The Value Added Tax (VAT) with five per cent tax rate is scheduled to be launched in UAE in the starting of the next year. However, the VAT registration for eligible businesses have already begun and will continue till December 4. That means, all the businesses that are liable to register under VAT are required to submit their registration applications latest by this date.
Implication of VAT on individuals
VAT, as a general consumption tax, will apply to most of transactions in goods and services. A limited number of reliefs may be granted.
As a result, the cost of living is likely to increase slightly, but this will vary depending on an individual’s lifestyle and spending behavior. If an individual spends mainly on those things which are relieved from VAT, he is unlikely to see any significant increase.
The government will include rules that require businesses to be clear about how much VAT an individual is required to pay for each transaction. Based on this information, individuals can decide whether to buy something.
Implication of VAT on businesses
Businesses will be responsible for carefully documenting their business income, costs and associated VAT charges. Businesses that meet the minimum annual turnover requirement (as evidenced by their financial records) 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, in case the ministry needs to establish whether they should be registered.
Registered businesses and traders will charge VAT to all their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.
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- VAT CONCEPT
- CATEGORIES OF SUPPLIES
- VAT AND UAE
- VAT REGISTRATION
- VAT CALCULATION
- VAT ADMINISTRATION
- VAT PENALITEIS (yet to be announced by MOF)
- VAT ON IMPORTS/EXPORTS
- VAT INVOICES AND RECORD KEEPING
- VAT ERRORS