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VAT will remain the main source of revenue

VAT will remain the main source of revenue

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.

From January 2018, the UAE introduced a 5% VAT on goods and services as part of a wider GCC framework. 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 report begins by reviewing the background to the introduction of VAT, including the socio-economic context, policy options, and the strategic activities necessary 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.).

Copyright © 2022 Khaleej Times. all rights reserved. Supplied by SyndiGate Media Inc. (Syndicate Information).

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