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VAT to introduce transparency, industry leaders say

by Rajiv Ravindran Pillai on Jan 8, 2018

By the time you read this, Value Added Tax (VAT) will have already come into effect in the UAE.

The Federal Tax Authority (FTA) had called on all UAE firms to take necessary measures to register for VAT, to avoid the risk of non-registration by 1 January, 2018, which would entail fines.

Businesses must register for VAT if their annual taxable supplies and imports exceed the mandatory registration threshold of AED375,000.

The failure of the taxable person conducting business to submit a registration application within the timeframe specified will entail an administrative penalty of AED20,000. The VAT registration form is available online on FTA’s portal and it should be completed by a person who is the authorised signatory of the business.

MEP Middle East spoke to several industry leaders over the course of a few months last year to find how what they thought about VAT and how prepared the industry is.

At the recent Big 5 tradeshow in Dubai, Abdulrahman A Khansaheb, the MD of Khansaheb Industries and director of Khansaheb Investment, said that there still remains some scope for clarity in the implementation of VAT.

Khansaheb said: “Not everything is crystal clear when it comes to the implementation of VAT. There are still some questions.”

He continued: “But I think it will need a few months for the authorities to clarify everything. We are updating our systems and procedures in order to incorporate the requirements of VAT. We also had our team attend workshops [on VAT]. We are internally keeping everybody up to speed on this.”

Khansaheb did admit though that VAT will be positive in the long run for the GCC. He said: “I think VAT will be good for the market as it will introduce transparency. Everything will be formalised and properly documented. It will be good in the long term.”

A survey of the Gulf's finance professionals found that real estate investments would become costlier following the implementation of VAT.

Results of the GCC CFA Societies survey, which covered Chartered Financial Analyst (CFA) professionals in the UAE, Bahrain, and Kuwait, revealed that 87% of the surveyed respondents believe that some – or all – of the additional expenses incurred by real estate firms due to VAT would be passed on to investors.