Importance of VAT for Businesses in the UAE
The GCC states (Gulf Cooperation Council) agreed “in principle” to impose the GCC agreement on value added tax (VAT) in the region. This will help the region reduce its dependence on oil and other hydrocarbon products as a source of revenue. All GCC countries agree that the VAT 2019, however, will be introduced before January 1 in all countries, the UAE has decided to probably apply VAT on January 1, 2018.
We believe that the decision to introduce value added tax would bring about a paradigm shift in the economic dynamism of the country and the region. Like most of the world, companies in the Gulf region also have to comply with strict regulations and regulatory requirements on a regular basis on VAT and report. The challenge for the Gulf’s business community will be to understand the new VAT law and implement the same before the expiration date.
VAT is one of the most common types of indirect taxes in the world. More than 150 countries have introduced VAT. These include the European Union (EU), the United Kingdom, Canada, New Zealand, Australia, Singapore, Malaysia, India, etc. USA UU., The GCC countries and some other countries, notably African continents, have not introduced VAT.
VAT is an indirect tax. It is a kind of general excise tax that is levied incrementally, depending on the value added at each stage of production or sales / sales. In general, it is implemented as a target-based control. In some countries, it is also known as the Goods and Services Tax (GST). VAT, the general excise duty, is applied to most transactions in goods and services. In the UAE, only a few items are exempt from VAT. Some items have a zero classification and the rest of the items have a complete classification or standard notation. The VAT registration criteria is calculated based on the turnover of the company The applicable VAT rate in the UAE is 5%.