Introduction of VAT in UAE

 

VAT is likely to be introduced across the UAE on January 1 2018. The rate will be low and is likely to be 5%.Value Added Tax is an indirect tax. VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax. A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.

Why is the UAE implementing VAT?

 

The UAE Federal and Emirate governments provide citizens and residents with many different public services. These services are paid for from the government budgets. VAT will provide our country with a new source of income which will contribute to the continued provision of high quality public services into the future.

VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. The UAE is part of a group of countries which are closely connected through “The Economic Agreement between the GCC States” and “The GCC Customs Union”. The GCC group of nations have historically worked together in designing and implementing new public policies as we recognize that such a collaborative approach is best for the region.

VAT is intended to help improve the economic base of the country. Therefore, we will include rules that require businesses to be clear about how much VAT you are paying for each transaction. You will have the required information to decide whether to buy something or not.

All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date. Businesses that meet the minimum annual turnover requirement will be required to register for VAT. Businesses that do not think that they should be VAT registered should maintain their financial records in any event.

How Can We Help

VAT compliance can be a tedious process if it is not conducted and managed properly. Our experts at Augment Management Consultancy are equipped to simplify the entire process of VAT compliance with the establishment of a robust VAT function. We shall ensure we reduce VAT costs and avoid significant difficulties in the future.

Talk to us at Augment Management Consultancy today to learn more.