With the deadline for Value Added Tax (VAT) registration just a few months away, a worrying article in the Khaleej Times suggests that 2 out of every 3 companies feel they are still unprepared for the changes ahead.
VAT in the UAE will be introduced from January 1, 2018, and is expected to generate in excess of AED90 billion in tax proceeds annually.
VAT registration in the UAE will initially be compulsory for companies with annual revenue in excess of 375,000AED, while businesses with annual revenue in excess of 187,000AED have the option to register. Whilst some sectors such as education, medical care, and certain financial services will either be exempt or be zero rated, the majority of other goods and services will be subject to the new tax at 5%.
Basic food items will also be exempt, but at the current time the legislation which determines exactly which items these will include is still being drafted.
It is important for businesses to start preparing for the impact of VAT on their UAE business by aligning their business models with new compliance and reporting procedures. Changes may also be required to core internal functions, such as accounting, invoicing and book-keeping software, human resources, and financial management.
Although details have yet to be released, one report in the The National states that there will be penalties for non-compliance with the new regulations.
Businesses who do not have the expertise to evaluate how their processes need to change should consider whether to seek VAT advice and support.
Advisors M.E. offers cost-effective accountancy and taxation services across the Middle East. The team can work with you to insure the new UAE VAT regulations are seamlessly implemented into your business. Advisors M.E. can assist with financial forecasting, including looking at the impact of VAT on your business and your profitability. They can also assess the impact of the new VAT regulations on your investment strategies, accountancy teams and financial planning.
Mohammed Siddiqui is Managing Director of Advisors M.E. and began his corporate career with Deloitte and Touche. He has over 20 years’ experience of helping businesses of all sizes across the MENA region. For further information on how to incorporate the new VAT rules into your business in the most efficient way, contact Mohammed on email@example.com, or call a member of the team on +971 7207 6683
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