VAT Impact on Logistics Industry in UAE

VAT Impact on Logistics Industry in UAE

Impact of VAT on UAE Logistics Industry

UAE is well known for being one of the very few countries which are tax free but now UAE and other GCC countries are following the path of those countries who have implemented VAT in their frameworks, UAE will be implementing VAT from 1st January 2018 at a very low rate of 5% which is standard rate as well, VAT will be affecting every step involved in the supply chain.

Logistic is a part of supply chain which starts from the origin and works till the point of consumption in order to satisfy and fulfill the need of the end consumer as it plans, implements, controls as well as helps in performing work effectively and efficiently.

Supply chain is a defined system which helps products and services to move from producer till the end consumer as it involves all the activities (transformation of natural resources, raw materials, and components into a finished product and delivery to the end customer).

Businesses don’t have to pay VAT at the point of import as businesses importing goods into the UAE will be eligible for reverse charge where if businesses are importing goods in other GCC countries which are transshipped through UAE, in that case VAT will be implemented at the first point of entry into the GCC Customs Union. Where export is categorized under zero-rated, storage will also attract VAT as businesses should plan their cash flows accordingly and should also take care of input VAT credit for the same.

Transportation of goods and people and all other related services are also chargeable but will be charged according to the place where transportation begins.

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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 1st January 2018. Now the question is that Will consumers spend take a hit or it will be business as usual for the retailers and manufacturers?

How Small Businesses Can Manage VAT Compliance in UAE

11th December 2017

The new value-added tax (VAT) is coming into effect from 1st January 2018 for the very first time in UAE, Ultimately it will affect small businesses as well, main concern of small businesses is all about the financial and operational impacts of VAT compliance, especially since they’re used to operating in a low-tax business environment. Most people have a preconceived notion that VAT is a burden for all including small businesses. However, if your business is organized with the help of a VAT expert, VAT may not be too onerous to you.