The UAE is likely to implement Value-Added-Tax (VAT) in 2018. Post the introduction and implementation, it is expected to generate a revenue between AED 10 billion and 12 billion in the first year. The tax will not be applicable to sectors including education, healthcare, social services and 94 food items. Inclusion of financial services under VAT is yet to be decided by GCC countries.
The Ministry of Finance said VAT is expected to be implemented in 2018 ranging between 3% and 5%. GCC countries have not finalized the implementation policy yet. However, GCC leaders have approved the tentative plan for tax implementation. GCC countries have given consent on vital issues for the implementation of VAT and are now closer to introduce direct taxation for the first time against the backdrop of declining oil prices.
What should businesses in UAE do?
Implementation of VAT in UAE is a part of nation building process which is going to benefit the economy and improve the financial health in the long run. Businesses need to get themselves organized in order to benefit from the growth of the economy instead of complaining about it.