Steps to be taken while implementing VAT in the UAE:
In the UAE, VAT is expected to be implemented from 1st January 2018. The proposed VAT rate is 5%. VAT is one of the most common types of consumption tax found around the world. Value Added Tax is an indirect tax that is collected incrementally, based on the value added, at each stage of production or distribution/sales. Now, as per the latest study, more than 50% of the companies are ready to implement VAT in the UAE. But the question is among the SMEs how many are ready to implement VAT in their businesses.
The procedure to implement VAT effectively into the business operation of a company are the following:
- Understanding the UAE VAT law and its provisions applicable to the industry the company operates.
- Proper study on the business of the company including the transactions process and flow.
- Review the existing contracts with customers, suppliers and other parties and learn the impact on the business.
- Provide VAT Awareness/training to the employees.
- Understand the impact of VAT in business.
- Apply for registration for VAT once the online portal is active.
- Educate the customers that the VAT is not a cost to the business.
- Identify the issues and to resolve them.
- Develop an Implementation plan.
- Provide guidance to the employees and software team.
- Review the effects in accounting ledgers and to reconcile for differences.
- Make a trial run and to determine VAT payable or refund.
Emirates Chartered Accountants Group has a separate wing for handling Taxation including VAT in the UAE. We support the client by conducting various VAT awareness programs/seminars/workshops, advising customers on the impact of VAT on their business, supporting the customers for implementing VAT in their business, registering the businesses for VAT and helping the business for filing their VAT returns.