Policy Changes (Govt.) in the Middle East and UK: What It Means for Businesses and You

Government policies are those unseen puppeteers that mold the way industries work and businesses flourish. Especially in the Middle East and the UK, such government policy changes can feel like a rollercoaster ride. But it is not all doom and gloom. In fact, with an understanding of these shifts, you can turn challenges into opportunities. Let us break down the government policy changes together.

Table of Contents?

• Middle East government policies?

- Ban on Plastics?

- 15 % Minimum Tax Profit on Multinationals Companies?

- Re-introduction of 30% Tax on Alcohol?

- Utilities Hike?

• UK government policies?

- Service Charge Hike?

- Rent Equivalent Tax/Fee on Landlords?

StockTake Online: Your Partner in Adapting to Policy Changes?

Middle East government policies?

1. Ban on Plastics?

Bans on plastics are sweeping the Middle East. While the objective is saving the environment, it is turning out to be a hard pill to swallow for businesses with the new regulations in the Middle East. The alternative packaging material is biodegradable or reusable but comes at a higher cost, thereby increasing expenses.?

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And who pays for these increases? The customers. Delivery charges, especially, have skyrocketed with eco-friendly packaging being the new order of things that fall under the Middle East business regulations.?

However, this shift has created space for innovation. Companies are trying out different packaging ideas such as edible packaging, seaweed wrapping, and plant-based packaging. These not only save waste but can also be sold as luxury products, appealing to green consumers.?

Important Note: Buying in bulk will save costs significantly on eco-friendly packaging. Seek suppliers that have loyalty programs or long-term discounts.?

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Pro Tip: Use your ecological practices in your marketing. It is all about bonding with the client; everybody will at least care enough about the world and might shell out a couple of extra rupees for this.?

2. 15 % Minimum Tax Profit on Multinationals Companies?

This is a game-changer for any multinational business in the Middle East. On the one hand, multinationals will never again be able to avoid their share of contribution; that is awesome, but the cost it pays for that is enormous.?

As a consequence, companies need to rethink how they manage their costs. Cutting overheads, reducing non-essential business functions, and using technology are common cost-cutting measures that many companies implement. IT solutions such as cloud-based inventory management systems play a vital role in automating operations.?

Automation is your best friend. The help of StockTake Online would be priceless in cutting waste and optimising resources so the saved funds can deal with higher taxes.?

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Key Note: The trick is not to cut costs but to do so smartly. Do not compromise on quality or customer experience, as this could hurt your bottom line in the long run.?

3. Re-introduction of 30% Tax on Alcohol?

And so, there is a brief respite in the levied of tax scheme on the alcohol. The 30% tax on alcohol comes back into force once more. It cuts seriously into business profitability. Restaurants and bars see their pricing strategy go down the drain. Will customers splurge on that expensive bottle of wine or fancy cocktail??

Interestingly enough, this tax can also quietly nudge the government to curtail alcohol use. Or, it can simply be a blunt revenue collection tool. In either case, nightlife neighbourhoods and restaurants serving upscale dining will need to tighten up.?

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TIP: Invest heavily in non-alcoholic drink menus. As mocktails and craft sodas become the latest must-orders, expect high-margin profit without any cost of additional taxation. Give offers on the cocktails to attract customers more to your restaurant.?

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Key Note: Customers seek value. Identify drink pairings with food or launch limited-time offers that will have customers coming back despite the added expense.?

4. Utilities Hike?

Rising utility costs are tightening up operating margins. Restaurants, cafes, and bars now feel every kilowatt-hour of electricity and litre of water like an added expense.?

Businesses are finding innovative ways to recover. Some charge extra utility surcharges on the bill, while others invest in more energy-efficient equipment and renewable sources. Such investments might prove expensive in the short term, but they definitely pay off long-term.?

Remember to monitor your utilities really closely. Saving lots of money can begin from trivial changes, like adjusting usage by improving air conditioning efficiency or upgrading to LED light bulbs.?

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Golden Tip: Check for government incentives or rebates for energy-efficient upgrades. There are a lot of initiatives offered to businesses to help them reduce carbon footprints.?

UK government policy updates?

1. Service Charge Hike?

The United Kingdom has recently introduced a new policy that makes businesses pay 100% of service charges directly to employees.??

The UK government has enforced the latest policy changes on tips, gratuities, and service charges with effect from 1 October 2024. The policy change is to make the system fairer and more transparent for hospitality employees. According to the law, employers must pass 100% of the tips and service charges directly to their staff so that workers can receive their due share without deductions.?

This could be great news for customers, but a new cost to absorb for businesses. Restaurants may have to increase menu prices, which could discourage people from dining out. Delivery options, service charge-free, might become even more popular.?

These provisions affect National Insurance contributions and reporting for payrolls as well as tax on cash tips that are distributed directly to employees, as those become exempt from PAYE, whereas electronic payments and compulsory service charges are treated through payroll with tax being deducted from employers. It also regulates troncs - independent schemes that manage tips and specifies the applicability of National Insurance contributions.?

In this context, VAT rules state that VAT is charged for mandatory service charges but not for voluntary tips. Furthermore, employers have to make sure that the tips do not help determine the National Minimum Wage. HMRC will enforce it by regular audits and checks of compliance and businesses must maintain accurate records to avoid penalties on behalf of the employers.?

Change adaptation for restaurants, bars, and cafés would involve changing the payroll processes involved and informing employees of the same policy updates. Considering tax obligations regarding employees will be met will be important in maintaining a fair pay distribution for the staff in smooth operations.?

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Pro Tip: Focus on the dine-in experience. Exceptional service and ambience can justify higher prices, making customers feel they are getting their money's worth.?

Key Note: Transparency matters. Be upfront with customers about the changes, and they are more likely to support your business through the transition.?

2. Rent Equivalent Tax/Fees for Landlords?

The UK government has implemented a rent-equivalent tax or fee for landlords. While this aims to regulate property markets, it is also creating a domino effect. Landlords are passing these costs onto tenants, making rents skyrocket.??

This may become a massive hurdle for potential restaurateurs. These prime spaces are no longer affordable to rent. But where there is a problem, there is also an opportunity. There is picking up of co-working kitchen spaces and food trucks as the new cost-cutting alternatives.?

Shared space with other businesses. Collaborative models can dramatically lower rental costs while providing shared utilities and facilities.?

Key Note: When leasing, look for longer-term agreements because fixing a fixed rate can potentially insulate one against future leaps in rent costs.?

StockTake Online: Partner with Us towards Smooth Policy Overhauls?

Of course, taking these sweeping overhauls individually would be truly challenging.??

Whether it is optimising inventory levels or slicing away unnecessary costs, StockTake Online has smart solutions to suit your business. Struggling with increasing utilities? Use our data-driven insights to identify savings. Concerned about the cost of eco-friendly packaging? Our inventory tracking tools ensure you order just what you need, waste less, and spend less money.?

Change is inevitable. But with StockTake Online on your side, it does not have to be overwhelming. Let us handle the numbers; you focus on delivering the very best dining experience. Ready to thrive in this new landscape? Let us do this together.?

Mountains of policies from the government might seem huge, but a mountain can turn into a stepping stone if we have the right tools and strategy. So, the real question is, are you ready to adapt and grow??