Hidden benefit of GST: Indian tax professionals in high demand in Gulf

Businesses in the Gulf countries are seeking Indian chartered accountants as the governments there plan to levy a value-added tax (VAT) from January 1.

Though initially tax professionals complained about the complexity of Goods and Services Tax (GST), slowly they have mastered the intricacies. Their sharpened expertise is now in high demand, not only in India but abroad as well.

Businesses in the Gulf countries are seeking Indian chartered accountants as the governments plan to levy a value-added tax (VAT) from January 1 next year. Businesses in the Gulf still look for expert assistance, though the VAT will not be as complex as Indian GST. That's because they have been accustomed of operating in countries known as tax havens.

After drop in oil income due to crashing prices, energy-rich Gulf states have decided to impose an indirect tax regime. Indian GST being a very complex indirect tax regime, Indian CAs are now being regarded as more reliable in the Gulf. Hundreds of chartered accountants from across India are making frequent trips to the UAE while many have also camped there. The demand for Indian CAs is only going to rise.

While the VAT has created huge demand for Indian CAs, it will be highly discouraging for Indian immigrants. It will not only make living costlier but also reduce job opportunities.

In 2014, a glut in global oil supply brought prices down. That has led to the state adopting austerity measures as well as imposing new levies.

Saudi Arabia has plans to slap an expat levy on employers which will encourage employers to hire more Saudis than foreign workers. The levy will encourages employers to hire more Saudis than foreign workers.

At present, companies pay a levy of 200 riyal a month for an expat employee, but only for expat employees that exceed the number of Saudi employees in the company. From next year, the levy on expat workers will be gradually increased. The fee is waived for companies in which expats do not exceed the number of Saudi or GCC employees. But with the new measure, the companies will be charged, though at a discounted rate.

Governments in the Gulf have also drawn hundreds of billions of dollars from their massive sovereign wealth funds to curb deficits. The six Gulf states are now taking austerity measures a step further with the plan to introduce VAT, ending their decades-old reputation for being tax havens.

As downturn hits the Gulf economies, it is a cause of concern for India. Nearly 35% of net remittances to India flow in from the GCC. India, the largest remittance-receiving country worldwide, witnessed a near 9% drop in NRI pay-in flows to $62.7 billion in 2016 over the previous year, as stated in a World Bank report. Much of this shortfall has been attributed to the economic downturn in GCC states.

As per External Affairs Ministry data, nearly 85 lakh Indians work or reside in GCC countries. In the first seven months of this year, over 2.77 lakh Indians relocated to the Gulf in search of jobs. The UAE has absorbed most of these jobseekers (about 1.10 lakh Indians), followed by Saudi Arabia (59,911), Oman (42,095), Kuwait (40,010) and Bahrain (7,591).

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