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No VAT impact on construction sector in UAE
The UAE’s construction industry has not been impacted by the recent introduction of 5 per cent value-added tax (VAT) and it will witness over 10 per cent expansion in 2018, the second-fastest growth rate in the world, according to industry executives and research reports.
The industry executives believe that Expo 2020 is not the end for the construction sector. Rather they are pinning hopes on multi-year plans such as Vision 2021 which would drive the industry in the post-Expo 2020 era.
“I see good potential for the construction sector. I would say VAT has not impacted us that much; however, there is a pressure on cash flow but people are getting used to it,” said Ravi Murthy, chief financial officer, Arabtec Construction.
Murthy attributed the strong growth potential for the industry to the hosting of Expo 2020 as well as growth in the hospitality and healthcare industries, with a massive inflow of visitors and medical tourists.
“Dubai has won the bid to host the World Chamber Congress which is coinciding with Expo 2020. More than 14,000 chambers from 100 countries will attend the event. If 10 per cent of those chambers do business, the requirement for hotels, infrastructure, road, entertainment, leisure and shopping is going to grow substantially. The UAE target is half a million medical tourists. As compared to the West, they are in the stage of implementation; there are about 43 hospitals with more than 100 beds, which is not enough to cater to the needs. There is a big potential for healthcare. Today, we have Dh740 billion worth of construction projects under way,” he said.