Latest news with #profit
The National
2 hours ago
- Business
- The National
Beyond the Bottom Line: How UAE Companies Can Turn Tax Compliance into Competitive Advantage
This column focuses on different treatments of tax law. If you are in a certain industry, what is the correct timing when invoicing? What information is mandatory on supplier invoices? You can continue to ask questions of this nature up to and including internal document management and compulsory filing with external parties. By way of consequences, inevitably it is the stick, not the carrot, that delivers the greatest response. It is important to understand what penalties can be applied and the sum value of interest on those. This is because it is typically at a later time that problems are discovered. Focusing on the carrot, let us reframe this as a positive business proposition. It is a useful exercise to revisit, line by line, component by component, your profit-and-loss statement to see if contributing elements are optimised. One part often overlooked is tax. Not just corporate tax, but VAT – and depending on your business activities – excise and customs duties. You can tell a lot about a chief executive's leadership by what draws their attention first. 'Sales is vanity, profit is sanity and cash flow is reality.' In uncertain times this adage is never more true. Let's start with sales. From an organisational viewpoint, the location of sales should cause you to consider having a separate entity for non-Gulf business. Depending on what and where you do it, this business might be exempt from corporate tax. At the very least, you can elect to sit outside the UAE's VAT system having satisfied the relevant authorities that you comply with their conditions. What would be lost in reclaimable VAT would be counterbalanced by not having to comply with rules of treatment for client and supplier invoices. Add to that reporting and the potential for disruptive external audits to normal internal operations. Let us add another layer. As more rules are introduced to a tax regime, it requires more effort to manage the increased difficulty. Several regimes that are adding new or amending existing rules, often tugging operational practices in different directions, require an alternative management approach. The worst outcome is when the rules of one tax regime are permitted to dictate the actions of another and do so incorrectly. For example, I've worked with people who, for years, thought that VAT did not apply to their revenue. These businesses will discover that the people to whom they are filing their annual corporate tax return, detailing their revenue, are the same as those they are not reporting their VAT related revenue to. If this is the position you find yourself in, admit the error. The relevant authorities will work with you to correct matters. Yes, with penalties, but having dealt with and settled your dues, the issue is considered resolved and everyone moves on. The above are examples of what you might find when you review your sales processes. It's not a comprehensive list. Let us move on to cost of goods and services. Does your business track the profitability of each piece of work it does at a consolidated level? For a corporate tax perspective, you are interested in whether any of your suppliers are related or connected parties. This means understanding the different parties that make up your supply chain. While you are looking at that, take a look at your margins. While we are talking about transfer pricing, what happens when a related party is not a direct supplier, but instead supplies one who is. Do the same rules of proving that transactions are being carried out at arm's length apply? I do not know. It's possible that a business might be unaware that it's happening. Given ignorance is no defence in law, that might not be sufficient, should it be discovered. Would the value of such business matter? A one-off transaction of value verses multiple micro transactions. Given the breadth of what constitutes a related party in the UAE, it might be easier than you think to find your organisation in this position.
