As a business owner in the UAE, as of 1st January 2018, it will be mandatory for certain companies to be registered for VAT.VAT is commonly known as an indirect tax that’s levied on the consumption of goods and services in a country, and is currently in effect in over 180 countries worldwide. The UAE joins this list as of this year, and as such, respective companies, that is those who earn Dh 375,000 and above, need to gear up for the changes. Whilst the deadline for VAT registration was the 1st of January, if you’re still unclear about how VAT works or aren’t sure whether your company qualifies, you can refer to the information here, or even book an appointment with our VAT registration company Dubai for more targeted advice.
Companies / businesses who fulfil the VAT registration criteria, can expect a VAT charge of 5% on taxable goods and services. This will range from rented commercial properties and free-zone companies to name a few. The implementation of VAT is seen as a positive move by the government, as it presents the UAE with an alternate source of income. This will in turn allow them to enhance the quality of public services offered, including healthcare, transport and infrastructure. Furthermore, VAT is a means to help steer the nation in another direction, away from depending on oil and so on, for revenue.
Whilst the new VAT laws will be applicable across most goods and services, there will be a few limited exemptions, which we as a proficient tax consultant Dubai can help you with. Though the move will increase the cost of living overall, this is also based mainly on each individual’s spending and lifestyle habits. If for instance, they spend on products that aren’t subject to VAT, their expenditure may not rise exponentially.
Additionally, companies that offer taxable goods and services are now required by the UAE government to clearly stipulate how much VAT is incurred by customers with each transaction. Complete transparency as well as detailed bookkeeping is vital, especially as failure to comply with the latter is set to cost 10,000 AED in fines. If your company doesn’t yet have a solid bookkeeping system set up, our UK tax consultancy in Dubai can assist you with that too.