According to the announcement, the UAE will impose VAT at a rate of five percent on the sale of goods and on services as from 1 January 2018. The five percent rate has been agreed between all GCC countries, and the framework agreement on the implementation of VAT is expected for release in July this year. The implementation will take place throughout the GCC, however the other GCC countries have from 1 January 2018 until 1 January 2019 to also implement VAT. The amount generated from VAT revenue in the UAE is expected to be between AED 8 and AED 12 billion in the first year.
In order to deal with the challenges, businesses in the UAE should evaluate and review their daily business activities, with a focus on the following points.
Businesses and merchants will need to incorporate VAT into their existing accounting systems and will need to establish new processes to keep accurate records to demonstrate to the tax authority that they have correctly applied the VAT rules.
IT systems will form an important part of this process as in any organizations, a fully automated tax engine will be a necessity.
VAT rules can be complex and the implications are not always considered. Implementation of VAT needs careful planning for its success.
Our dedicated VAT team will help you consider every stage of the implementation process.
Our experienced VAT team, along with international VAT experts and the Accelerated VAT approach have been advising and implementing strategies to help organizations comply with their VAT obligations and reduce VAT liabilities and particularly for clients without full VAT recovery.
If you require further information on VAT issues, please contact us.