VAT will streamline businesses
Businesses need to acquaint themselves with the new tax system and the new way of functioning in the business environment, experts at the ‘VAT Clinic’ in Sharjah said.
Businesses across the UAE need to acquaint themselves with the new tax system as well as the new way of functioning in the business environment, experts at the ‘VAT Clinic’ in Sharjah said.
Speaking about the challenges that businesses across the UAE are still facing after the implementation of the value-added tax (VAT), Sudesh Aggarwal, chairman of the India Trade Centre and Giant Group, said consumers will find it easier to adapt to VAT as compared to businesses.
“Challenges remain for businesses seeking to function in the environment right now, but the government and the Federal Tax Authority are fully aware of those challenges and they are working with businesses to resolve them,” he said. “A change is happening in the economy and that is where we need to adapt as businesses. One of the positives in this scenario is that business processes will be streamlined and there will be greater transparency in the environment.”
In his opening address, Mohammed Juma Al Musharrakh, director of Sharjah FDI, said VAT is an important step for the UAE. “With VAT coming in at the start of 2018, the government has a new role in clarifying the implications of VAT on the private sector. We are working with the Institute of Chartered Accountants of India — UAE (Dubai) Chapter at events such as these so that the private sector has a clear idea of what is happening and how they can be prepared. We always want businesses to know the advantages of them imposing VAT on their accounts and systems and how it will benefit the UAE economy.”
One area that experts focused on during the seminar was designated zones and how VAT would affect them.
“A designated zone specified by a decision of the Cabinet shall be treated as being outside the state,” explained CA Rajiv Hira, director of business advisory at KPI.
He clarified that the transfer of goods between designated zones shall not be subject to tax where the goods, or part thereof, are not released, and are not in any way used or altered during the transfer between the designated zones; where the transfer is undertaken in accordance with the rules for customs suspension according to GCC Common Customs Law; and the owner has to give a financial guarantee for the payment of tax.
Asked how a company that has turnover of less than Dh187,500 should deal with the Customs authorities insisting on a TRN, when clearing their goods, experts said as per the guidelines provided by Customs and the FTA, the non-registrant will have to settle the VAT on goods before they may be released.
“After receiving the payments and once the Customs confirms your importer’s registration with the FTA, they will clear the goods. Just to add on this topic, the FTA and Customs systems are now integrated and it is easy for customs to verify the importer’s registration,” Hira said.
When it comes to exports and how rates will apply at designated zones, CA Gopu Rama Naidu, managing partner at KGRN Accounting Associates, revealed that as Saif zone is a designated zone, for the purpose of goods, it will be considered as outside the state. “When a company in Saif zone will sell the goods to the registered mainland company, at that time the mainland company will consider it as an import of goods and will do RCM on the same.”
Brian Conn, VAT partner at BDO, UAE, said that it’s important for the UAE economy that international transport is zero rated to help facilitate international trade.
The first thing the consumer should do is to check for the retailer’s TRN and VAT amount on the invoice CA Naveen Sharma, Chairman of ICAI (Dubai chapter)