The UAE’s banks could be forced to increase fees to cover the costs of implementing value-added tax (VAT), according to KPMG’s new ‘UAE Banking Perspectives 2018’ report.
Clare McColl, Partner and Head of Indirect Tax, KPMG, stated that such moves may be unavoidable if the country’s banks are to maintain their current levels of profitability.
“As banks grapple with the new VAT regime and the high compliance costs associated with mandatory VAT registration, it will be interesting to see how they manage their pricing policy from now on,” McColl wrote. “International trends would indicate that the banks will increase their fees to compensate for the additional, hidden costs.”
UAE banks’ total assets grew 5.2% to reach USD 578.4 billion last year. Combined net profits, meanwhile, increased 6.6% year on year to top USD 9.8 billion.
Despite this continued growth, KPMG identified key challenges ahead for UAE banks, including how broadly and quickly to adopt blockchain technology and artificial intelligence; whether or not to partner with financial services startups known as fintechs; and the continued threat from hackers and cybercriminals.
If you’re interested in checking out the numbers in detail, you can download the full report here.