Articles
Low VAT Rate on UAE Firms
by Demetris Achilleos LEGAL &CORPORATE DEPARTMENT MANAGER
The implementation of Value-Added Tax (VAT) across the
United Arab Emirates (UAE) may possibly increase the cost of conducting
business within the country. Nonetheless, according to experts, the cost of
doing business will not be affected significantly, as the VAT rate is expected
to be set at merely 5%.
Organizations and companies are called to get informed
on the VAT legislation in advance, in order to prepare financial and management
systems as per the requirements of the legislation.
Informative discussions regarding the impact of the introduction of the VAT
were recently held by aafaq Islamic Finance and the Chartered Certified
Accountants (ACCA) in Dubai.
In general, it is believed that the more simplified the system is, the greater
the consistency there will be throughout the GCC, making the implementation of
VAT easier for everyone.
It is anticipated that it will be difficult to
introduce the VAT system into the judicial structure. This process will
possibly take longer to implement and develop.
In light of the UAE’s top-notch infrastructure, strategic geographical position
as well as economic and political stability, it is expected that the
introduction of the VAT will not affect foreign investment flows.
On the other hand, the forthcoming introduction of
Corporate Tax is worrisome for Small and Medium Enterprises (SMEs) across the
UAE. This is the case because up until now SMEs have been used to operating
within a tax-free environment. During the discussions, it was emphasized that
particular tax reliefs and exemptions on revenue may be introduced to support
SMEs, but it is significant for SMEs to prepare in order to adapt to a tax
environment.
The ACCA emphasized that Europe introduced VAT in the 1970s. The burden of the tax is ultimately added to the final consumer. It is believed that all the members of the ACCA are ready to adapt to the implementation of the VAT. All the members are willing to comply with the tax legislation in line with the International Financial Reporting Standards (IFRS). The most vulnerable group is the SMEs, which is believed that with the adequate training and guidance, the businesses will rapidly develop, recruit experts and adapt to the changes the VAT will bring.
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About Demetris Achilleos 
LEGAL &CORPORATE DEPARTMENT MANAGER
35 connections, 0 recommendations, 103 honor points.Joined APSense since, December 5th, 2013, From Limassol, Cyprus.
Created on Dec 31st 1969 18:00. Viewed 0 times.
