Value Added Tax commonly known as VAT is a type of general consumption tax that is collected additionally, based on the value added, at each stage of production and is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer.V
It is confirmed that the UAE will start implementing a Value Added Tax (VAT) rate of five per cent from January 1 2018. This has resulted in a lot of anxiety and fears in the minds of general public as well as business owners. People have different questions and they seek to get clarifications on the same.
It is believed that running a business in the UAE is easier than anywhere else. But will it remain the sameeven after the introduction of VAT is a question to be asked.
Well, no doubt VAT has many advantages to the business.
Easing Business Dealings:
Many suppliers and organisations are reluctant to do business with companies and SMEs that are not VAT registered. Companies may be unwilling to deal with you if you are unable to produce a proper VAT. The advantage of voluntary VAT registration is that you will be issued with a VAT registration number and can more easily deal with external businesses.
Another advantage of voluntary VAT registration is the ability to claim VAT on goods and services purchased for your business. If you are selling one sort of VAT Rated product (e.g. zero rated) while buying another (e.g. standard rated) you may actually receive money back in terms of VAT refunds.
Boosting Business Profile:
It is believed that starting out a small business or a new limited company can be tough to compete against the big players in the market. So voluntarily registering your business for VAT might give the impression that your business is bigger and more successful than it actually is.
VAT not only reduces risk of dealing with unauthorized dealer but also helps you to be cautious about black listed dealers.