United Arab Emirates on the process to adopt VAT by Jan 1st 2018.AdvicePRO
Specifically, Mr. Obaid Humaid Al Tayer, the United Arab Emirates Minister of State for Financial Affairs has declared that his nation will adopt VAT at a 5% rate on January 1st, 2018.
Al Tayer has recently participated in a press conference in Dubai on 24 of February with the Managing Director of IMF, Christine Lagarde. A general VAT rate of 5% is estimated to be adopted, although there will most likely be some exceptions in the sensitive sectors of healthcare and education.
United Arab Emirates are expected to adopt VAT on or by January 1st, 2018 and other Gulf Cooperation Member States are planning to adopt it in a similar manner by January 2019. The country members of GCC are already participating in plans for the approval of the expected common VAT regime.
This joint VAT regime will set the framework for the adoption of a public VAT program by each of the member countries of GCC. There might me some obstacles to be tackled first prior its adoption, but VAT is expected to assist states in the achievement of long-term plans for financial heterogeneity away from petrol while at the same time being capable of achieving the implementation of socio-economic plans.
The specific parameters of the VAT system that need to be addressed on a common basis and nation-wide legislation have yet to be determined. Our history of perceiving other markets has shown that the setting of clear and concise legislations and effective governing resources are essential for a successful VAT introduction and execution.
Companies in UAE and GCC should start making plans to determine the way these new changes would affect their business in order to secure an easy transition. Companies will have to adjust to these new changes by assessing the effect of VAT in their business processes and some basic aspects to consider include:
-Determining the capabilities of existing programs
-Setting an effective VAT adoption strategy
-Determining the contracts that need a VAT adjustment
-Assessing business to business transactions
-Implementing training and knowledge programs
Consumer habits are also expected to be affected by an eventual VAT adoption and this is a key parameter that companies must examine to make a successful adjustment and set their strategic plans.