UAE and associate GCC nations in the form of Value Added Tax (VAT) on all goods and services at a standard rate of 5% with effect from the beginning of new year i.e 1st January 2018. Will consumers spend take a hit or it will be business as usual for the retailers and manufacturers?
UAE will soon introduce a new taxation system in the form of VAT, confirmed by the Ministry of Finance, UAE. Goods and services would be charged at a standard rate of 5% exempting basic food items, health, and education. Hence arises the dilemma who will actually bear the tax burden : Consumer or business ?
With the introduction of VAT, it is mandatory for all the businesses in UAE to abide by the rules, as per laid down by law of Federal Tax Authority. All the businesses coming under the ambit of prescribed turnover criteria for the mandatory VAT registration i.e. AED over 375,000/, are required to get themselves registered and comply to the rules, as per the guidelines.
VAT will be introduced in UAE with effect from 1st January, 2018 and the registration process already has started from 1st October, 2017. Since time is running short, the businesses in UAE need to be ready for the adoption of new VAT policy. VAT rate is 5% of value of supply of goods and services including imports.