NEWS FROM THE UAE
SOURCE : THE NATIONAL

 
Pressure mounts for VAT as oil prices dip

U.A.E. - OCT 27: The UAE’s first universal tax is needed now more than ever because of the falling price of oil, a tax conference in Dubai was told yesterday.

International and GCC economists said a value-added tax (VAT) on goods and services would act as “insurance” for oil-producing states. Oil prices have fallen from US$147 (Dh504) a barrel to US$64 during the ongoing financial crisis.

Yesterday’s conference, organised by the Dubai Economic Council, was attended by customs officials, economic consultants and representatives of government departments, including the Ministry of Economy.

Dr Vito Tanzi, a former director of fiscal affairs at the International Monetary Fund (IMF), said: “Under the worst circumstances, the revenue situation for most of these [GCC] countries could reverse rather quickly. The price of oil has been coming down, but also the global financial crisis will certainly have implications on returns from foreign assets. The best way to think of VAT is as an insurance against a potentially negative future.”

Dr Abdulaziz Aluwaisheg, the director of the Economic Integration Department at the GCC, said oil revenue “can’t be relied upon on a consistent basis”.

However, the proposed introduction of a tax on consumption has been widely condemned by people in the GCC struggling to cope with inflation.

Two years ago, the Government, looking ahead to when customs revenue is reduced under GCC free trade agreements (FTAs) with trading partners such as the EU, India, China and Pakistan, commissioned Dubai Customs to investigate the feasibility of VAT for all emirates.

Subject to the introduction of the FTAs and the approval of a common tax system by GCC heads of state, VAT is likely to be introduced by 2012, three years later than the date first proposed, at a rate of five per cent throughout a GCC common market.

The IMF estimates that revenue from customs duties represents less than one per cent of the UAE’s total GDP. The revenue the UAE will earn from a five per cent VAT is estimated at 2.2 per cent of GDP.

Many UAE residents have questioned the need for an oil-rich country to collect extra revenue from taxes and warned that the loss of the Emirates’ perceived tax-free status will be a psychological blow. GCC countries earn between 23 per cent and 73 per cent of their GDP from oil and gas revenues, the IMF estimates.

Although the proposed five per cent VAT is lower than in many other countries – the rate in the UK, for instance, is 17.5 per cent – residents are likely to oppose any measure that could raise their bills.

Speakers at the two-day conference in the Grand Hyatt hotel sought to ease concerns, claiming VAT can be used as a financial tool to control inflation and to distribute extra revenue towards essential public services.

“Inflation comes from many sources and VAT is not one of them,” Dr Tanz said. “You can use the revenue from the VAT to help the poor.”

Dr Aluwaisheg added: “Contrary to popular views that VAT will contribute to inflation, in fact we perceive it as an important tool in controlling inflation.”

The introduction of VAT in place of customs duties and the UAE’s numerous “hidden” fees and charges means that prices on imported goods will stay roughly the same, speakers said.

Small businesses with an annual turnover of less than a specific figure – expected to be about Dh3.67 million (US$1m) – would also be exempt, a condition that experts say would exclude a large number of people from the tax but have a minimal impact on revenue.

There are added fears that the GCC would suffer VAT fraud like that in several EU countries.

Dr Ehtisham Ahmad, a senior adviser to the executive director at the IMF, said a harmonised tax administrative system and single rate throughout the GCC would minimise the threat.

“What we have learnt from the EU experience is the importance of harmonisation,” he said.

“The model they put in place was faulty, the treatment of sectors was problematic, and the harmonisation of the tax administration didn’t exist.”

 
Prosecutors set up in Dubai airport

DUBAI - OCT 27: Dubai International Airport is to be equipped with a public prosecution office to handle smuggling, illegal immigration and drugs cases, a senior government lawyer announced yesterday.

Mohammed Ali Rustom, the chief prosecutor for Bur Dubai second district, also outlined procedures to deport travellers caught with small amounts of illegal drugs instead of prosecuting them in a court case.

Mr Rustom said the “fully functional” prosecution office would be provided by the Dubai Civil Aviation Authority at the International Airport’s administration building. It would be the base for three full-time prosecutors, including an assistant chief prosecutor.

“The decision to open the office was taken one month ago by Sheikh Ahmad bin Saeed Al Maktoum, president of the Dubai Civil Aviation Authority,” Mr Rustom said.

DIA already has a prosecutor on duty 24 hours a day, seven days a week to ensure the speed and efficiency of procedures.

