What Will Happen With the Prices After the Introduction of VAT?

Updated on Saturday 20th May 2017

What Will Happen With the Prices After the Introduction of VAT? Image
Although the introduction of the VAT in the UAE was announced in time, there are question marks everywhere, especially from companies which are interested if the prices for goods and services need to be increased when implementing this kind of tax, or not. It is true, the transition might take a while until the VAT necessity is fully understood and enforced, but if you need information in this matter, we suggest you talk to our accountants in Dubai. Our advisors can also provide you with support and financial advice for your company in Dubai.

To absorb the VAT or not, this is the dilemma

The 5% VAT rate seems to be around the corner, as it will be enforced on particular goods and services in the UAE, starting next year in January. To ease the transition and to properly implement the VAT, it is necessary to ask questions and to receive good answers in this particular problem. For instance, the companies in the UAE want to choose the suitable solution when adding the VAT, whether to increase the prices or to absorb the VAT. Being quite an impact for the Arab states of the GCC (Gulf Cooperation Council), the VAT rate will most likely be supported by companies, with the idea of not changing the prices and the bills. Besides that, this is a good and smart way to acquire or to develop the market share.

Implementing a good strategy means knowing all the details and information, which is why our Dubai accountants are ready to offer comprehensive advice on the taxation in the UAE and the changes which come in 2018. We remind that you can also rely on our auditing firms in Dubai for services in this matter for your company.

Good decisions will lead to pleased customers worldwide

You might say it is plenty of time until January 2018 when the VAT will be mandatory for all kinds of goods and services in the Emirates, but as the time goes by, companies need to make good decisions for them and especially for their clients. In theory, the 5% VAT rate must be added to the current prices for which a client will pay, and then the tax will be directed to the financial authorities. The calculations are simple at the beginning, but big companies consider it is best to maintain the prices and to absorb the VAT. As for the small businesses in Dubai, these might be enforced to change the strategy and to actually add the VAT to their prices for goods and services. According to the financial consultants in the UAE, enterprises will meet cash flow problems after the implementation of VAT because the duration of tax refunds is not settled yet.

We invite you to contact our accounting firm in Dubai for complete information about the taxes you need to consider for your company, including the VAT.