Value Added Tax (VAT) was introduced in the UAE in 2018. In the simplest of terms, it is a consumption tax that is imposed on goods and services either at the final stage of production or any stage where value is added to the product. This, when compared to the other countries the world over, is a late addition to the country with the most simplified taxation system in the world.
Businesses established in UAE must register for VAT if the value of their taxable products exceeds AED 375,000.00 over the 12-month period that has passed or is expected to exceed this sum in the 30 days to come. However, registration is not compulsory and can be done voluntarily if taxable products and imports are expected to exceed AED 187,500.00. And if the taxable services do not exceed AED 187,500.00, businesses are exempt from paying the tax. This new taxation law applies to all businesses in the UAE.
While this might appear perplexing to businesses both big and small, there has been a surge in the number of VAT consultants in Dubai that offer services that cater to these needs.
1.Efficient use of resources: Besides an increase in revenue, VAT has also resulted in the government and businesses making informed decisions in an efficient manner, thereby reducing the use of resources and decreasing corruption and instances of financial fraud.
2.Understanding and Analysing Budgeting: Understanding and implementing VAT can be a rather cumbersome process at first. Businesses now need to be more vigilant about their documentation, especially at the time of filing. All financial transactions made by the company must be accounted for. These financial exchanges between businesses and VAT consultants in Dubai make the VAT filing process smoother and help businesses better prepare for the oncoming financial year by assisting them in preparing their budgets and understanding and analyzing future trends in their businesses.
3.New Career Opportunities: VAT now opens up a new sphere of career opportunities for people who have strong knowledge and understanding of VAT-related terms. VAT Consultants in UAE are the need of the hour. For a large number of businesses, this will be a trying time and most will not have the time nor resources to understand the complexities involved with the VAT. Thereby, hiring VAT consultants in UAE, which understand the intricacies of the tax and are able to advise on how this new law can be adopted in the business is useful.
In addition, employees will have to undergo training sessions to explain business procedures and transactions to their customers keeping VAT in mind. And, if a business can afford it, maintaining in-house VAT consultancy services would be extremely beneficial.
4.Promotes accountability: The UAE has been a country where tax has not been imposed in the past. The addition of VAT might result in the inflation of expenses, but this inflation is believed to be temporary and fairly undramatic. In the long run, the benefits of VAT outweigh the possible negatives. The imposition of VAT helps create an atmosphere of transparency in businesses and between businesses and has allowed for openness and accountability.
With the revenue gained from the imposition of this tax, the government foresees a reduction in the dependency on the export of oil and gas. The money from this new source of revenue will then allow the government to not only improve the infrastructure of the country but also provide its citizens with better healthcare and other amenities, which will be beneficial not only to businesses but to individuals as well.
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