How VAT will Impact UAE Consumers

VAT impact on consumers

VAT is an indirect tax and has levied at each stage of supply chain start from manufacturing to consumption. VAT has been implemented from 1st January 2018 in UAE and other Gulf Countries at the rate of 5 percent. According to Khaleej times, It has been disclosed that 94 basic food items would be exempted from the VAT as well as services which include health, education, bicycles and social services would be tax exempt. Yet VAT laws has not been disclosed in UAE or other GCC countries, however, there is no official confirmation which basic food items will be exempted from the tax.

Finbarr Sexton, Mena Indirect Tax Leader at Ernst & Young stated that there has been no official announcement of 94 basic food items that are zero rated for VAT purposes. Sexton also added that We expect that Basic food items will be zero rated for the implementation of VAT purposes and these basic food items are exempt from the customs duties and we expect the same food items with limited additions to be VAT zero rated.

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VAT Implementation in UAE

VAT implementation in UAE

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.
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