VAT is an indirect tax charged at each stage of economic activity throughout the supply chain. VAT would be applicable on majority of the business transactions with some relief or exemption.
A significant milestone in the GCC was achieved when UAE along with Saudi Arabia, Bahrain, Qatar, Kuwait, and Oman announced the adoption of indirect tax system, namely VAT (Value Added Tax).
“Majority of revenues for Governments in the GCC region is from the Oil & Gas sector. Introduction of VAT is expected to reduce the dependency on the revenues from Oil and Gas sector and increase the availability of funds for people’s welfare and infrastructure in the region”
The GCC countries under the GCC VAT Agreement have aiming to adopt 5% VAT from 1st January, 2018 for countries that are VAT prepared and 1st January 2019 for GCC countries that are not VAT prepared.
The VAT is the largest-ever tax reform in the fiscal history of UAE. It charts a new course for indirect tax system in UAE. UAE declared the adoption of VAT from 1st January 2018.
With less than four months to go before businesses in the GCC are expected to start accounting for VAT, businesses should be well on the way to being ready. The introduction of VAT is more than just financial issue and businesses need to understand the commercial implications of VAT which include the potential impact on profit margins and cash flow as well as additional administrative requirements and costs.
Preparation for the changes required is essential and time is quickly running out. Businesses should be looking at:
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018