VAT is implemented in UAE from 1st of January 2018 at the rate of 5%. It will be applied to all the supplies of goods and services. Businesses in UAE will surely face a number of challenges, as the new tax regime will impact all parts of the business.
The recent reports of Deloitte Middle East show that the implementation of VAT in UAE can require some important modifications to operate a business in UAE which includes:
To gain knowledge about the VAT implementation system and its impact on demand for goods and services.
How VAT is Impacting Automobile Industry in UAE
The automobile industry in UAE was facing a tough time due to excess stock and was gearing up with new VAT era carefully. Stakeholders were considered that the final legislative framework of VAT agreement could provide some clarifications for the operational purposes, for imported and local vehicles.
Several car manufacturers and dealers were making the automobile industry highly competitive specifically for the SUV, mid- size and SUV segment that time. Car manufacturers and dealers lured customers just by providing a discount on the new purchase, loan facility, low maintenance cost and free insurance for the first quarter of year. Dealers were doing that just because to clear out the available stock before the introduction of VAT in UAE.
Dubai Gold was liked by consumers just because of its design, purity, standard and competitive pricing as the comparison with other markets. More than 180 people, who are living in UAE like to purchase gold from Dubai instead of their own countries.
6 states all over the GCC (Gulf Cooperation Council) mutually agreed to collect VAT at the rate of 5 percent from 1st January 2018 on all non- essential luxury goods. From the introduction of VAT, GCC will be gained Dh12 billion in the UAE in the introduction year.
From 1st January 2018, it is expected that VAT has been implemented in UAE at the rate of 5 percent while purchasing goods and services. Some challenges faced by UAE at the time of implementing VAT are as follows:-
The supply chain is one biggest challenge faced while implementing VAT in UAE as it is an indirect tax and levied on the whole supply chain. Consumers are the end cycle of supply chain and pay tax at the time of purchasing goods and services. Companies who are dealing business with UAE and GCC members also have to pay tax. Consumers (Taxpayers), Businesses (Shareholders), Government (Tax collectors ) and Consultant (Tax Experts) are four important stakeholders which come under VAT framework. But the question is who will be affected the most by the tax system. Read More
As the UAE has announced the official date of the implementation of the VAT, i.e Jan. 1 2018, the small businesses want to know the benefits of the upcoming tax regime and what change it will bring in their lives. The Entrepreneurs who are into the process of introducing specific software for the VAT in UAE said that the value-added tax system will boost the economy of the GCC that has been hit by the downfall of the oil prices in the recent times.
They believe that the businesses will be given special treatment in the long term, after the imposition of the 5 percent tax on goods and services in January.
As per the Khaleej Times, Charges and commissions applied by exchange houses on remittances in UAE may fall under the category of VAT.
VAT has been introduced from 1st January 2018 in UAE. It is one of the major decisions taken by the government. This decision of Government which helps to diversify more revenue sources in UAE in a bid to move away from dependence on oil income.
CEO of UAE Exchange Group, Promoth Manghat, said that VAT on remittance fee is one of the popular topics that has been currently discussed by the media reporters and service providers. As per the information sources that we have got from experts, remittance fee may be the subject of VAT in upcoming future. Read More