Value Added Tax (VAT) will continue to be the main revenue-generating tax in the UAE in the coming years, according to a report published by WTS Dhruva Consultants on the occasion of VAT’s fifth anniversary.
According to media reports, since its implementation in 2018 to October 2021, the total value-added tax revenue distributed in the UAE at the state level has exceeded 95.4 billion dirhams (26 billion US dollars).
WTS Dhruva reports that the possible implementation of e-invoicing and the increase in VAT rates will further strengthen the need for businesses to ensure their VAT affairs are in order.
The introduction of VAT five years ago was a revolutionary development for the UAE. The tax, which imposes a flat rate of 5% on most goods and services sold locally, affects every aspect of private and business life, requiring a paradigm shift in the way businesses and government organizations conduct their activities.
“We have passed the five-year mark since the introduction of VAT and it is fair to conclude that the tax has been a success and is a true testament to the UAE’s ability to adapt to the new economic realities,” said Nimish Goel. WTS Partner at Dhruva Consultants.
The WTS Dhruva report takes us through the journey of VAT since its introduction in 2018.
The report begins by reviewing the background to the introduction of VAT, including the socioeconomic context, policy options, and the strategic activities that must be undertaken for a successful VAT introduction.
As the tax system does not stand still, the report goes on to discuss legislative and procedural developments in relation to VAT over the past five years – importantly, this includes recent changes to penalties, voluntary disclosure and statute of limitations regulations which now make it voluntary for businesses to It is financially more attractive to disclose errors than to have the FTA discover errors during tax audits.
To provide practical insights to the business community, the report outlines the ongoing challenges faced by businesses across 13 different industries (real estate, retail, logistics, etc.). In addition, a number of senior industry finance and tax leaders contributed to the report by writing about their own experience implementing and managing VAT in their organisations – “this will undoubtedly be helpful to other in-house professionals working in similar roles and familiarity,” said Vlad Skibunov, associate partner at WTS Dhruva Consultants.
The report concludes with forecasts for likely tax developments in the coming years. Among other things, tax technology will be the focus of the tax function in the future. — trade arab news agency