Will VAT Be Accepted in the UAE?

Updated on Sunday 12th February 2017

Will VAT Be Accepted in the UAE? Image
The VAT for businesses in the UAE was on the debate last year by the financial and economic authorities in charge, and according to the latest news, this kind of measure will be adopted on January 2018. The 5% tax will be reinvested in infrastructure, health, and education, as mentioned by the authorities, which are also trying to prepare the businessmen and their companies to properly deal with the VAT. Complete details about the VAT which will be implemented next year as predicted can be provided by our accountants in Dubai.
 

How should companies prepare for the VAT


The VAT in the UAE will be established at 5% rate, which is relatively at a low level compared to European countries or to Australia. As it is known, high revenues are registered in the UAE and many taxes are deductible, which is why entrepreneurs and companies are getting ready to comply with the new rules. Small and medium companies need to change and to adapt to new business regulations, considering that the future profits will pretty much depend on the implemented VAT, starting with 2018. Although the announcement of VAT was made last year, the companies need to be aware and to adopt satisfactory provisions related to the future costs. Many systems or methods can be introduced to reduce the expenses and companies are suggested to fully verify and understand the new tax system in the UAE, in order to increase awareness.

Companies in Dubai can receive suitable information about the taxation system and can receive audit services in Dubai, no matter if it’s a small or a large company involved.
 

The impact of VAT in the UAE


The value-added tax can positively influence the businesses in the UAE. About $3,30 billion can be generated in the first year with the implemented VAT, which is approximately AED 12.5 billion, according to the Ministry of Finance and its calculations. The authorities consider reinvesting the revenues from collecting the VAT in the most important areas in the UAE. The International Monetary Fund (IMF) encourages the UAE to support companies understand the new taxation system, as a large fiscal modification.

You are invited to contact our accounting firms in Dubai for additional information about the taxation system in the UAE and about the VAT.

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