Mr Rustom said the number of drug smuggling and possession cases originating from the airport had risen slightly in the first six months of 2008 compared with the same period last year. “This year we registered a total of 381 drug- related cases from January to June, compared to the same period last year when we only registered 336 cases.”

However, Mr Rustom pointed out that this was not a major increase when compared to the dramatic rise in the number of visitors to Dubai in 2008 from the previous year.

The assistant chief prosecutor for Bur Dubai second district, Mohammed al Nuaimi, recently said 98 per cent of drug cases originating at the airport involved narcotics, mostly heroin, swallowed in capsules by smugglers, a method he said was typically used by visitors from Asia.

“Most of these are individual initiatives, people who try to make Dubai a transit point for the transport of illegal narcotics, but there are no organised drug smuggling gangs involved,” Mr Nuaimi said.

He said although no formal guidelines were in place, visitors arrested at the airport with small quantities of drugs in their possession would often be sent straight home rather than face prosecution here.

“While there is no formal order to this effect, we follow the Dubai Attorney General’s instructions in cases of possession of small quantities of drugs,” he said. In such cases, “we recommend deportation to the technical office at the Public Prosecution Department which is the body that takes the decision”.

Under UAE law, anyone convicted of possession of drugs or drug abuse faces a four-year prison term.

Mr Rustom said decisions on whether travellers involved in minor possession should be referred to the courts or deported without proceedings would be taken on a case-by-case basis, adding that there were no fixed criteria.

The Pakistani cricketer Mohammed Asef was detained at Dubai International Airport in June after customs inspectors discovered 0.24 grams of opium in his wallet. He was deported after two weeks in custody.

Mr Rustom said most minor possession cases usually involved people visiting the country for the first time.

Only last week, the Dubai Criminal Court of First Instance heard three new cases of narcotics smuggling via Dubai International Airport. All three suspects were men, two of them African and the third Asian, and all had carried the drugs inside their bodies.

A Nigerian man was attempting to smuggle 1,113.07 grams of cocaine stuffed inside 77 capsules, the court heard.

The man, detained on July 23, admitted he had swallowed the capsules and that he was told to deliver the drugs to a man he did not know at a hotel in Dubai.

In another case, the court heard that a Ghanaian man was caught at the airport on Sept 4 with 715 grams of cocaine hidden inside 60 capsules concealed inside his body.

The man told prosecutors he was asked by a compatriot in Ghana to deliver his consignment to an Italian man at a Dubai hotel.

Mr Rustom said the conviction rate for drug cases in general was close to 95 per cent.

The total number of cases prosecuted by Bur Dubai second district, whose jurisdiction includes the airport, ports and Rifaa area of Dubai, was 3,452 in the first six months of this year, an increase of 218 cases compared to the same period in 2007.

The total number of cases prosecuted from the airport actually decreased from 752 cases in the first six months of 2007, to 682 cases in the same period this year.

Capital adds new bus routes

ABU DHABI - OCT 27: Three routes have been added to the city’s bus network, bringing the total number criss-crossing the island each day to seven.

Routes eight, nine and 44 join routes five, seven, 32 and 54, which have undergone several changes.

Route eight begins in Al Khubeirah district, running from a stop by the Ministry of Foreign Affairs at the intersection of Zayed the 1st Street (7th) Street and Bainuna Street (34th) Street to the Tourist Club area at the City Terminal on 12th Street. Buses will run along Bainuna Street, up Al Falah Street to Airport Road, then up Zayed the 1st Street and Hamdan (5th) Street.

Route Nine departs from the same stops, but travels up Hazza bin Zayed (11th) to Karama (24th) Street before carrying on up Al Falah Street. Route 44 runs from the Tourist Club at the intersection of 10th Street and Al Falah Street to Zayed Grand Mosque.

Unlike routes 54 and 32, this new route diverts from Airport Road to make stops along Karama (24th) Street, Khaleej Al Arabi (30) Road and near the Abu Dhabi Police college on Fourth Street.

Buses on the new routes will run 20 minutes apart. The first of about 60 buses in operation starts running at 6.20am, on route 54, while the last buses leave on routes seven and eight at 11.35pm.

Bus network maps have been posted at the Department of Transport’s 400 bus stops, while staff are in the process of posting individual route maps at every stop.

The service is free until the end of the year; the Government has not yet announced its upcoming fare scheme. By 2010, there will be 1,360 air-conditioned buses operating in the emirate. There are also plans for air-conditioned bus shelters and bus stations featuring a mix of retail, food and beverage, and banking outlets.

