Introduction of VAT in UAE :
Value Added Tax abbreviated as VAT which is collected by the government to pay for the public services. It is an indirect tax or consumption tax imposed on goods and service. It is charged on each step of supply chain but ultimately the final consumer bears the VAT while businesses collect it from the consumers on behalf of the government.
The Gulf Corporation Council (GCC) has been having discussions on introducing VAT over the years has finally come to an agreement. Being a member UAE is likely to introduce tax from 1 January 2018. The government has been participating in the discussions about the introduction of VAT in UAE with the GCC association. The decrease in revenue in the oil industry has made a huge impact on all GCC countries, which is why implementation of VAT has come into light. However, it will take quite some time to make the laws relating to the VAT and lot of ground work has to be done before the implementation. The govt is planning to impose 5% VAT on goods and services with few exceptions including basic food commodities, healthcare and education.
Only those businesses which meet the minimum annual turnover will have to register for VAT. However, the minimum turnover is yet to be decided by the government. This protects the small businesses from the documentation required for VAT. In order to register for VAT, all the businesses need to know their annual turnover, for the government to analyze the Tax eligibility hence have to maintain regular and accurate financial records.
Businesses need to be prepared from now so that they can efficiently operate when the VAT is being implemented. It is expected that the cost of businesses might slightly increase with the implementation of VAT because it is effected on every step of supply chain. For those companies with tax experience might be slightly easier to operate compared to those companies which never dealt with tax before. Employment opportunities are likely to increase in next year where VAT is being introduced. Companies need to hire VAT experts to transit the accounts. Professional from finance and IT, ERP might have demand than any other.