It’s been a month since VAT launch and all is well

Introduction of the latest tax system ensures long-term economic stability for our country

Just over a month ago, the UAE — along with Saudi Arabia — implemented the value added tax (VAT). Despite the concerns and seemingly endless number of questions surrounding it, VAT was introduced by the Federal Tax Authority (FTA) in a relatively smooth rollout in last month. The FTA should be complimented. It accomplished a nationwide implementation of an electronic-based tax system in a country that is largely unfamiliar with taxes. There were teething pains and for many companies there are still questions, but there were always going to be issues early on. A seismic shift of this proportion was never going to be simple or easy. Despite this, life has returned to normal and the country carries on.

Most importantly, it carries on with the financial support of the people. The citizens and residents of the UAE should also be complimented. They are the ones who carry most of the financial burden of VAT, and while it would be unfair to say anyone loves to pay their taxes, it is these people who are now supporting the UAE’s infrastructure with their contributions. The UAE now has a tax-supported government that does not really count on a single commodity for revenue. That kind of stability is crucial for any government.

It is the companies who now must be vigilant going forward. They must ensure that the taxes are properly paid and accounted for. They must monitor their own business to make sure they are in continual compliance with all regulations, as tax regulations can and will change — as in other countries. The government too must be vigilant, because any company that knowingly violates the tax rules must be held accountable.