29th April 2019
An article published in the April edition of the International Accounting Bulletin (IAB) focused on the global challenges and opportunities present for Dubai-based firms in relation to changes in accounting standards and taxation.
Challenging economic environment
Dubai is the only city in the Middle East to retain its position among the world’s top 44 powerful cities. Investment by the ruling Sheikh Mohammed bin Rashid Al Maktoum has led to an influx of business for accounting and advisory firms, but competition is also increasing in line with clients increasing their demand and new VAT service providers joining the market.
Faiyaaz Rajkotwala, from MGI Salim Rajkotwala and Associates, commented extensively in the article.
Changes in regulation
Faiyaaz discussed how the past lack of regulation saw clients taking a more laidback attitude to their accounts, but the introduction of VAT has changed this “with many more clients seeking out our advice on maintaining accounts, and many choosing to outsource the process.”
Pressure to lower fees
The increased demand has not brought a level rise in profit though – the Indian Institute of Chartered Accountants has been successful in a drive to increase their members presence in the UAE, which has come with consequences for established firms. With new firms offering unprofitable rates to secure a footing in the market, existing firms are facing more aggressive negotiation of fees in order to secure or retain business.
Diversification of services
The changes in regulation have made bookkeeping more of a commodity, which has opened up opportunities to diversify by offering more value-add services, such as due diligence and valuation. Looking to the future, Faiyaaz commented that “with the very real prospect of the introduction of corporate income tax, growth prospects for taxation work looks promising.” With the introduction of the DIFA Wills and Probate registry, inheritance tax planning is also a rapidly growing service area.
Overreliance on real estate and tourism
Concluding his comments, Faiyaaz noted positively that diversification was in progress, but that the largest challenge for Dubai as a nation remains its reliance on real estate and tourism. In terms of growth however, “manufacturing and the service sector – especially healthcare – have shown huge potential with the mandatory health insurance policy for every resident introduced in Abu Dhabi and Dubai in 2018.”
For more information visit MGI Salim Rajkotwala & Associates' member profile page or their website.
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