- June 4, 2016
- Posted by: admin
- Category: News
To whom it will apply?
VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. Reliefs may be granted in the basic food products, health care and education.
VAT is likely to be introduced across the UAE on January 1 2018. The expected rate will be lowest across the world, which is likely to be 5%.
Some of the global VAT rates are;
VAT System and its Operation
Businesses will be responsible for carefully documenting their business income and costs and associated VAT charges. Registered businesses and traders will charge VAT to all of their customers at the prevailing rate at the time of sale or service. The VAT paid on goods / services that they buy from suppliers will be considered as input VAT which can be reduced from the VAT payable to the government. The net result is that tax receipts to government which reflect the ‘value added’ throughout the supply chain.
To explain how VAT works we have provided a simple, illustrative example below (based on a VAT rate of 5%):