The UAE does not plan to raise VAT from the current rate of 5%, clarified the Finance Ministry, after Saudi Arabia’s tripling of the rate.
Banks and Financial Institutions have drawn down 77% of the AED 50bn worth of funds provided by the Central Bank of the UAE under the Targeted Economic Support Scheme. Under the scheme, banks can defer both interest/profit and principal repayment to extend support to customers impacted by the COVID-19 outbreak.
Private and family-owned businesses have submitted a set of proposals to the Dubai Supreme Fiscal Committee to support them through the COVID-19 outbreak: this includes requests for a reduction in VAT to 2%, settling payments faster to suppliers and contractors, freezing of 2.5% market fee, 50% reduction in customs fees and utilities among others.
Dubai Customs extended a 20% refund on fees imposed on imported products sold locally in Dubai markets, in addition to the cancellation of the AED 50k bank guarantee required to undertake customs clearance activity.
UAE banks (including FAB, Emirates NBD and Mashreq) have an exposure of close to USD 108.6mn to Phoenix Commodities and its subsidiaries. The company, which also owes millions to HSBC and Standard Chartered, has gone into liquidation after declaring USD 400mn+ in potential trading losses.
UAE’s National Creative Relief programme will support those in the cultural sector with the provision of financial grants ranging between AED 15-50k. Applications are open from 17th May for a week, and some of the factors being considered include amount of lost work/ projects, financial impact from COVID-19 and the amount of work undertaken in 2019.
Emirates SkyCargo expanded its weekly scheduled cargo flight operations to cover 75 destinations across six continents.
The government in Bahrain needs legislative approval for any increase in VAT, according to an MP, while guaranteeing that the VAT will not be increased to 15%.
Bahrain awarded 372 contracts worth USD 740mn in Q1 this year, with the biggest share for procurement of equipment and materials (USD 233mn) followed by the Construction and Engineering Services sector (USD 188.7mn) and the Aviation Sector (USD 132mn).
Tamkeen’s Business Continuity Support Programme launched in Bahrain last month, with an estimated budget of BHD 40mn, has so far supported more than 10k SMEs. Support ranged between BHD 1050-12k based on the size of the institution’s workforce.
Egypt received USD 2.772bn in emergency financing from the IMF; the country is seeking a further USD 5bn from the IMF and USD 4bn from other sources, reported Bloomberg.
Egypt suspended all new buildings and building height permits for 6 months – applicable only to residential buildings – in Cairo, Giza, Qalyubia, and Alexandria.
Lebanon has begun formal negotiations with the IMF, including discussions around the government’s financial recovery plan. A senior finance ministry official revealed that the IMF have requested for clear figures on the losses of the Central Bank. Separately, the Finance Minister stated that the country is ready to float the pound only after securing the aid package.
Lebanon initiated a 4-day complete lockdown starting from Wednesday night, aiming to contain a resurgence in COVID-19 cases.
In an interview, Qatar Airways CEO disclosed plans to lay off 20% of its workforce, while also confirming that talks were underway to defer aircraft orders for several years. He expects only 50% occupancy when flights resume, with global travel demand unlikely to recover until 2023/24.
As part of the government’s plan to save SAR 100bn amid the COVID-19 crisis, Saudi Arabia will triple VAT to 15% (from 5% currently) from July onwards and cancel the SAR 1000 cost of living allowance for government employees from June. Separately, Saudi Gazette reported a cut of close to SAR 30bn in the budgets of the Vision Realisation Programs.
Saudi Arabia will enforce a 24-hour curfew across the Kingdom during the 5-day Eid holiday. Till then people can move about between 9 am-5 pm excluding Mecca (which is already under full curfew).
Stock markets declined again last week on disappointing economic data alongside rising US-China tensions (this time about tightening export controls). Regional markets were mostly down: a few major UAE banks disclosed exposure to an agri-trader firm undergoing liquidation, Saudi Aramco declared a fall in Q1 profits, while Saudi’s PIF disclosed various investments ranging from Boeing to Facebook to Marriott to Total and Royal Dutch Shell. Among currencies, the euro was relatively stable while the pound took a beating after news broke that Brexit trade talks have made “very little progress”. Oil prices climbed, on hopes that demand would pick up as restrictions are eased while US crude inventories fell in the most recent week for the first time since January. Gold prices are rising on safe haven demand.
About Business Exchange Bureau:
Business Exchange Bureau (BXB) is a Professional Marketplace for Business Owners to Buy and Sell Businesses, Investments or Business Assets in the UAE.
The BXB vision is clear - to connect great business minds to great investments.
Nasser Saidi & Associates