Apartments and villas are homes, not investments
I am writing in regard to the recent property rush in Dubai (Sales launch for Emaar in online shift after chaos, April 16).
Why do property developers offer villas at sale prices? Generally, it's because business is slow and it is a way of generating trade.
But surely they have got it wrong in this case: if there are 188 villas for sale and more than 500 individuals wanting to buy them - including people who just want to make a fast buck by reselling - then any student of economics will tell you that it is a situation of excess demand.
How do you alleviate that? Let the market operate; the price must be higher.
Governments sometimes sell properties at a discount - an example being the sale of council houses in the UK under Margaret Thatcher. This enabled low-income households to gain a foot on the housing ladder.
There should be a stipulation that the buyer should live in the property and cannot resell it for a given period of time.
We should get back to thinking about villas and apartments as places to live, not as assets for speculators to make fast returns.
M Sayers, Dubai
Physics shows need for belts
I refer to the letter All passengers can't buckle up (April 18), in which one reader highlighted the difficulty of restraining four children in the back of a car that has only three seat belts.
Although the writer says he understands how important it is to buckle up, I wonder if he truly grasps the physics of a car crash.
Put plainly, if a car travelling at 60 kph crashes, anyone in that car who is not wearing a seat belt will continue to travel at 60 kph. In the case of a three-year-old child, this will most likely be straight through the front windscreen.
Crash tests have shown that, even at this speed, the impact of this is the same as dropping the child from a third-floor balcony and is likely to be fatal.
I urge anyone who is still considering the usefulness of seat belts for their children to watch one of the child crash tests on YouTube. Those parents with four or more children should consider buying a people-carrier or any other type of vehicle that offers more seat belts in the back.
Name withheld by request
Online registration would end queues
I don't understand the need for "nightmare queues" for people to re-register their Sim cards (Mobile phone users' long stay on the line, April16).
In this age of advanced technology, Etisalat and du could have facilitated re-registration online.
Do they like seeing hard-working people queuing for hours just so we can continue to use our mobile numbers? Or are they hoping that most of us will give up and just buy a new Sim card after the deadline?
Name withheld by request
Education may put end to trafficking
I am writing in reference to human trafficking (New law to protect domestic workers, April 18).
It would be good to know how the current laws are being implemented and how effective they are.
There seems to be a lot of emphasis on the punishment of the victims but the perpetrators of these crimes are rarely mentioned.
The country's reliance on low-skilled labour is one reason for the continued abuse. Perhaps having more educated workers would help reduce trafficking.
M Carr, Abu Dhabi
Solutions to the plastic problem
Regarding Experts question value of biodegradable bags (April 14), there are other ways to recycle plastic bags.
It would be wise to look at competing technologies which do not change the recycling stream.
Jack Roberts, US
We should stop the culture of handing out plastic bags at all shops, even for small items.
Paper or jute fibre bags are the norm in some other countries.
Joe Burns, Dubai
Why not charge customers a deposit on the bags they take?
Charging Dh1 to Dh 5 per bag, and refunding the money to people who bring their bags back, should do the trick.
This system gives people an incentive to recycle, and I believe it has worked elsewhere in the world.
Donald Glass, US
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 sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
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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
TOP 5 DRIVERS 2019
1 Lewis Hamilton, Mercedes, 10 wins 387 points
2 Valtteri Bottas, Mercedes, 4 wins, 314 points
3 Max Verstappen, Red Bull, 3 wins, 260 points
4 Charles Leclerc, Ferrari, 2 wins, 249 points
5 Sebastian Vettel, Ferrari, 1 win, 230 points
