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The UAE construction companies want to speed up deals before the VAT introduction

  • Категория: News

Construction companies try to settle all existing payments and close deals before the UAE introduces the 5% VAT in January.

From 2018, the transactions under all projects and agreements, even those previously signed, will be subject to 5% charge. All companies somehow connected to the construction industry are trying to have all invoices paid off. Moreover, the companies are reviewing their policies. The majority will include a provision in future agreements that will entitle the clients to cover the VAT expenses.

Traditionally, the construction industry in the UAE operates within 3-4 months credit period. So now, the companies experience an unseen surge in the cash flow. However, the experts predict that after the new regulations come into force, the practice of applying the credit period will return. It is worth mentioning, that despite the invoicing rush, there is no sign of rising prices for any building materials.

Steel rebar is the only good that has risen by 10-20% over a quarter, but mainly due to the international situation. Analysts foresee an inflation in the industry in the coming years as the UAE will witness more projects under construction related to Expo 2020. The obvious way out of high prices under the high demand pressure is the switch to cheaper resources, from China or India, for example.

Source: gulfnews.com

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