A levy on the nominal value on supply of qualifying goods and services in the country. The mechanism of VAT is based on a system of input and output where the ultimate charge is passed on to the final consumer of the good or service. The standard VAT rate in the UAE is set at 5%.
VAT will have implications for an organisation’s business functions and supply-chain. Well prepared organisations will be able to make informed decisions on how to deal with VAT and whether it would be profitable to absorb VAT or pass it on.
Preparation for and compliance to UAE VAT is an organisation wide exercise.
Each functional department must understand how it will be affected by UAE VAT and take the necessary steps to be prepared.
Ideally, every organisation must appoint an individual or a team who will be responsible for the implementation of UAE VAT and ensure that up to date information is available and disseminated to the relevant personnel.
For instance, updates to the format of tax invoices, modified reporting parameters such as frequency and information to be reported, supply-chain review to ensure no leakage of recoverable input tax; the sum of these and many more facets, if addressed well, ensure that an organisation is ready for UAE VAT.
At FACT, we assist SMEs to plan and prepare for VAT compliance, while considering financial and operational business implications.