VAT in UAE - Why it will help you?

What You Need to Know about the En Route VAT in UAE 

The Six-Nation GCC Block is all set to implement VAT starting next year. VAT is set to make a debut in UAE by January 2018. The new tax policy is only less than a year away, as the go-live date of the VAT is approaching, consumers and businesses are trying to educate themselves on life in UAE once VAT is deployed.

This article aims to answer some of the basic questions related to VAT. Implementation of VAT in UAE will come into effect on January 1 2018. The rate of VAT in UAE is set to be 5 % (Note: Other GCC Countries have their own VAT rate). Let us glance at some of the common concerns you might have.

What is VAT (Value Added Tax)?

VAT is an indirect tax. This tax is applicable on different supplies of goods and services (bought/sold). VAT is normally also referred to as “general consumption tax”. VAT is usually charged at each step of the ‘supply chain’ and the ultimate consumers are ones bearing the cost. The role of businesses is also integral to it as businesses collect and account for the money collected as VAT from the consumers. In the case of VAT, businesses act as a tax collector working on behalf of the government.

How common is VAT around the Globe?

VAT is the most common consumption tax nowadays and it is implemented in nearly 150 countries (or more). The higher number of countries constitutes the success rate of VAT.

Benefits of VAT:

VAT acts as another source of raising revenues for governments. The collected revenues are spent by the government on different projects and welfare of the public as spending in healthcare, infrastructure, education etc.

How VAT will help Government:

The Federal and Emirates governments in UAE provide residents and citizens of UAE with many different public services – including roads, hospitals, police services, parks, schools and much more. The expenses for these services are covered and paid from the government budget.

VAT will empower the UAE government to have an additional source of income to contribute to the provision of high-quality public services in the future. VAT will also assist the UAE government to proceed with the vision of reducing dependence on oil and other hydrocarbons as a revenue source.

Life after VAT: 

Enough about the concepts and benefits of Value Added Tax (VAT), most of us might wonder how will we as ‘consumers’ contribute to all this. Although the VAT charge list for commodities and applicable sectors is not released but based on the assumptions withdrawn from VAT implementation across the globe we would like to picture life in UAE after VAT implementation;

VAE doesn’t necessarily apply to all commodities in UAE. Some items will be exempted from this cart. There are many food products and items belonging to education, health and

Prepare to pay more for buying electronics, clothes, home-furnishings etc.

Cost of living is likely to increase but then it all depends on the buying preferences of the buyers.

UAE, as a global tourism destination, attracts millions of tourist every year. Tourists buying perfumes, luxury bags, big-priced items might also pay the additional 5 % in price.

Remember! There is no tax on Salaries. So Chill!

So, it is safe to establish that Life after VAT will be normal and one should not expect drastic changes in lifestyle after all. Some might find it a challenge to cope up with this recent development which is bound to happen next year, others might see it as an opportunity from an employment point of view as corporations might be looking out to hire professionals who are aware of this taxation method and help the company stroll forward without any hitch.

If you are on the lookout to cash this opportunity and educate yourself on VAT and other related fields, then CLICK HERE to see a list of courses offered in Dubai and elsewhere to help you achieve your goal.

Sources: Khaleej Times, United Arab Emirates Ministry of Finance, Gulf News