What lies ahead for Tax Resourcing in the UAE

Tax recruitment in the UAE has seen a steady rise since the introduction of VAT on January 1st 2018. Many larger companies have predominantly hired "Heads of Tax" to cover their entire Tax & VAT affairs for the region. It’s clear that a lot of these positions have been “Lone wolf” roles and with ever growing amount of responsibilities for these positions, I predict there will be a surge in demand to increase headcount and support the Heads of Tax in these companies.

Below I have set out my thoughts on the state of the Tax Talent Pool in the UAE and how I think it will evolve going forward, along with some great insights from Senior Tax professionals in the region.

Tax Talent Pool in the region

• Historically, the UAE has always been a tax free country, with one of the most attractive aspects for Expats to move here being the lure of the 0% Income Tax. There is also a minimal Corporation Tax Regime (which is something that may change in the coming years) but with the introduction of VAT in 2018, it really is the first time there has been a clear NEED for companies to have an in-house tax professional on the ground here in the UAE keeping the business up to date with the tax regime as it progresses, compliant and ensuring to mitigate risk and optimise the overall tax position in the region. 
• With this progression of established tax regimes in the region in mind, there is no surprise that there was NOT a significant supply of tax talent on the ground in the UAE. The vast majority of tax professionals which have flooded into the region to date have come from the surrounding Middle East/Asian Countries or the EU Tax system. Tax systems will DIFFER from jurisdiction to jurisdiction and therefore it is not as easy for businesses to “lift and place” tax talent without allowing longer “settling in” periods, which you would not need to allow for if there was a larger pool of “locally grown” tax talent. Having recruited in the region, I can confirm that it would be a lot easier for a Finance Director from London to relocate and settle into a Finance Director role here in the UAE than a Head of Tax from London to move and settle into a Head of Tax role in UAE.
• The good news is that the UAE has already taken steps to develop local tax talent, in particular the Big 4 companies, who have hired and invested heavily into having experienced local tax talent which should really start paying dividends in 3/4 years from now.

  ''Professional services firms, the tax authorities and educational/professional institutions have a key role to play in setting the bar high for the profession so that businesses can obtain in-house and external tax resources meeting their needs in terms of quality, commercial awareness and reliability” - Joanne Clarke, Tax Director - Pinsent Masons

Tax Qualifications

Finding very strong Qualified Tax professionals in the region is also considerably harder than finding Qualified Finance professionals. Why is this?

• The tax profession is NOT regulated – i.e. there is no body that a tax professional has to report to annually, etc
• There is NO globally accredited Tax Institute/Association
• Most Tax professionals are Chartered Accountants, with Tax as a topic area but still not a full tax qualification
• Many candidates have obtained 3 month / 6 month certificates, mainly done on-line or with only 10 – 12 hours of classroom study, multiple choice questions as the exam, etc – not creating a thorough and specialist qualification but a high level intro to the topic
• Chartered Tax Advisers or other Internationally respected Tax Qualifications are harder to come by in tax talent which again adds to the complexity around a strong talent pool in the region. This is an area that we expect to see develop in the long term.
• GCC universities should INVEST in integrating their Economy/Accounting Degrees with a specific “Tax career path” that will create the first generation of “local” Tax experts. The Country that will start first, will have a significant competitive advantage in the Region.

 ''Some companies still believe that the strategy should be either having internal tax resources or outsourcing the tax function. In my views, the best strategy is to have both. Firstly, in order to have the right answers, companies need to be able to ask the correct questions and secondly, the complexity of the tax landscape and the level of the tax exposure that companies may face require the management to be able to involve the C-suite in the tax issues'' Mohamed Faycal Charfeddine, Group Head of Tax - Aujan Coca Cola Beverages Company

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Supply and Demand

Having recruited multiple Tax positions and Traditional Finance positions (Finance Manager, Financial Controller, Finance Director) I would openly admit that it’s a lot harder to fill tax positions in the UAE. Why is this?

• The simple answer is that there is a lot higher volume of finance professionals in the region versus tax professionals so naturally if you have more talent to pick from then it’s easier to fill the positions.

Digging into this a little deeper there are some clear differences in supply and demand between junior and senior tax positions

• Supply still EXCEEDS demand at below manager and junior manager level
• Demand is HIGHER than supply at a senior tax lead level (qualified and experienced)
• I believe there is OPPORTUNITIES for Senior Tax Professionals in the UAE and KSA as the demand will only increase from multinational and large domestic UAE and KSA companies, especially as such corporates continue to feel the significant impact of VAT penalties/fines. These real costs associated with tax in the region in 2020 may be the final straw that breaks the camels back for CEOs & CFOs to realize they need a dedicated Senior Tax professional in their organization.

“Tax professionals have a huge responsibility in managing their Group’s Tax Strategy and Risk in an ever changing global tax landscape” – Sunita Juma, Global Head of Tax - Aramex

In-house roles

• Slowly businesses are TRANSITIONING the tax role away from being an “additional responsibility” of the finance team and towards it being an independent role of its own.
• This is coming in faster with international businesses than with local groups, unless they are very large. However, as the tax regimes continues to mature so too will these local organisations.
• Senior tax professionals are fighting harder now for permanent junior resources rather than outsourced support, although this is not fully developed in the region and is still DIFFICULT to get over the line with CFOs
• Globally, we are seeing international firms break down the “Global Tax Lead” roles to have multiple tax leads with geographical ownership due to the global tax reform which is putting greater pressure on businesses – this is leading to more ME, MENA, EMEA Tax Lead roles based out of UAE / Saudi Arabia

 “A very expensive Tax Manager will always be MUCH cheaper than the consequences of his/her absence”.'' – Amedeo Aragona, Head of Tax Operations MENA - Novartis

Conclusion

• The tax resource pool in the region is at the start of its life cycle and has a long road ahead before it will be on par with mature tax regions across the globe.
• Businesses in the region should tread carefully and undertake a sufficient due diligence, with the support of HR and tax professionals, in order to identify tax resources that fit their needs, their budget and that will deliver without introducing unnecessary risk into their business.
• There have been significant tax developments globally and in particular in GCC of late. Following the introduction of VAT and Economic Substance Rules in some of the GCC countries, we should not be surprised with the introduction of Corporate tax in UAE and Bahrain in the near future which will alter the tax landscape significantly and potentially affect your global Transfer Pricing strategies, tax compliance requirements and require careful tax planning including the Tax Governance of the business avoid high penalties.

If you envisage you may need tax support in 2020 or would like to have a confidential discussion on your next move within tax in the region please feel free to reach out to me on [email protected]

For insights on some value added Tax Planning and Mitigation that your business could implement during these challenging times, please see the following article by our Article Contributor, Joanne Clarke, Tax Director, Pinsent Masons - https://www.pinsentmasons.com/out-law/guides/coronavirus-gcc-tax-planning-and-mitigation

I hope everyone remains safe and healthy

Conor