VAT has positive effects on progressive economies

DUBAI — For any progressive economy, like the UAE and India, the implementation of taxes such as the value added tax (VAT) have medium to long term positive effects, said S. S. Bhandari, partner at S. Bhandari & Co. Chartered Accountants, Jaipur, India.

“The beneficial effects of VAT is multi fold,” he said. “Foremost, it’s brings fiscal stability through diversification of revenues, which the UAE government has and will wisely spent on building a world class infrastructure and establishing a pro business environment. The introduction of five per cent VAT will have limited impact on inflationary expectations, and will bring macroeconomic dividends. Secondly, it will formalise the economy and reduce the shadow economy bringing

Some challenges were faced by business, especially from the SME sector, but now almost all businesses have coped with support from the FTA

Pugal T, Associate vice-president, Tally Solutions Private Limited

in transparency in company’s accounts and balance sheets. This will help create a favourable lending environment to SME’s.” Pugal T, associate vice president at Tally Solutions Private Limited, noted that the majority of businesses in the UAE have registered for VAT. “Some challenges were faced by business especially from the SME sector, but now, almost all businesses have coped with support from the FTA, advice from chartered accountants and software houses.”

“Confusion could be present for a very small percentile of business,” he added. “The FTA’s action indicates kindness from authorities to provide more time for those businesses who have not registered. There could be some delays and challenges for busineses, as this is being implemented for the first time, but business must comply with the VAT law by filing returns on time and in the proper way.