With the UAE and other GCC countries currently, in the midst of transitioning to a new corporate tax regime, experts have called for an overhaul of the regulatory system for the sector to guard against the occurrence of major frauds and malpractices in the sector.
Introducing new accounting standards and enhancing the capacity of regulatory bodies to oversee the profession to enforce the new regulations effectively are among the changes urgently required.
The new corporate tax regime may also require a renewed focus on ethical behaviour and professional standards in the accounting profession to maintain public trust.
The suggested measures are to caution the regional regulators to be ahead in the game to stop fraudsters and mal-practitioners in the sector in their tracks.
“Some regulatory changes are expected to ensure the accounting profession [in the UAE and the larger GCC region] is equipped to meet the needs of the changing landscape,” Sharron Gunn, COO of the Institute of Chartered Accountants in England and Wales (ICAEW), told Arabian Business.
“While the exact nature of regulatory changes will depend on the specifics of the landscape, the accounting profession in the region will need to adapt to meet the changing demands of the business environment,” Gunn said.
The UAE is to introduce a 9 percent corporate tax from June, while other countries in the region such as Saudi Arabia, Kuwait, Oman and Qatar have either transitioned or are in the process of imposing 20-10 percent taxes on corporate income, subject to various stipulations and exemptions.
The OECD’s (Organisation for Economic Cooperation and Development) proposed 15 percent GMT for multinationals with revenues of more than 750 million Euros will also come into effect from January next.
Other sector experts have also cautioned that the accounting and auditing body regulators in the region need to equip themselves with stringent oversight processes and advanced technical capabilities to ensure a smooth transition to the new corporate tax regime.
“Regulators in the Gulf countries could pick from the learning of other countries for evolving a new regulatory and tax administration system,” R Guha, a leading financial sector consultant and a former India finance head of a Dutch MNC, told Arabian Business.
Guha said most companies in the region having international operations are already familiar with these processes and procedures involved and therefore implementation of the new system should not pose much of a problem.
M R Rajaram, another sector expert and an independent director on company boards in India, said rotation of auditors and insistence on company boards to have strong, independent auditing companies would help regulators in GCC region in a big way to ensure checking of frauds and malpractices in the sector.
Experts also underlined the need for accounting professionals to abreast themselves with the fast changing regulatory processes and systems to remain relevant.
Gunn said the increasing importance of Environmental, Social and Governance (ESG) factors in business as well as the rapid pace of digitalization also requires accounting professionals to constantly upskill.
“As the UAE and wider GCC continue to advance their tax reforms, accounting professionals will need to invest in their professional development to keep abreast of the changes in their responsibilities,” she said.
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