Business

Investment, Sales Tax Law Reforms Structurally Changing

Interview with Chairman of the Chamber of Commerce and Industry, Mr. Al-Kabous

Mr. Hasan Al-Kabous, Chairman of the Chamber of Commerce and Industry (CCI) in the capital secretariat, said the meeting between the Chamber of Commerce and the Customs Authority last week brought the two views, concerning the new sales tax law, closer together.

In an exclusive interview with the National Yemen newspaper, he said that the agreement signed recently between the authority and the chamber was an attempt to create a congruent vision about the endorsed mechanism for implementing the law to best serve public interest.

“The last meeting was one of a series of organized by the chamber of commerce, with representation of its governorate branches, and the customs authority to spread awareness of the new law among traders,” Mr. Al-Kabous said.

Mr. Al-Kabous has reviewed the issues related to the private sector and other issues in the following interview:

Let’s talk about the last meeting you had in the chamber with the chairman of the Customs Authority, and the private sector’s commitment to implement sales tax law. Could you give us an idea on the new mechanism of implementation?

I think that traders generally feel that the new mechanism cannot be properly implemented and that it is unrealistic for it necessarily incorporates many difficulties because most traders still do not have a developed legal understanding of taxation.

Also, the mechanism requires accounting systems, an auditor and regular bookkeeping. Therefore, we hear some reservations and objections – these are expensive overheads.

There were many purposes for the meeting. The first objective was to put people in the Customs Authority in the picture about the difficulties faced by the chamber due to the intense objection from most of the chamber’s general assembly of the sales tax law. Although we reached agreement until after an extended session, voted on it and signed the agreement accordingly.

Therefore, a meeting was held last week with our peers in the authority in an attempt to find a congruent vision of the endorsed implementation mechanism of the law t best serve public interest until the Constitutional Court gives its verdict on the case by the end of the current year, in addition to compensating for damages incurred on some traders due to suspending their tax number.

How could the chamber contribute towards creating comprehensive tax awareness to better achieve the common interest between the public and private sectors?

On our part, we wish that this meeting which we recently had with the customs authority – part of a series of meetings organized by the chambers of commerce and provincial chambers and the CA, makes traders aware of the new tax law and the procedures it includes, and the importance to keep the law. Particularly problematic at the moment is that the law mandates traders present their financial statements within three months.

In your last meeting with the authority, do you think the problem of the sales tax law is over? If not, what are your expectations of its development in the coming period?

No doubt the last meeting with the CA has brought great rapprochement between us and broke many barriers between the traders and the CA. Most important is that such meetings make sure everybody acclimatizes to a culture of dialogue, which we consider the solution to all the issues we face. Without dialogue, nothing of what all of us are trying to achieve will be reached.

We realize that there is one objective uniting us, which is the interest of the country. Therefore, we have to look at the similar attitudes or the differences as a difference in opinion, realizing that we are all on the same boat and everyone must exert efforts according to their abilities to ensure that this boat reaches a safe shore. So, I expect that the relationship with our colleagues in the authority will improve to the better.

And as I have mentioned earlier, an atmosphere of mutual trust started to develop, especially now that we are all in agreement about the law and the distance between our differing views is limited to some mechanisms of implementing the law. I am confident that we will come out with solutions that please all.

How does the private sector, represented in the Chamber of Commerce, view the new income tax law endorsed by the parliament recently?

No doubt the new income law is much better than the previous one, in terms of the low tax ratio and the mechanism followed to collect this tax. I believe that, when we come to implementing any tax law, we have to commit to the essence of the constitution and the law so that tax can bring about larger contributions from the higher classes of society and to fulfill social justice.

This can be achieved by exempting people with limited income from tax, lightening the tax burden on the middle class, supporting and developing production investments that contribute to finding solutions to unemployment, resolving the imbalances in the structure of the Yemeni economy by bolstering production sectors and increasing the contribution of the sectors of banking, insurance and communication to collecting tax.

In your standpoint, what are the expected results from the amendments that have been recently made to the investment law?

This law is unsuccessful and will cause great damage to investment in Yemen, namely to domestic investors. I agree with those who do not expect that the new law will achieve success in attracting foreign investments, which require a stable environment and productivity, to grant foreign investors access to Yemeni markets with ease.

Quite often we learn of arguments that consider the investment atmosphere in Yemen totally unsuitable due to the deterioration of the security, social, economic and political situations, which have played a significant role in scaring off investors.

In the absence of investment incentives, it is unlikely that Yemen will attract most direct kinds of foreign investments which it is aspiring to. We demand a program aimed at supporting the private sector and local companies to largely get into the investment process, which will resolve a lot of issues and problems that Yemen faces at this stage.