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Ajman Conference VAT will harm competitive position of UAE: Al Tayer.

Dubai The UAE is not ready for value-added tax (VAT) as it could harm its competitive trade position, Ahmad Humaid Al Tayer, governor of the Dubai International Financial Centre (DIFC) and chairman of Emirates NBD, said at the Ajman International Economic Conference yesterday.

He said that although VAT would have to be introduced eventually in the GCC, it is too early to be adopted by the UAE. "Our economies are still young and still developing. This will increase prices and there will be no competition in trade," he said.

While Saudi Arabia has put administration systems in place and is ready to implement VAT theoretically, Qatar, Bahrain and Omar are currently working on developing the system. Meetings will take place later this year as GCC ministers reach a decision on VAT.

Al Tayer said that taxation at this point in time would be more damaging than beneficial. "It is still very early to speak about it. There is no unity within the GCC countries on commodity prices or other services," he said.

Anwar Ebrahim, former deputy prime minister of Malaysia, who attended the conference, observed that while VAT is a principle the country is not rejecting outright, the problem lies in applying it. "The cost to the public will be horrendous," he said, as initial shocks of inflation will be felt. Only when a country matures should it consider applying VAT, he said.

Echoing earlier remarks by Central Bank governor Sultan Bin Nasser Al Suwaidi, Al Tayer said the UAE should have a combined stock exchange. "We have reached the state where we have established the markets. This is the best way to activate the economic life of a country," he said.

Investor safeguards

However, he said restrictions and controls should remain in place to protect small investors. "There should be governance in the boards of the companies as well as good governance to make sure projects implemented are beneficial to stakeholders, he said.

Nasdaq Dubai and the Dubai Financial Market are currently in the final stages of merger discussions. DFM's executive chairman Eisa Kazim said earlier that DFM and the Abu Dhabi Securities Exchange (ADX) have broached merger talks.

"We have to create one market at the level of the UAE," Al Tayer said. He said that while share prices have dropped, most listed companies are still profitable.

Regarding discussions on various types of unions among GCC countries, Dominique de Villepin, former prime minister of France, said he supports the concept of a single regional country. "What Europe is doing should be done in other countries," he said. A united currency would increase the credibility of each member country and bring more stabilisation in its global position.

"The GCC has a strong opportunity in the world [with a single currency], he said.

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Publication:Gulf News (United Arab Emirates)
Article Type:Conference news
Geographic Code:7UNIT
Date:Apr 8, 2010
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