Vat’s to worry about?

In my opinion all medium and large business entities are prepared or are getting ready for VAT in Jan 2018. The challenge would be with the small businesses Shailesh Dash, CEO of Al Masah Capital Management

The UAE VAT base is quite broad by global standards. It has a low rate but a broader base than you see in most jurisdictions, especially when compared to Europe David Stevens, VAT implementation leader at EY

dubai — As the Federal Tax Authority has chalked out plans to start online registration of companies for value-added tax in midSeptember, the UAE bluechip companies are ready to face the challenge of new consumption tax in January 2018.

Analysts and experts said the consumers are unlikely to face any major impact from 5 per cent standard VAT in January as the government has already exempted around 100 basic food items, housing rent, life insurance and some healthcare services from the new levy. Education and public transport services are also expected to be zero-rated VAT to keep the inflation in control, however the consumers will have to bear additional cost for non-essential food items, dinning out, vehicles buying and its insurance, among others.

The International Monetary Funds, in its latest report, also indicated that inflation in the UAE eased to 1.8 per cent last year from 4.1 per cent in 2015 chiefly due to declining rent. It further estimated that the inflation will average 2.9 per cent next year and 2.5 per cent in 2019 despite VAT implementation in the country.

David Stevens, VAT implementation leader at EY, said introduction of consumption tax forms a significant shift in the UAR’s fiscal policy and wider GCC region.