The VAT has made its debut in Dubai in 2018. However, considering that it has recently been introduced in the business world, there are a lot of people out there who have no idea whatsoever about it. To clear things out, given below is a bit of information that will surely help you out:
What is VAT?
Also known as ‘Value Added Tax’, the VAT is another means of helping the government raise revenues. If truth be told, it has been estimated by financial experts that the implication of VAT will help the UAE generate over Dh12 billion in added revenues just in the first year. The tax has particularly been implemented as a means of diversifying the revenues received by the government of UAE. At the moment, the VAT is being charged at about 5% and if you are eligible to register in the program, then you should consider hiring a VAT consultant in Dubai.
How does the VAT work?
Just so you know, the VAT is applicable over every company in the UAE that reports more than Dh 3.75 million on a yearly basis. It is necessary for all such companies to the registered under the GCC VAT system. Apart from that, companies that report an annual revenue of between Dh 1.87 million and Dh 3.75 million also have the option to register for the VAT program during the initial stages of its implementation. However, it is expected that with the passage of time, it will be obligatory for just about every company out there to be a part of the system, no matter the revenues they report on a yearly basis.
There are a number of ways in which the UAE will remain tax-free even after the implication of the VAT. For instance, there are no taxes applicable on salaries received by employees in the country. A tax-free environment is also made available to businesses in the free zones of the country as a means of bringing in foreign investments. Apart from that, as per the government of the UAE, there are over a hundred food items and those associated with health, social services, bicycles and education that are to be considered exempt from the VAT program. On the other hand, when you get more info, you will learn that the taxed category will include things like smart phones, electronics, cars, eating out, watches, jewelry and entertainment. Excise duty will also be applied on beverages that are largely considered as being harmful to health.