who should worry most about vat in the uae
Wednesday 30 July 2025
Last Updated : GMT 09:40:38
Themuslimchronicle, themuslimchronicle

Who should worry most about VAT in the UAE?

Themuslimchronicle, themuslimchronicle

Themuslimchronicle, themuslimchronicleWho should worry most about VAT in the UAE?

A bookstore in Munich. A lot of the goods and services consumed in the UAE
Dubai - Arab Today

By January 1, 2018, it is expected that value added tax (VAT) will be applied at a rate of 5 per cent on most goods and services in the UAE and wider GCC region.
The GCC governments will face a combined fiscal deficit of about US$350 billion over the next five years, according to the IMF, which bases its estimate on an oil price of $56 per barrel. This means that unless a government finds non-oil revenue to plug its deficit, it will be forced to borrow. VAT is an important source of non-oil revenue as it can bring in at least 1.5 per cent of GDP, or one-fourth of deficit.
While VAT is an indirect tax applied at every stage of the supply chain, the end effect of the levy is on consumers who finally pay the tax while buying a good or service. There are four important stakeholders in this VAT episode – governments (beneficiary), businesses (tax collectors), consumers (taxpayers) and consultants (VAT experts). So the question is who will be affected the most? 
First, let us look at the government that will receive this VAT. Obviously being a beneficiary means that it need not worry about VAT. In fact it should be celebrating. However, as tax administrator, it may have to worry to see that it collects all the VAT that is collectible. It needs to create the necessary infrastructure and manpower to supervise and collect the VAT, and make sure that this does not dent the GCC’s image of a tax-free haven.
Second, consider the businesses that are supposed to collect the VAT and deposit it with the government. They should be the most worried since they will be the ones that have to perform an extra function, which could result in additional hiring and costs, although they do not receive a dir­ect economic incentive. If it is a question of simply collecting and remitting, then it may not be a big issue. However, being in the middle brings several complexities.
Most of the goods and ser­vices consumed in the UAE are imported, mostly from Eur­ope and Asia, and in some cases from other GCC countries. Countries can either exempt certain goods and services (VAT exempt) or can have a zero rate on some products. While exempt categories can remain exempt, zero-rated products can be increased in future. Here comes the problem. What if something VAT exempt in one country need not be VAT exempt in the GCC, and vice versa? Also, what is set as 0 per cent VAT in a recipient country need not be 0 per cent in UAE, and vice versa. So if a good is taxed in the source country and VAT-exempt in the UAE, then businesses in the middle may be stuck in that they may not be able to claim a VAT refund.
For example, goods classified as foodstuffs have a VAT range of 7 to 19 per cent in Germany, 4 to 10 per cent in Spain, and 0 to 20 per cent in the UK.
Meanwhile, for books the VAT is a flat 7 per cent in Germany, 4 to 21 per cent in Spain, and 0 per cent in the UK.
In these cases, companies will have to take a call on either absorbing the VAT (which will reduce the margin) or passing it on to consumers (which will reduce the market share). Such a squeeze can also affect working capital and cash flows. In summary, cost of doing business will go up for companies.

Source: The National

themuslimchronicle
themuslimchronicle

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

who should worry most about vat in the uae who should worry most about vat in the uae

 



Themuslimchronicle, themuslimchronicle

GMT 12:29 2016 Friday ,30 December

Burberry to launch Liquid Lip Velvet

GMT 09:55 2018 Tuesday ,23 January

Washington chooses Syria as its battleground

GMT 10:50 2017 Wednesday ,12 July

UAE para-athlete dies in training accident

GMT 15:54 2017 Friday ,28 July

Putin signs law to keep Russian base in Syria

GMT 08:03 2017 Thursday ,06 July

Qatar Airways says flights now exempt

GMT 00:44 2012 Wednesday ,09 May

Larger-than-life leader

GMT 10:00 2017 Tuesday ,04 April

S&P cuts South Africa's credit rating to 'junk'

GMT 09:02 2017 Wednesday ,15 March

Test of maturity for Kohli and Smith in Ranchi

GMT 15:13 2017 Thursday ,31 August

Jordan condemns Daesh's killing of 11 Libyans

GMT 16:23 2017 Friday ,03 November

UN’s support of Houthi militias is unacceptable

GMT 07:18 2018 Friday ,19 January

IMF urges Germany to loosen purse strings

GMT 19:42 2017 Monday ,06 March

Turkey's constitutional referendum heightens

GMT 01:24 2012 Friday ,11 May

Power in Political Islam

GMT 14:11 2017 Monday ,24 April

BMW reveals i8 Protonic special edition

GMT 23:26 2018 Thursday ,04 January

US, S. Korea agree to suspend military drills

GMT 09:10 2018 Wednesday ,03 January

Japan emperor greets New Year well-wishers

GMT 09:37 2016 Tuesday ,27 December

Kuwait jails Filipina for joining Daesh jihadists

GMT 10:12 2017 Thursday ,31 August

France seeks 600 mn in taxes from Microsoft: report

GMT 13:16 2017 Thursday ,09 March

Israeli law banning prayer call rejected
Themuslimchronicle, themuslimchronicle
Themuslimchronicle, themuslimchronicle
 
 Themuslimchronicle Facebook,themuslimchronicle facebook  Themuslimchronicle Twitter,themuslimchronicle twitter Themuslimchronicle Rss,themuslimchronicle rss  Themuslimchronicle Youtube,themuslimchronicle youtube  Themuslimchronicle Youtube,themuslimchronicle youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2025 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2025 ©

muslimchronicle muslimchronicle muslimchronicle muslimchronicle
themuslimchronicle themuslimchronicle themuslimchronicle
themuslimchronicle
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
themuslimchronicle, themuslimchronicle, themuslimchronicle