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VAT


Indroduction Of VAT in GCC

The Value Added Tax (VAT) was implemented for the first time in France in the late '50s and ever since, more and more countries have begun to adopt it.
The GCC Member States are in the process of approving the long anticipated common framework for the introduction of a Value Added Tax (VAT) system in the GCC.
The UAE Minister of State for Financial Affairs, His Excellency Obaid Humaid Al Tayer, has stated that the UAE will implement Value Added Taxes (VAT) at the rate of 5% on 1 January 2018 with some limited exceptions including staple food items, healthcare and education and social services. Other GCC countries are anticipated to implement the same by 1 January 2019.

READ MORE ON VAT

That rate of 5% is among the lowest in the world and to help to put it into a bit of perspective, the standard VAT rate in the UK is 20 per cent. Yes, 20! Comparisons like that make it easier to understand the impact the introduction of the system will have on the prices we pay for things. An increase of no more than five per cent will be negligible and won’t really affect most of us that badly. In fact, some of us might not even notice it at all.
Leaving the Challenges apart, the new VAT system will help governments to deliver long-standing plans for economic diversification away from oil, while still being able to deliver social and economic programmes. When VAT is introduced in 2018, the UAE is expected to generate around Dh10 billion to Dh12 billion in revenues from the tax in the first year of implementation.

So, Will all businesses need to register with the government for VAT?

No, not all businesses will need to register for VAT. In simple terms, only businesses that meet a certain minimum annual turnover requirement will have to register for VAT. That is, many small businesses will not need to register for VAT.
Our experience and study on the markets poses the need for every Entity in the UAE (and GCC) to adapt to the changes by identifying the impact of VAT on their business.

A word of caution!

It is important to understand that the introduction of VAT will affect the whole of a business, not just the finance department. For example, those in sales will need to have the knowledge of how it’s calculated; the pricing department will have to reach the most attractive price, etc. Therefore it’s time for companies to start preparing for VAT.

Here are a few recommended key immediate considerations for every Business Organization

  • Assess capability of existing systems
  • Identify VAT implementation strategy
  • Identify contracts that need a VAT action
  • Identify intercompany transactions
  • Undertake training / awareness programmes for employees/consumers
  • Implement and ensure proper Book keeping procedures to initiate transparency of records.
At BMS Auditing, we believe that Time and Tide wait for none! We provide unending support to Our Clients and equip them with all the requisites to face the new VAT Regime.

  • Other tax based services include -
  • Local Taxes
  • Tax Structuring
  • Transfer Pricing
  • Other latest amendments
  • We prefer to take a proactive vs. reactive approach to tax services. By keeping current on new tax laws and legislation, we are in a position to identify key tax planning opportunities that minimize both your current and future tax liabilities.


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