5 Business Considerations for 2018 VAT Laws
On January 1, 2018, a Value Added Tax (VAT) of 5% will be added to consumer goods in countries that are a part of the Gulf Cooperation Council (GCC). In the UAE this tax is expected to increase revenue for public services and decrease the country's dependence on funds from oil and other hydrocarbons.
According to Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance, the first step businesses need to take to comply with the new tax is to create an account online via the e-services section of the Federal Tax Authority's (FTA) website. They will then need to register to receive a tax identification number. Sheikh Hamdan has assured businesses that he and the FTA have worked together to create user-friendly digital systems to simplify the application process and help companies avoid fines for non-compliance.
Businesses should be aware that although implementation begins in January, full VAT compliance may be a lengthy process. Below are 5 responsibilities to consider before VAT becomes official next month:
- Begin now consulting with government and tax professionals to ensure a complete understanding of how this new legislation affects their business, and what procedural changes are the highest priorities.
- Develop and polish record keeping protocols to ensure business income, costs, and associated VAT charges are accurately recorded.
- Train employees on new responsibilities and expectations in light of VAT
- Purchase and install new technologies necessary for maintaining or improving production efficiency.
- Account for the new tax and vendor response to the new tax in all budget decisions.
For more help understanding how VAT will affect your business and what you can do to be tax compliant, contact the professionals at Legends Accounting today.