For the first time in the history of UAE, the government decided to implement VAT i.e. Value added tax which will start commence on 1st January 2018 at a rate 0f 5% & Excise taxes to be brought in during the fourth quarter of 2017. It has turned up as a vast development in country’s image of completely tax-free living. One side for the new investors this change brings another module to work on closely, than on the other side it is also challenging for ongoing businesses to have a close watch on their business financial standards.
Value-added tax is also known as consumption tax meant to be imposed at each level of production till final sale whereas excise tax imposed only on the manufacturers during the process of production. The main difference between EXCISE & VAT tax is that the excise tax is levied on certain goods such as Tobacco/cigarettes etc. They are levied once either at the time of import or during production. Also this tax comes often within the price of the product.
The government further explains that companies which fall under the taxable goods & services with annual revenue of above DHS 375,000 will be required to register for VAT & any businesses with below DHS 375,000 but above DHS 187,000 will have a choice to register for it. A limited relief may be granted as the utility services like hospitals & education left exempted from this tax.
All Businesses are allowed to register three months before the launch date i.e. 1st October 2017 which helps to ensure sufficient time to get well drilled & prepared ahead to comply with upcoming tax challenges. Though it is yet not cleared if any new designed or completely different VAT supported system will get introduced or the current software of accounting with companies will be updated to best comply with VAT requirement. But whatever it may be, companies may have to face compliance & statutory related challenges to get through it. The amount of work required depends on the size & complexities of any business which is why it is very important to assess the reality of your business financial at an earliest.
In order to lighten the pressure of this new obligation, all companies would require an expert intervene as an associate support to handle their business financials as per new tax rule. This support will enable them to handle extensive documents & related hassles to fulfill VAT requirements by the government. All kind of business establishments may also require sizable changes in their pattern of working with financial transactions of their businesses as authorities can demand them any time to verify the records kept & reports submitted, failure to which may draw severe penalties thus required to have a strict control on financial standards by adopting transparent accounting policy.
In short an initial drill is needed to be carried out where all businesses need to review their financial system before VAT implication date since there is relatively short time left for client to be VAT ready, We at Flying Colour Business Setup Services carries an expertise & experience of working with tax authorities & related VAT jurisdiction advisory.
Flying Colour Business Setup Services, Dubai is the leading professionals in setting up successful business practices across the world. Having a team of specialist in administrative expertise, accounting advisory & business analyst, we at FCBSS enables you to have full back office assistance & solutions to regulatory affairs so you left no room for flaws & errors in your business operations. We are well geared to take up the upcoming financial challenges by ensuring timely & cost-effective services for all SME’s through our well -projected strategies.
We are well established in assisting our clients to handle & understand this new affair. Our expert approach will help in identifying strategies & resources needed to match VAT obligations. Once an appropriate accounting comes in place, we will then assist further on how to implement VAT on your business ensuring updated & screened records to identify if the business falls in or out of VAT gateway.
Feel free to call our Business Expert today for a quality consultation relating to any kind of your VAT query. Send your enquiry at raj [at] flyingcolour [dot] com or call us +971 4 4542366.