The government of UAE is evaluating effects of VAT (value added tax) on various sectors and industries since implementation of this tax from January 01, 2018. The progress report of different sectors show mixed results. Few sectors suffer badly after implementation of VAT while others attained steady growth.
The government also takes action to reduce negative effects of VAT on specific sectors. But one such sector that has successful absorbed effects of newly-implemented tax and performed best is the construction sector. According to reports, UAE’s construction industry is expected to grow by 10% in 2018 which is 2nd fastest overall in the globe.
According to a research report and opinions of industry experts, the construction projects intended for Expo 2020 is an important reason for this expected growth of the said sector but it doesn’t mean that construction industry is merely depending on this upcoming expo for its growth. It is estimated that other multi-year plans will also boost the construction industry after Expo 2020 including Vision 2021. Experts say that VAT put pressure on cash flow but people are now getting used to it. It helped them to minimize negative effects of VAT.
Other factors that will stimulate construction growth in UAE include Dubai’s hosting of World Chamber Congress and influx of medical tourism in the country. World Chamber Congress will be held alongside Expo 2020 where over 14,000 chambers from 100 countries will participate. These chambers will increase business activity by increasing requirement of infrastructure, roads, hotels, shopping and leisure projects. This will stimulate markedly even if 10% of chambers do business here.
Along with that, medical tourism is increasing prospects of healthcare industry in UAE. The country is aiming to attract half a million medical tourists. Currently, there are very few hospitals as compared to this target and they will require constructing lots of big projects to accomplish their requirements. Therefore, it is expected that construction sector will grow beyond 2020. The small percentage of VAT (5%) is also an important reason that its impact is minimal on the whole sector.
This recent report and experts’ opinions clearly indicate that the future of construction sector in UAE is very bright and it demands entry of further related companies in UAE. It will benefit both UAE and the foreign investors. If you want to take full advantage of this opportunity, then you can contact Riz & Mona Consultancy via email address [email protected] We have assisted numerous construction companies setting up their business in all the emirates of UAE.