When the concept of VAT was prevailing all around the world, tax in UAE still had no fixed layout due to the option of the free zones. On realising that the implementation of VAT would enhance the brand value of a business and would also be an additional source of revenue for the government, the GCC countries agreed to enter into an agreement for the proper implementation of VAT. The Ministry of Finance, UAE have implemented VAT from 1st Jan 2018 and a tax rate of 5% was decided to be charged. The accounting standards followed in UAE is defined by the Federal Tax Authority, UAE also known as FTA. This decision of implementing VAT in UAE 2018 was a bold step by the government.
The impact of VAT in the UAE was huge and the taxation in UAE took a new turn as there was exemption on corporate tax as well as the income tax in UAE according to UAE tax law. The implementation of VAT also provided the government with a different source of revenue for the economy. VAT was also a helpful change as it helped the UAE government to shift its focus from the revenue from oil and other hydrocarbon-based sectors. The implications of UAE VAT 2018 can be huge for you and your business. Read ahead to understand the benefits of Vat for your business.