boost economic activity and empower citizens to lead the way towards more secure and stable futures.
Political, social, technological and environmental factors have brought forth rapid changes in lifestyles, consumer habits and business practices. However, there are various opportunities to view these changes with optimism and create new avenues for development that support long-term development goals.
Earlier this year, Oman Investment Authority launched a fund valued at $5.2 billion to encourage investments in the private sector and small and medium enterprises. It is called the Future Oman Fund and is expected to support sectors such as tourism, manufacturing, green energy, maritime resources and technology.
This is an important move to support economic diversification goals. It is, after all, encouraging to have growing industries with further potential being brought to light and entrepreneurs – both existing and aspiring – receiving financial support as well as a boost in confidence.
SMEs are said to be the backbone of the economy and powerful drivers of social development, creating close to 70 per cent of jobs and gross domestic product worldwide, according to data published by the World Economic Forum in 2022.
However, SMEs are more profoundly affected by hurdles such as inflation and rising costs. Indeed, even the slightest shifts in supply chain or market demand will significantly affect revenues. Also, given that they typically have small numbers of employees, they will instantly see a slowdown in productivity if there are talent shortages or high staff turnover rates.
This year's Tour of Oman. Growing industries are being brought to light and entrepreneurs are receiving a boost in confidence. AFP
It is encouraging to have growing industries being brought to light and entrepreneurs receiving financial support
Expansion, competition and the securing of funds are all challenging for SMEs, which is why strategic approaches to recharge them – as we are currently seeing in Oman – are crucial.
Beyond funding, there are various initiatives that support the growth of SMEs. Workshops for budding business owners led by seasoned entrepreneurs, mentorship programmes and an increased focus on entrepreneurial education by educational institutions can all help drive this objective.
Industry consortiums and business networks can allow entrepreneurs to tackle common challenges pertaining to rising costs, employee retention and market demand together.
Omani entrepreneurs have an excellent opportunity to tap into the global conversations that are challenging international brands that have monopolised several markets internationally. Shopping local brings forth a series of benefits that include reducing carbon footprint, using locally available sources, better and more personalised service, and growth in local jobs, production and revenue.
Home-grown businesses have the highest levels of connection with their market and can engage more easily with consumers to ensure that market demand is met most efficiently.
Further, local businesses enhance the tourism landscape of any country, as travellers are interested in engaging with brands and experiences that reflect their destination’s culture, heritage and natural resources.
Salalah, Oman. There is plenty of potential in the tourism industry to partner with international businesses and offer package deals. VisitOman
Of course, this does not mean that SMEs must be limited to the local market – we must encourage entrepreneurs to expand beyond their borders, across the region and internationally. There is plenty of potential in the tourism industry, especially to partner with regional players as well as international businesses and offer package deals that allow visitors a variety of experiences.
SMEs must also be encouraged to adopt AI technology in innovative ways to deliver more personalised experiences than ever before. Augmented reality can overlay digital experiences in the physical world by adding more interactive elements in digital spaces, offer gamified experiences such as treasure hunts, use virtual reality to elevate user experience, and cut travelling time.
There is enormous potential for tech firms and operators in the tourism industry to collaborate and innovate together, taking elements from Oman’s celebrated tourism offerings to create technology that makes for new, improved and more accessible experiences.
Oman has some further work to do in terms of greater economic growth and diversification, but it must remain strong and united. The nation’s leaders, government, private sector and citizens have come a long way owing to unity and a vision for a prosperous future.
It must make the most of its available resources to keep developing its talent, plan strategically and rise to the best of its capacity. I do not doubt that our nation will not only meet its goals but also establish itself as a global benchmark for growth and resilience.
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
Director: Manuel Calvo Stars: Yassir Al Saggaf and Fatima Al Banawi Rating: 2/5
Visa changes give families fresh hope
Foreign workers can sponsor family members based solely on their income
Male residents employed in the UAE can sponsor immediate family members, such as wife and children, subject to conditions that include a minimum salary of Dh 4,000 or Dh 3,000 plus accommodation.
Attested original marriage certificate, birth certificate of the child, ejari or rental contract, labour contract, salary certificate must be submitted to the government authorised typing centre to complete the sponsorship process
In Abu Dhabi, a woman can sponsor her husband and children if she holds a residence permit stating she is an engineer, teacher, doctor, nurse or any profession related to the medical sector and her monthly salary is at least Dh 10,000 or Dh 8,000 plus accommodation.
In Dubai, if a woman is not employed in the above categories she can get approval to sponsor her family if her monthly salary is more than Dh 10,000 and with a special permission from the Department of Naturalization and Residency Dubai.
To sponsor parents, a worker should earn Dh20,000 or Dh19,000 a month, plus a two-bedroom accommodation
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