Dubai has come out of its image as a tax-free country by implementing VAT – Value Added Tax at a 5% rate. It has invited new investors to bring another piece to closely work with. While for the other businesses it brings a great challenge to closely watch their financial standards.
The VAT is also called as the consumption tax. It means the tax is imposed on all the production levels until the final sale. But in the case of excise tax, it will be imposed on the manufacturers at the time of production process.
The difference between the VAT tax and the Excise tax is that goods like cigarettes, tobacco will be levied as the excise tax. They are imposed once either during the production process or when it is time for import. This tax often comes within the product price.
It is learned from the government that companies which have the annual revenues above DHS 375,000 should be registered for VAT tax.
But if any business with the annual revenue below DHS 375,000 and above DHS 187,000 have their choice of freedom to register it or not. The services like education and hospitals are exempted from the tax.
The companies may sure face some complications and challenges. It will also affect the workforce and the company depending on the complexity and size of the business. Hence it is important to estimate your business’s financial reality as early as possible.
To lighten the new obligation pressure, all the companies would need expert support to handle finances as per the law. With this associate support, it would be helpful for them to take care of the hassles and the extensive documents to fill the requirements of the VAT as per the government.
The business financials transactions must be customized little as to keep the reports and the records ready, for it will be asked anytime for verification. Failure to submission of any reports or records would result in severe penalties.
Dubai is getting ready for its big event– Dubai 2020 so as to present as an example of profitable business practices to the world. Keeping this in mind, an initial drill is a must, so that all the businesses are ready for as how the tax actually works and how will it implemented. It will help them by giving a clear picture of the tax system.
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