VAT (Value Added Tax) is an indirect tax. Sometimes VAT is also mentioned to as a type of general consumption tax. In a country which has a VAT, it is levied on most supplies of goods and services that are bought and sold. VAT is one of the most common types of consumption tax found around the world. More than 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore and Malaysia. At every step of ‘supply chain’ VAT is charged. Ultimately consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government. The tax paid by a business to the government is that it collects from the customers while it may also obtain a refund from the government on tax that it has paid to its dealers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.
OBM Overview: Our team of VAT experts are hands on and can take care of your VAT requirements on time. We will guide you through all stages right from Pre assessment and registration to filing returns and collection refunds.
Our Role: OBM offers to be your partner dealing with the complexities of preparing for VAT in a comprehensive manner. Our experts will evaluate your accounting process, technology and people to ensure you are ready in every way. Our team provided you instant scalability and help you maintain a streamlined process to ensure success.
TAX is the source through which governments’ raises income for public services. The government uses income collected from taxation paying for public schools and universities, defense, hospitals, etc.
There are many different types of taxes:
A direct tax is collected by government from the person on whom it is imposed (e.g., income tax, corporate tax).
An indirect tax is collected for government by an intermediate (e.g. a retail store) from the person who eventually pays the tax (e.g., VAT, Sales Tax).
There are different public services like hospitals, roads, police services, parks, etc. provided by The UAE Federal and Emirate governments to the residents and citizens. The payment for all the public services is generated from the government budgets. By implementing VAT the country will get a new source of income which will fund the continuous delivery of high quality public services in the future. This will also pave the way to help goverment reduce dependency on oil and other hydrocarbons for revenue and move towards its vision.
OBM Overview: As a part of welcoming the new system OBM plays a key role in serving the country and development in various government initiatives.
Our Role: Rebinding the trust of the client (business) and government.
There is no need to register for VAT by all businesses. The businesses that meet minimum annual turnover will have to register with government for VAT. It means that the small businesses that don’t meet the criteria will not have to register for VAT. This decision will protect small businesses from wide reporting and documentation system as VAT requires. The businesses that only provide goods and services which are not subject to VAT also not need to register.But all the businesses in UAE should record financial transactions and make sure that their all financial records are accurate and up to date. The organizations or businesses that think they don’t need to register with the government for VAT should maintain their financial records in any occasion, in case the government needs to establish whether they should be registered.The important point is that the government has not yet concluded the particular conditions like minimum annual turnover, etc. which will help to distinguish the businesses that do not need to register with the government for VAT.
OBM Overview: OBM helps the accounting and reporting for any business concern irrespective of the size. The financial transaction and relates are safe with OBM and serves as the per the Government rules and regulations.
Our Role: Safeguard the client with right decision on the right time. Functioning as an advisor for any queries related to the subject.
VAT-registered businesses generally:
The taxable goods or services which they supply must charge VAT on it.
They can reclaim if they have paid VAT on business-related goods or services
Maintain a range of business records which will let the government to check that they have got things right
If your business is registered for VAT you must report the VAT amount charged for you and the amount you paid to government on a regular basis. This will be an official submission and it is probable that the reporting will be made online. If the amount of VAT charged is more than you have paid then you have to pay the difference to the government. And if the amount you paid is more than you have charged then you can reclaim the difference.
OBM Overview: We deal with confidential data with updated financial position reporting to the client. All the government related and other docs will be safe with us.
Our Role: The scope of OBM is for daily basis reporting, VAT calculation and online payment within cut off time with minimal escalation. We assure the proper recording of all transactions and safety.
The businesses will have the time to get ready before VAT will come into effect. Throughout that time the businesses should meet necessities to fulfill their tax obligations. The businesses can begin now so that they will be prepared later. The businesses need to make few changes in their core operations book-keeping and financial management, human resources, technology, etc. to comply totally with VAT. It is important that businesses try to understand the implications of VAT now and once the legislation is issued make every effort to align their business model to government reporting and compliance requirements. The final responsibility and accountability to comply with law is on the business.
OBM Overview: Be prepared for welcoming Tax. We assist all types of businesses to meet requirements and fulfill their tax obligations.
Our Role: OBM act as financial advisors, accountants, tax advisors etc.
Registration for VAT is expected to be made available to businesses that meet the requirements criteria three months before the launch of VAT. Businesses will be able to register online using eServices.
OBM Overview: Registration for any licenses are essential part for any business.
Our Role: We assist all clients for speedy procedures and eservices.
