11 Jun Brace for impact. VAT is coming!
The 1st January 2018 will see the new value added tax (VAT) implemented in the UAE. This will be the first time that VAT has been issued anywhere in the GCC, and there are bound to be a few early hiccups, especially for smaller businesses who manage their own accounts. At the moment we are still awaiting full details from the government, but there are a few things we do know.
– The VAT rate will be 5% and is added to every transaction within the supply chain.
– Companies with revenue over AED3.75 million will be required to register, account and charge VAT, so it’s time to start getting your accounts ready and in order!
– For companies with revenue over $100,000, registration will be mandatory and each business will need to account for VAT.
– For companies with revenue below $50,000, VAT registration is not required.
– Certain goods and services will be exempt from VAT, but that doesn’t mean you’re free from accounting obligations. You’ll have to be able to show how much your company earned in revenue and why an exemption should apply, if required.
VAT is causing concern for a lot of small businesses. For all companies, accurate and reliable accounting will now be an essential part of business. For those companies above the threshold, VAT will take a bite out of earnings. For those below the threshold, VAT will be included in purchases from vendors and it cannot be claimed back.
But it’s not all doom and gloom. VAT will bring a major improvement to UAE business methods: SMEs will now have to review their current accounts and keep accurate records. We all have that friend who does all of the accounting on Excel (or maybe you find yourself guilty of that as well). Though this can save some initial costs, all too often accounts are neglected and there’s no clear financial picture for business operations. Thanks to VAT, many smaller companies will now review their accounts in more detail, which will lead to more organised (and more profitable) businesses.
To help our clients get onboard with VAT, Vital has teamed up with our friends at Legends Account Services (LAS). LAS has been our preferred accounting services provider for quite awhile and their financial expertise has been essential to helping us grow. To help out fellow SMEs, Vital and Arshi from LAS will be hosting a talk at Emirates Golf Club on 15th June 2017 at 09:30 to guide businesses through the changes they will need to make to become VAT compliant. We’d love to see you there. Please contact us at email@example.com to get more details and confirm your place.