It’s been 120 days since the implementation of VAT in UAE and by now more than 275000 businesses have registered for VAT. The implementation being a novel one in UAE, the impact of it on the business sector is something that needs to be analysed.
The fact that almost 99 percent of the UAE companies have filed tax clearly indicates that UAE nationals have embraced the landmark implementation. According to Federal Tax Authority, few companies have failed to register, which can be intentional or unintentional. The FTA, in collaboration with the Department of Economic Development intends to send their analysts to unregistered companies to “help them register, if they are having technical issues.”
According to the estimates made by FTA in the previous year, around 350,000 companies should have registered for VAT by now. But 75, 000 companies failed to register, resulting in a breach of the new policy.
The VAT return process was indeed challenging for certain companies; ensuring accuracy of the information entered in the return was one of the major concerns. Even though people had to struggle in the initial phase, response levels to the tax system is quite satisfactory.
UAE had implemented VAT laws and regulations with effect from January 1, 2018, along with Kingdom of Saudi Arabia. The businesses registered under UAE VAT will be levied 5 percent tax.