Half of the chief finance officers in the Gulf region admit their business has a “minimal understanding” of the likely effects of value-added tax (VAT).
The result, from a survey by consultancy Deloitte, is likely to worry business leaders given that Saudi Arabia, UAE and the other Gulf states are set to levy a 5% tax on consumption in 2018.
Although a large majority, 93%, of the finance chiefs expect VAT to have an impact on their business, more than four-fifths say they have yet to consider the new tax in their strategic planning.
The looming prospect of VAT, along with the negative effect of low oil prices, has helped to cast a shadow over companies in the region, with the Deloitte report noting that “collective scepticism has emerged among Middle East chief financial officers”.
The finance chiefs’ optimism about their own companies’ prospects in the coming six months has fallen to its lowest level since the survey began in 2009.
Cost reduction was named as a top priority in the next 12 months by 91% of respondents and 83% said now was not a good time to add greater risk on to the company balance sheet.
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