Dubai records 15% drop in fatal traffic accidents

DUBAI - OCT 27: Fatal traffic accidents in Dubai have fallen by 15 per cent in the first nine months of 2008 from the comparable period last year.

The Roads and Transport Authority said there were 196 deaths on the emirate’s roads between January and September, compared with 231 in the first nine months of 2007.

Of those, 73 cases involved pedestrians being killed, down 25 per cent from 97 cases in 2007, although the number of pedestrians injured by cars increased to 580 this year from 540 last year.

Maitha bin Adai, the head of the traffic and roads department at the RTA, said safety initiatives including new pedestrian crossings, the introduction of penalty points and road safety awareness campaigns were responsible for the drop in deaths.

“The RTA strategy aims to keep the drop in traffic accidents and the resulting loss of life and property to the lowest rate possible,” she said.

“The traffic points campaign launched by the RTA and Dubai Police last July made a substantial contribution to [the decline in] the accident rate.

“The RTA is also focusing on awareness campaigns and training workshops targeting youths and lorry drivers.”

She said a series of campaigns would try to cut traffic jams, reckless driving and speeding, while physical improvements, such as bridges and fences, were also being built.

“Improvements have been made in more than 100 locations, enhancing the traffic flow and safety,” she said.

She also praised co-ordination between the police and the RTA.

“Such co-operation is key to the success of efforts made to enhance road traffic safety and reduce accidents.”

Maternity hospital planned

ABU DHABI - OCT 27: A new Dh750-million (US$204m) specialist hospital is expected to bridge the gap between maternity and paediatric health care services.

Hospital bosses say the 300-bed Danat Al Emarat hospital will be completed in 2011.

The hospital, being built by United Eastern Medical Services (UEMedical), would be one of the most luxurious in Abu Dhabi, with 15 VIP suites, spa facilities, an electronic medical record system, state-of-the-art technology and hundreds of staff.

Mohammed al Shorafa, the chief executive of UEMedical, said the hospital would raise the bar in terms of quality of care.

“There was a clear gap and we feel we are trying to close it,” he said. “There are 1.7m people with private health insurance and this has created tremendous stress on the existing health system.

“Our role is to identify these gaps and provide services that will meet these needs.”

Mr Shorafa said the company hoped the 21-storey hospital, designed by American architectural firm HKS, would become a regional centre of excellence for high-risk pregnancies.

There are plans for labour, delivery and recovery rooms and a neonatal intensive care unit to care for babies born very prematurely, who are critically ill or need surgery. The hospital’s outpatient facilities will offer a full range of obstetrical and gynaecological services.

Patient rooms will include hotel-like features such as internet, video-on-demand, video games for children and “luxurious furnishings and fittings”.

The hospital will be staffed by more than 500 doctors and nurses who will be recruited from all over the world and housed in new accommodation located by the hospital in downtown Abu Dhabi, near the Maqta Bridge.

The facility will also have a diagnostic and breast cancer centre where women can receive mammograms, genetic testing and breast MRIs.

“We want to set a new standard,” said Mr Shorafa. “It is a much more patient-centred approach. When we started looking at this project we consulted focus groups. We always had to have the involvement of women and mothers.

“We need to engage the patient and understand what they want. Even the architects needed to know what mothers want, in terms of how involved they wanted their families to be if they were giving birth.”

Mr Shorafa said they had not yet begun discussions with insurance companies but wanted their services to be accessible to almost everyone.

Like many other hospitals in the UAE, Danat Al Emarat will be affiliated with an international company but officials declined to name it immediately.

Abu Dhabi has just a few hospitals offering maternity services. The Corniche Hospital, a dedicated maternity hospital, has been struggling to cope with its heavy patient load.

Mr Shorafa, who began his career at the Abu Dhabi Investment Authority and later worked for the Far East Equity Department, said he had high hopes for the health care market, especially in light of the recent call by the Health Authority Abu Dhabi (HAAD) for the private sector to play a bigger part in health services.

“When the company was created this was one single project,” he said. “And when the health authority came up with their new strategy, we started to look at our strategy from that perspective.

“They are trying to encourage the private sector to invest and develop the health care system. There are not a lot of private health care companies.”

The company’s goals are long-term: there are plans to create a network of facilities including primary care clinics that would act as satellite centres for the bigger facilities. Under the umbrella of Healthway Medical Centres, they will also create specialist clinics covering specific areas such as dentistry.

UEMedical also has plans to build a specialist orthopaedic hospital and a 60-bed facility that would be dedicated to caring for expatriate labourers.