Forbes
10 hours ago
- Business
- Forbes
Nike Takes Billion Dollar Tariff Hit But Predicts Hard Yards Behind It
Despite tariffs, Nike believes the worst is behind it. Nike put a billion-dollar price tag on tariff costs Thursday, while it proclaimed that the worst should be behind the company as sales and profit declines moderate ahead. The Portland-based footwear giant took its largest financial hit yet from its extensive turnaround plan during its fiscal fourth quarter as finance chief Matt Friend conceded to analysts on an earnings call that the tariff duties represented a 'new and meaningful' cost to the business. 'With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion' Friend said for its current fiscal year, though he stressed that the company is working to 'fully mitigate' these additional costs as it reorganizes its supply chain. Currently, about 16% of Nike's manufacturing and footwear manufacture comes from China and Nike anticipates that it will be able to reduce this to the high single-digits by the end of next summer, although Friend reiterated that China remained important to its global source base, as he also pledged to future investment in the business. Nike Beats The Street Nike beat Street consenus estimates with quarterly sales to May 31 of $11.1 billion versus analyst expectations of $10.72 billion, but that was down about 12% from $12.61 billion a year earlier. The company also reported net income for the quarter was $211 million, compared with $1.5 billion a year prior. Nike had predicted that its fiscal fourth quarter would be the low point of its turnaround but conditions have toughened since, though Friend confirmed in Nike's earning release that headwinds are expected to moderate moving forward. Nike's stock price held firm after the announcement, but its stock value is off around 15% in the year to date and are a third down over 12 months. 'The results we're reporting in Q4 and in FY25 are not up to the Nike standard, but as we said 90 days ago, the work we're doing to reposition the business through our 'Win Now' actions is having an impact,' Nike CEO Elliott Hill said. 'From here, we expect our business results to improve.' Nike will focus back on sports segmentation going forwards. Nike's profits plummeted 86% in the previous quarter as it cleared out old inventory and reset its digital business through discounts and clearance channels. Neither has the delay to its much-vaunted NikeSkims collaboration with Kim Kardashian helped, a topic that was not discussed on the earnings call. Revenue fell in all regions during the quarter but came in a little better than expected in North America, Nike's largest market, where sales fell 11% to $4.7 billion. Revenues in China were just below expectations at $1.48 billion and Nike is currently trialling new retail concepts with a local approach. Nike Looks To Sports Segmentation Since Hill took over as Nike's CEO in the fall, he has concentrated on winning back wholesale partners, while the company is also realigning internal teams to focus back on specific sports segments, Nike has also started selling on Amazon again for the first time since 2019. From this fall, Amazon will begin carrying an assortment of footwear, apparel and accessories and Nike will have a featured brand store on the platform for running, training, basketball and sportswear. During the quarter, Nike released a new sneaker collection for A'ja Wilson from the Las Vegas Aces and the first drop sold out in three minutes flat. The company plans to double the pairs available in the coming seasons and sneakers remain the most important category in Nike's business, although apparel is growing and represented about 28% of Nike brand revenue in its last fiscal year. Where Nike has been lagging is in womenswear, which has become a long-standing issue. The buoyant athleisure sector has also seen a host of specialist players enter the market, focused on everything from the gym and boxing to yoga, while brands such as On continue to take Nike's market share. Hill came out of retirement last year to lead the revival of the all-powerful sports brand and retailer but from field to mat, track to ring, the industry is becoming increasingly competitive and fragmented. Tariffs have hardly helped for a business that has leveraged global supply chains but Hill remained confident that the hard yards are finally behind Nike.
Daily Mail
14 hours ago
- Business
- Daily Mail
Heathrow eyes £2bn profit despite National Insurance hit
Heathrow has lifted profit forecasts after a stronger than expected bounce in travel demand and despite higher costs arising from the recent National Insurance hike. The British Airways hub, which is Europe's busiest airport, said it now expects to post adjusted earnings before nasties of £1.98billion for this year, up from £1.95billion in December. However, the airport's latest profit outlook would mark a 3 per cent decline year-on-year, owing to higher operating costs. It said it faced ongoing cost pressures from security requirements, 'additional service mitigations', and rising contractual costs from National Insurance. Chancellor Rachel Reeves announced last autumn that employers' National Insurance contributions would go up in early April from 13.8 per cent on annual wages above £9,100 to 15 per cent on salaries exceeding £5,000. Many prominent businesses have complained that the tax increase, together with the higher minimum wage and less generous business rates relief, will lead to job cuts and lower profits. The airport also continues to expect total passenger numbers of 84.2 million this year, compared to 83.9 million in 2024, due to elevated leisure demand and greater long-haul flying than initially predicted. A total of 32.6 million people travelled through Heathrow in the first five months of 2025, supported by growth from Latin America, the Middle East and the Asia-Pacific markets. Heathrow's cargo tonnage also rose by 16 per cent, as increased volumes from North America ahead of the introduction of recent tariffs offset declines in Europe. The airport claimed to be the most punctual hub airport in Europe during the period, with 98.4 per cent of regulated queue times in Central Search Areas coming in under five minutes. Thomas Woldbye, chief executive of Heathrow, said: 'As the UK's hub, delivering for our customers and the country is what matters. 'We are on track for another strong year with the best punctuality amongst the major hubs in Europe, over £1billion of investment to improve the airport and growing passenger numbers despite macroeconomic uncertainty. 'We are doing it all with an airport charge that, on a like-for-like basis, is aligned with our European competitors.' Heathrow briefly closed on 21 March after suffering a power outage when a nearby electrical substation caught fire. Around 270,000 journeys were affected by the shutdown. A review of the incident by former Transport Secretary Ruth Kelly said the airport 'made the right decisions in exceptionally difficult circumstances.' Heathrow has agreed to implement all 28 recommendations made by Kelly's report.
