A thorough study and analysis of the business model is required for the effective implementation of VAT within the organization. Full understanding of the business model renders clear insight about the organization; hence it is a perquisite to identify specific rules and customer base, associated with one’s business. The steps for the successful implementation of VAT services can be summed up as following:
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?
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.
In preparation for the GCC-wide implementation of VAT, each member state of the GCC will establish their own separate national legislation concerning VAT and as such the detailed compliance requirements and set of rules will be outlined in respective legislation.
The UAE government has released domestic VAT legislation by mid-2017 with detailed regulations.
VAT will be payable by every individual/consumer in the country except by non-resident tourists in certain cases, who buys any product or takes services in GCC.
VAT is imposed on supply of goods and services and is charged throughout the supply chain, including on the final sale. VAT is also imposed on the imports of goods and services so as to ensure that a level playing field is maintained for domestic providers of those same goods and services.
Businesses will be liable for precisely documenting their business income and costs and related VAT charges. Registered businesses and traders will charge VAT at the prevailing rate and incur VAT on goods and services they take from suppliers. The difference between these sums is reclaimed or paid to the government.