VAT relief for gold on the cards in UAE
The UAE’s gold jewellery trade hopes for a surprise in the form of a tax relief to boost sales that have gone into a dismal tailspin following the introduction of value added tax (VAT) in January.
The trade is waiting for a favourable action from the federal authorities on exempting the value of gold from five per cent VAT.
Trade sources said the proposed changes in the VAT mechanism for the gold and jewellery sector would mean that VAT would be levied only on making charges (value addition) and not on the gold value.
Wholesale and retail gold jewellery sales in Dubai plummeted between 30 and 50 per cent in the first quarter of this year compared to the same 2017 period in the wake of VAT.
Informed trade sources said they hope for a positive official response to their plea for a review on VAT anytime now but the implementation could take time.
“A special tax consideration will be a big boon for the wholesale and retail jewellery trade, which has been hit hard as the price competitiveness that has been the most appealing hallmark of Dubai, the City of Gold, has ebbed away with VAT introduction,” a jewellery retailer said.
For the wholesale jewellery trade, the expectation is that VAT will be charged at five per cent on full value but to be implemented via the “reverse charge mechanism”.
“This means, there will be no actual payment of VAT on business to business transactions. Under the Reverse Charge Mechanism, there will only be documented entries of five per cent VAT in the books of both buyers and sellers and no payment of the fee,” explained the sources that want to remain unidentified.
Dubai investments distributes 12% cash dividend
Dubai Investments has decided to distribute 12 per cent cash dividend to its shareholders for the financial year ending December 31, 2017.
A proposal to this effect was approved by the shareholders at the company’s 22nd annual general meeting on Wednesday. The company’s shareholders also approved all other resolutions presented by Dubai Investments board of directors.
The company presented its 2017 financial results, which disclosed a net profit of Dh1,001.6 million for 2017. The company’s profitability was in line with the previous year if the one-off gain from divestments amounting to Dh186 million is excluded. Total assets increased by Dh890 million to reach Dh17 billion as of December 31, 2017.
At the AGM, Hussain Mahyoob Sultan Al Junaidy, vice-chairman of the board of directors of Dubai Investments, read out the chairman’s report highlighting the company’s growth.
Elaborating on future prospects, the report said the company’s outlook for 2018 is positive, with various real estate developments and exciting investments in the pipeline.
“The potential IPO of Dubai Investments subsidiary Emicool and a mixed-use Real Estate Investment Trust [REIT] through Al Mal Capital will provide additional investment opportunities to the shareholders, significantly enhancing Dubai Investments’ profile locally and regionally and creating value to shareholders.”
Meanwhile Dubai Investments has unveiled its new corporate logo and brand identity in line with its futuristic growth vision across the UAE, regionally and internationally.
DIB posts dh1.2 billion net profit
Dubai Islamic Bank (DIB) on Wednesday announced that its group net profit for the period ending March 31, 2018, increased to Dh1.2 billion, up 16 per cent compared with Dh1.04 billion for the same period in 2017. The bank’s total income increased to Dh2.69 billion, up 13 per cent compared with Dh2.37 billion for the same period in 2017. Net operating revenue increased nine per cent compared to the same period in 2017, while impairment losses stood at Dh168 million. Costs held flat, with cost to income ratio declining to 29.9 per cent compared with 32.8 per cent for the same period in 2017, depicting continued focus on creating efficiencies across the organisation.
“The overall macroeconomic environment continues to recover, with bright prospects on the horizon for 2018, based on further improvement in global oil prices and pick up in investment activity, as a result of mega projects leading up to the Expo 2020,” said Mohammed Ibrahim Al Shaibani, chairman of Dubai Islamic Bank. “The quarter saw improving financial metrics across the industry following the implementation of new economic and banking regulations such as Basel III, IFRS 9 as well as VAT as the market continues to strengthen its domestic policies.”
The bank’s profitability continues its upward trajectory with total income increasing to Dh2.69 billion, compared to Dh2.37 billion for the same period in 2017. The rise of 13 per cent was driven primarily by sustained growth in core businesses, as income from Islamic financing and investing transactions increased by 16 per cent to Dh2.09 billion. Net financing & sukuk investments rose to Dh162.7 billion up by nearly 3.5 per cent, compared to Dh157.3 billion at the end of 2017. Total assets stood at Dh211.1 billion at the end of first quarter 2018. In addition, customer deposits stood at Dh151.7 billion at the end of first quarter 2018.
Emirates NBD q1 profit surges 27%
Emirates NBD announced on Wednesday that first-quarter profit rose 27 per cent rise year-on-year to Dh2.4 billion, underpinned by higher net interest income on the back of loan growth and improved margins.
The bank, the largest lender in Dubai, said total Income of Dh4.1 billion grew 13 per cent year on year due to loan growth and the positive impact of recent rate rises while total assets grew one per cent to Dh475.6 billion from end 2017.
Shayne Nelson, group chief executive officer, said the group’s balance sheet remains strong with solid liquidity and capital ratios and a further strengthening in credit quality.
“We continued to expand the bank’s international presence and opened a new branch in Jeddah last month and we are in the process of opening 2 further branches in the Kingdom of Saudi Arabia. We are well positioned to utilise our strong franchise, digital capabilities and financial strength to take advantage of growth opportunities within the region.”
Surya Subramanian, group chief financial officer, said margins widened 17bps during the first quarter as rate rises flowed through to the loan book and funding costs remained stable due to healthy liquidity conditions. With current and savings accounts representing 57 per cent of deposits, the bank’s book is positioned to benefit from expected rate rises.
“The cost to income ratio, at 31.1 per cent, provides headroom to keep investing for future growth as we further enhance our digital and technology capabilities.”
