It is not a new thing for anyone to hear that UAE has become a business hub for the people and companies around the world. Because of all the facilities and business opportunities available for the people over there. UAE is the place where every resource is available for a successful business to get started and this environment supportive of all the business has made UAE the best place for any company to have headquarters in. But the question here is, that if UAE is providing all these facilities. Where does all this money being spent of the welfare came from? This is where we will start thinking about the VAT or value-added taxation.

Investment in UAE

Since a very long time all the money and revenue of UAE depended upon oil reserves of the country. Although it is a very expensive resource to have but at the same time it was not a reliable one for long term development. That is why UAE brought in foreign investment in the country to help their economy grow and this ended up is a success story that we see today in the form of a successful country in the middle of deserts.

But it is not enough for all the extraordinary buildings, infrastructures etc. to depend totally on the foreign investment. The government has already reduced taxed to invite more investors in the country. At this point the government has to come up with an idea that is not only able to generate revenue for the government. But also keep the foreign investors motivated to keep on investing in UAE.

VAT came out as one of the best ways to get both of these benefits. Suppose that you wish to have a Dubai mainland company setup, what would you want the government to do? Would you allow them to take more taxes and still be in the country? That is now how people work, especially business folk. That is why the idea of VAT was introduced. VAT or value added tax is not paid by the business owner himself but by the people who are the last customers of that product or the users of the product. This makes it lesser of a liability on the businesses working in UAE.

VAT effects

The next question that would be pondering in your mind is what the effects of this VAT on the workings of the businesses are. Well, this is a very crude question but there are plenty of answers to that. This is quite obvious that this new change is going to be a liability on the workings of the business. This would happen mainly in two ways. Firstly the prices of the products would have to be increased since VAT would be added in it as well. On the other hand the responsibility of collecting the taxes and submitting them to the government would also be an extra liability. That is why VAT does not sound that much good to a person who is already running a successful business in UAE.

Now think about this, why would you take up all this responsibility? The answer is that all these taxes are being collected to make sure that you get all the best resources for your business to work effectively. This is not rocket science to not get into the mind of common folk. That is why you should be willing to do it because eventually, the increase in your sales would happen because of the developmental projects the government would bring in by using this VAT money. The benefits are so much that you should be willing to make some effort. But what is that effort demand of you?

VAT Procedure

Since it is difficult for many people to understand the procedure of VATs. There are many UAE business consultants who can help you in understanding the process. It is very important for the company to have its finances audited and calculated in a very vigilant way. You do not want to pay any money from your own pocket just because you could not manage and note the financial workings of your company. You should have good staff who will keep a check on all the sales and purchases of the company. So that at the end of the year when you have to pay taxes you do not face any loss.

Business Importance

On the other hand it is very important for any business to understand that every policy has a lot of thinking put into it by the ones who make it. VAT is not only for getting money from the people to help the governmental projects. This technique use for quite some time to prevent the people from tax evasion. When the governmental authorities have a complete understanding of how your business works. And all the sales and purchases are in their hand. You would have to face a lot of trouble if you want to evade any taxes. It is a two in one policy that not only collects money. But also brings in a transparent system for the businesses running in that area.

This is a very obvious question that might be popping up in your mind. What if your business is relatively new and you do not earn that much profit out of it. You won’t be able to make your products very expensive and VAT could have a negative impact on the sales of a newer company. This is not something that the government has ignored. That is why VATs implement only on the companies who have the assets whose value is equal to a set amount. This makes the whole system a huge success.

VATs have been implemented in UAE from 1st January, 2018. It has been a success since its implementation. That rate of VAT is kept as low as 5% which does not make any huge difference in the price of the product at all. This is one on the strategies that makes UAE the best place to start up business in.

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