Wall Street Journal
16 hours ago
- Business
- Wall Street Journal
Mediobanca Aims to Boost Profit, Payouts in Bid to Fend Off Monte Paschi
Mediobanca MB -1.24%decrease; red down pointing triangle said it is targeting higher profits and shareholder payouts over the next three years, as the Italian bank touted its standalone growth prospects in a bid to fend off an unsolicited takeover bid from Monte dei Paschi. The bank–formally known as Mediobanca Banca di Credito Finanziario–said Friday that its plan for the next three years calls for revenue of more than 4.4 billion euros, equivalent to $5.15 billion, net profit of 1.9 billion euros and a return on tangible equity–a key profitability metric for banks–of 20% in the year ending June 2028.
The National
18 hours ago
- Business
- The National
Why UAE companies must understand the nuances of tax laws
This column focuses on different treatments of tax law. If you are in a certain industry, what is the correct timing when invoicing? What information is mandatory on supplier invoices? You can continue to ask questions of this nature up to and including internal document management and compulsory filing with external parties. By way of consequences, inevitably it is the stick, not the carrot, that delivers the greatest response. It is important to understand what penalties can be applied and the sum value of interest on those. This is because it is typically at a later time that problems are discovered. Focusing on the carrot, let us reframe this as a positive business proposition. It is a useful exercise to revisit, line by line, component by component, your profit-and-loss statement to see if contributing elements are optimised. One part often overlooked is tax. Not just corporate tax, but VAT – and depending on your business activities – excise and customs duties. You can tell a lot about a chief executive's leadership by what draws their attention first. 'Sales is vanity, profit is sanity and cash flow is reality.' In uncertain times this adage is never more true. Let's start with sales. From an organisational viewpoint, the location of sales should cause you to consider having a separate entity for non-Gulf business. Depending on what and where you do it, this business might be exempt from corporate tax. At the very least, you can elect to sit outside the UAE's VAT system having satisfied the relevant authorities that you comply with their conditions. What would be lost in reclaimable VAT would be counterbalanced by not having to comply with rules of treatment for client and supplier invoices. Add to that reporting and the potential for disruptive external audits to normal internal operations. Let us add another layer. As more rules are introduced to a tax regime, it requires more effort to manage the increased difficulty. Several regimes that are adding new or amending existing rules, often tugging operational practices in different directions, require an alternative management approach. The worst outcome is when the rules of one tax regime are permitted to dictate the actions of another and do so incorrectly. For example, I've worked with people who, for years, thought that VAT did not apply to their revenue. These businesses will discover that the people to whom they are filing their annual corporate tax return, detailing their revenue, are the same as those they are not reporting their VAT related revenue to. If this is the position you find yourself in, admit the error. The relevant authorities will work with you to correct matters. Yes, with penalties, but having dealt with and settled your dues, the issue is considered resolved and everyone moves on. The above are examples of what you might find when you review your sales processes. It's not a comprehensive list. Let us move on to cost of goods and services. Does your business track the profitability of each piece of work it does at a consolidated level? For a corporate tax perspective, you are interested in whether any of your suppliers are related or connected parties. This means understanding the different parties that make up your supply chain. While you are looking at that, take a look at your margins. While we are talking about transfer pricing, what happens when a related party is not a direct supplier, but instead supplies one who is. Do the same rules of proving that transactions are being carried out at arm's length apply? I do not know. It's possible that a business might be unaware that it's happening. Given ignorance is no defence in law, that might not be sufficient, should it be discovered. Would the value of such business matter? A one-off transaction of value verses multiple micro transactions. Given the breadth of what constitutes a related party in the UAE, it might be easier than you think to find your organisation in this position.