Hesham Abdulla Al Qassim, vice-chairman and managing director, Emirates NBD, said as the region’s leader in digital banking, the bank rolled out several initiatives this year, including the group’s first Innovation Month, aligned to the UAE Innovation Month initiative.
The bank’s net interest income improved 7 per cent over the previous quarter due to loan growth coupled with an improvement in margins. Core gross fee income was flat quarter-on-quarter and improved four per cent year-on-year on account of higher fee income.
During the quarter, the Impaired Loan Ratio improved by 0.2 per cent to 6.0 per cent. The impairment charge in Q1-18 of Dh440 million is a 31 per cent improvement on that in Q1-17 as the net cost of risk improved. The bank said the increase in net profit was driven by asset growth, higher margins and reduced provisions, which helped, offset a modest decline in non-interest income. Both loans and deposits increased by two per cent during the quarter. The advances to deposits ratio remains comfortably within Management’s target range at 93.8 per cent. In first quarter, the bank raised Dh5.2 billion of term funding through a mix of public issues and private placements.
RAK sets sights on tourism
Ras Al Khaimah has recorded a steadily growing economy of 5-7 per cent over the past 5 years, and the emirate’s tourism sector is set to play a bigger role in the coming years, experts say.
In an announcement at the 14th Arabian Hotel Investment Conference, His Highness Sheikh Saud bin Saqr Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah, said that the emirate has set its sights on increasing tourism’s GDP contribution to 10 per cent by 2025.
“Already, the sector has been growing at a rate of about 19 per cent year-on-year,” he said. “Tourism is only a small part of our overall economy, at five of GDP. Our biggest sector is manufacturing, which accounts for about 30 per cent. However, the dynamics are changing fast. RAK will have one million visitors by the end of this year 2018 in Ras Al Khaimah and a target of 2.9 million per year by 2025. The obvious challenge we face, though, is to have enough hotel rooms to keep up with demand.”
At the moment RAK has have about 5,500 units but thousands more are needed, he said. “At Marjan Island, there are several hotels under development, but we still need to do more to keep up with demand.” That is why it is important that Ras Al Khaimah attracts more investors to our growing tourism sector, he underscored. “Let’s network, do business and look forward with confidence, safe in the knowledge that, this industry, in the Middle East, is only just getting started.” Ras Al Khaimah is very much part of what will be a booming future for the UAE, he pointed out. “We are home to some of the world’s most successful companies, including RAK Ceramics, Julphar Pharmaceuticals, RAK Rock and Stevin Rock, leave alone our forward-thinking judicial system. We have taken every measure to attract more investment and business; no ifs, no buts.”
Tesla cars in UAE not prone to corrosion problem
The global recall of more than 100,000 electric cars by US carmaker Tesla will have minimal impact on its fleet in the UAE as the “excessive corrosion” problem in power steering component of the cars has been found to occur only in “very cold climates.”
In a statement sent to Source, the maker of autonomous electric vehicles said it is proactively opening up a voluntary recall to retrofit a power steering component found in Model S vehicles built before April 2016.
In the UAE, some 50 Tesla electric cars haven been deployed by Dubai Roads and Transport Authority since September 2017 as part of a 200-car deal signed with the automaker in February 2017. In addition, a few residents also own Tesla cars.
“Since it is learnt that those 50 vehicles bought by RTA are post-2016 models, and given the fact that problem was seen occurring only in very cold climates, the question of recall in the UAE doesn’t arise,” said an automobile industry veteran.
Globally, 123,000 Model S vehicles are being recalled. Tesla Model X and Model 3 cars are not included in this recall.
The vehicles contracted by the RTA are two models – (S) from Sedan and (X) from SUVs.
The automaker explained that it has seen “excessive corrosion” in the power steering bolts of the affected vehicles. Even if the bolts fail, the driver would still be able to steer the car, but would have to use “increased force.”
“This primarily makes the car harder to drive at low speeds and for parallel parking, but does not materially affect control at high speed, where only small steering wheel force is needed,” Tesla said in its email.
The problem has been seen to occur in “very cold climates” where road salts are commonly used. But the company said it was recalling all affected vehicles regardless of climate, “to account for the possibility that the vehicle may later be used in a highly corrosive environment.”
“In order to ensure safety, Tesla will proactively retrofit a power steering component in all Model S vehicles built before April 2016. (No other Tesla vehicles are affected.) There have been no injuries or accidents due to this component, despite accumulating more than a billion miles of driving,” the statement said.
Etisalat offers unlimited pack for customers traveling to Saudi
UAE-based telecom firm Etisalat on Wednesday announced the launch of a roaming pack exclusively for its mobile post-paid and prepaid customers, offering unlimited data and voice roaming for Dh400 per week.
The new Saudi unlimited pack, valid for 7 days, offers value for money with bigger savings on calls and data usage due to very high data and voice allowances for receiving calls, and making outgoing calls to Saudi Arabia and UAE.
Khaled Elkhouly, Chief Consumer Officer, Etisalat, said: “At Etisalat, we understand the value of staying connected with family and friends while travelling abroad. We are pleased to give both our valued post-paid and prepaid customers an unlimited but affordable roaming pack catered to those travelling to Saudi Arabia.
“Mobile connectivity is an integral part of overseas travel and we want to ensure a hassle-free travel. Customers don’t need to wait in long queues, purchase local SIM cards or depend on Wi-Fi passwords to stay connected.”
Fair usage policies apply to this plan to ensure superior service levels to customers with normal usage behaviour. Data allowance will be 25GB at full speed and unlimited usage at reduced speed, and voice minutes at 2,000 minutes for receiving and making outgoing voice calls to UAE and Saudi Arabia. Voice calls beyond the fair usage limit will be charged at the regular standard rates.
To purchase the roaming package, customers can dial *177#, use the Etisalat mobile app, or SMS “KSA” to 1010.