When I first came to the UAE in 1987, what I saw was a dynamic leadership ensuring constant progress. I was amazed by the pace of progress and how welcoming the great nation was for whoever was interested in participating in the growth and prosperity of the country.

The amazing thing was how the leadership picked and chose lessons from around the world. This country did not blindly follow; it picked and innovated based on where they wanted to be in the future. And I think they were clear on what they wanted to achieve - that is, to be one of the most-developed and dynamic nations in the world. This small nation has managed to do just that.

I am sure there has been constant discussion on the value of implementing taxes and similar systems that would not only generate more revenue for the country but also help streamline economic development and progress.

The UAE is now moving to the next level of growth, which would mean the UAE government is working to take steps and measures to prepare the economy and business towards this next level of development. I believe VAT would be the result of this thinking. Since the UAE is not used to any form of taxes, I think there will be some teething issues during the implementation phase of VAT here. However, I am sure the government has studied all the implications and are 100 per cent prepared to manage any issues or inconveniences that are expected.

The UAE is one of the most dynamic and forward-thinking countries in the world, and all initiatives are always well-planned and smoothly rolled out. I suppose the structure and other details of VAT, which is only on-value addition, are still in the planning stage, hence it's too early to react on its possible implications. Also, the proposed rate of five per cent for VAT is quite low compared to many other countries that apply VAT. The UAE government is also studying a VAT refund scheme for tourists. With VAT, businesses are worried they may become less attractive to customers, and customers are worried that they may soon end up paying more for goods and services. But most necessities are exempt from VAT, so the impact on spends will be very limited.

The UAE is positioned as the 'City of Gold', and this is because of the fact that retailers here offer the best mix of price, choice and quality. The expected impact of VAT on this positioning will be on the price aspect; however, the details are still being finalised and it is still too early to comment on this. I am sure whatever happens will be in the best interest of the country, the businesses and consumers. Also, I think after an initial reaction, things will be back to 'business as usual' quite quickly.

We don't foresee much change in consumer spending behaviour in the long run, and consequently not much of an impact on sales is expected. However, we do consider the introduction of VAT in the UAE as an opportunity for us jewellery retailers to further seek excellence, whether in the quality and variety of our products or customer service, to ensure the continued growth of the industry and satisfaction of our customers.

The UAE has very recently received recognition amongst the top 10 most competitive countries in the world by the IMD World Competitiveness 2017 Yearbook. This, amongst other international accolades and satisfaction surveys, is proof that the nation's leadership has been well-prepared and calculated in every step taken so far. The introduction of VAT is yet another step into the bright future they have planned for us, another milestone in our collective success story of progress.

VAT is usually a transparent system and has proven to be successful in many countries, and we should expect the same in the UAE. To reiterate, VAT is on-value addition, so it will not really have much impact on consumers.

The writer is chairman of Joyalukkas Group. Views expressed are his own and do not reflect the newspaper's policy.

Source: Khaleej Times