Vat in Abu Dhabi

VAT is an indirect imposed tax which is applicable to most goods and services and is commonly found in most parts of the world. Value added tax is charged at each step of the supply chain right from the production until the final sale. However, the majority of tax is borne by the end customer. A manufacturer needs to pay tax for each raw material that he purchases and he can later collect the account of tax from the consumer. The implementation of VAT will have an adverse impact on your business as every product you sell will be liable for the tax. Business owners pay the government a tax which is collected from the consumers. In the UAE businessmen and business, women can reclaim the value-added tax paid to the suppliers from the government through formal procedures. The net result of tax revenues received by the government is value added through all stages of the supply chain. VAT implementation will impact business like the sale of electronic items, car rental services, jewellery, clothes, food, water and electricity bill, fuel price, school transport, financial services and hotel rents. However, the implementation of value added tax will not impact education services, medical services, cost of medicines, surgical cost, public transport airline tickets and salaries.

In the UAE sectors will be viable to receive five percent tax for all goods and services. VAT implementation will also impact the logistics transportation cost, hotel services and online web related services. The government of the UAE has come up with a zero-rated VAT service which allows business to claim refunds from the government. Any form of goods or services which are subjected to zero-rated VAT service is free of taxation when exported to the Gulf co-operation council (GCC). However, goods and services which come under zero-rated VAT are taxable but under 0% VAT. This is because VAT registered businesses produce zero-rated services which have the right to claim their input detections. There are certain goods and services such as medical equipment, surgical equipment and education services which come under the exempted VAT category are free from all forms of taxation.

The implementation of VAT will have a major impact on the cost of living and the lower income class will find it difficult to cope with the taxation. VAT implementation will, however, increase the gross domestic produce (GDP) to a high level as it tends to increase the net revenue each year. The gulf corporation council of UAE exempts VAT for goods which are imported directly or indirectly. Some services which come under zero-rated VAT are international transport, air passenger transport, air seal or land means of transport, aircraft rescue vessels and investment in precious metals. VAT is also exempted from residential building sale, oil transport, gas service, healthcare service, the supply of land and supply of local passenger transport. VAT implementation can support the government of UAE by strengthening its economy and enhancing public services thereby attracting tourists and foreign businessmen for investment.

Declaring VAT in the UAE is a complex process as it involves VAT registration, VAT implementation on business, approval and filing for returns. Registering for value-added tax for your business can be a complicated tax, therefore, you need to get in touch with VAT consultants who guide you through the process of VAT registration. They follow four key steps for VAT registration which is project preparation, impact assessment, design and implementation and finally registering and testing. VAT consultants conduct seminars to make business owners aware of value added tax and its impact on your business. Some popular locations to get in touch with VAT consultants in Abu Dhabi are Khalifa Street, Corniche Road, Al-Saman tower, Sheikh Hamdan Bin Mohammed street and Madinat Zayed.