The VAT return submission is expected on a regular basis for registered businesses. The default period for filing VAT returns for the majority of businesses is expected as three months. The return can be filed through online eServices.
OBM Overview: VAT Returns on daily basis. Proper records submission process.
Our Role: Filing returns and online e services.
The businesses will need to maintain the records which will allow the authorities to identify the details regarding the business activities and to review transactions. The details regarding the documents which will be required and the time period for maintaining them will be informed by the authorities.
OBM Overview: The secured data and records with OBM.
Our Role: Proper channel of communication and recordings by well-trained staffs.
The government will provide information and education to businesses to make them aware of VAT and to help them make the transition. The government will not pay for businesses to purchase new technologies or hire tax specialists and accountants. That is the responsibility of each business. The government will provide guidance and information to support you and will give businesses time to prepare.
OBM Overview: Being intermediary for the business and the government and guide the business on proper route.
Our Role: Being active in all support related to VAT and Tax matters.
will be introduced in the UAE, along with other Gulf countries, from the beginning of 2018 at 5 per cent.
Companies in the UAE that report annual revenues of over Dh 3.75 million will be obliged to be registered under the GCC VAT system, the Undersecretary of the UAE Ministry of Finance, Younis Al Khoury, said. Al Khoury also confirmed that companies whose revenues fall between Dh1.87 million and Dh3.75 million will have the option to register for VAT during the first phase of the VAT implementation. He also mentioned that it will eventually become obligatory for all companies to be registered under the system, when it is rolled out in the second phase, regardless of the reported revenues.
The UAE government has already announced that 100 food items, health, education, bicycles, and social services would be exempted from VAT.
Electronics, smart phones, cars, jewellery, watches, eating out, and entertainment will fall under the taxed category. GCC countries are also expected to introduce excise duties on certain beverages that are deemed to be harmful to health, including those with high sugar content.
Where you are engaged in the supply of goods or services that are subject to VAT (including at the zero rate) you will be entitled to reclaim VAT you incur on costs. Where you are engaged in activities that are exempt from VAT and you cannot reclaim VAT incurred on costs, VAT will be a cost to your business (as suppliers will charge VAT that you cannot reclaim).
Our analysis suggests that it will help the country strengthen its economy by diversifying revenues away from oil and will allow us to fund many public services. This is a sign of a maturing economy.
No. There will be a number of items in your shopping cart that will be VAT-exempt. Younis Al Khouri, undersecretary at the Ministry of Finance, has said that GCC states had already agreed to exempt about 94 food products, as well as the healthcare and education sectors. That means your grocery, hospital or school bills will most likely remain unchanged, unless there are price hikes. A new law, however, has yet to be released to specify which items are non-taxable.
Since the VAT law is not out yet, there is no definitive answer to this. But judging by the VAT implementation in other countries, there is a likelihood that the price of airfares won’t go up because of VAT. “We will have to wait and see, but if we look at examples in other countries, for instance in the UK as well as in Singapore (where VAT is called GST), passenger transport carries VAT at zero percent. So, it is expected that air tickets in the UAE may be carrying similar VAT rate of zero percent,” said Pardasani.
The cost of living will likely go up slightly for a lot of people, but this will all depend on the individual’s buying preferences and lifestyle. If you keep on taking home things that are taxable and maintain an expensive lifestyle, expect your outgoings to increase. “If you ask me, I don’t think 5 per cent will break the bank,” said Pardasani, when asked whether VAT will make dining at restaurants costlier. “If one is to spend mainly on items which are not attracted by VAT, then the cost of living of the individual is unlikely to have any significant increase,” according to the Emirates Chartered Accountants Group.
Businesses are encouraged to implement the new tax system, but the Ministry of Finance said that the government is currently in the process of defining the exact fees and penalties for non-compliance.
If the initial date for the VAT roll-out is followed, businesses can probably start registering for VAT from 1st October 2017. As announced recently, the registration will be open three months before the go-live date. Companies will have the option to register online.
For most businesses, VAT returns should be filed every three months. Filing of returns can also be done online using the government’s eServices.
Hiring new staff that will enable businesses prepare for and implement the new tax policy should be done at this point in time. “Companies should have started to think about the additional resources they would need to ensure VAT compliance. Depending on how tedious / frequent the process is, companies would need resources based on the complexity of their operations. But one thing to bear in mind is that VAT is not only a finance issue,” said Pardasani. “It flows through all operational departments of the company. This is because wherever a company acquires products or services, it may pay VAT and it would need to capture all the documentation relating to VAT paid, in order to claim refunds.”