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UAE Freezones Biz News Updates
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Smooth transition toward VAT compliance a must for UAE companies
Third edition of KT 'VAT Clinic' sees major turnout
As the deadline for the implementation of value added tax (VAT) draws
closer, residents across the UAE are doing their best to come to terms about
how the tax will be impacting their daily lives.
Experts from the Institute of Chartered Accountants of India (ICAI) Dubai
Chapter sought to clarify some of the misconceptions that non-resident
Indians (NRIs) have regarding the tax during the third edition of the 'VAT
Clinic' at the Indian Consulate in Dubai.
The VAT Clinic is an informative series organised by Khaleej Times, the
UAE's first English newspaper, in partnership with the ICAI Dubai Chapter
and supported by Qadi Accountants, a boutique advisory firm that provides
services ranging from audit, accounting, advisory and taxation.
Experts during the third edition of the event included Manu Nair, CEO of
Emirates Chartered Accountants Group; Sangeetha Nahar, senior manager of
finance at Dubai Properties Group; Dilip Jain, VAT lead at the ICAI VAT
Faculty; and Girish Chand, director of MCA Management Consultants.
Vinay Kamat, editor of Khaleej Times, said: "I would like to extend my
thanks to the team at ICAI for their efforts and help in putting the VAT
Clinic series together. We are grateful for the support that they have shown
in helping us highlight the impact of VAT."
Speaking during his opening address on Friday, Naveen Sharma, chairman of
the ICAI Dubai Chapter, noted that the UAE "has given a lot to all of us
living and working here."
He called upon business owners to be more skilful and transparent across
their organisations to ensure a smooth implementation.
"The reality of the tax has set in and we should do our best to prepare for
it from next year," he said. "The ICAI has looked at VAT in a very broad
way," said Madhukar Hiregange, chairman of the Indirect Tax Committee. "Our
target is to have 500 people who are capable of training to be ready to help
individuals very soon. Any expert that learns about VAT has the
responsibility to raise awareness. One of the biggest challenges of VAT will
be how business owners can continue to run their businesses in the region."
Hiregange also stressed that businesses should transition smoothly in the
wake of VAT. "There might be a pressure on margins in the coming months.
Starting next year, VAT will be a time when people can lose business. If
customers aren't happy then there is a danger of losing them, but it is also
an opportunity for businesses to gain new customers."
"People are really concerned about what is going to happen after January 1,
2018, so it is really important for us to provide clarity," noted Vipul,
Consul-General of India in Dubai.
Answering questions regarding what VAT will be primarily impacting, experts
noted that there is a general misconception that there will be a five per
cent impact on consumers after VAT is introduced, which is not correct.
"As the major items in consumer spending is out of the VAT domain, - i.e.,
residential rent, majority of educational fees, majority of
healthcare-related items - we expect the impact on the consumers to be in
the region of 1.2 per cent to 1.8 per cent," experts noted.
Under VAT, residential rents are mostly exempt unless it is first lease,
wherein it will be zero-rated. There is no impact on the consumers in both
scenarios.
When it comes to school fees, the majority of educational related fees are
zero-rated including tuition fees, educational materials, and anything
charged in relation to education. School transport is exempt under local
passenger transport. The only items coming under VAT in this case are school
uniforms, school lunches, computers being provided, extra-curricular
activities and any other fees not related to education.
Asked if there will be any impact on residents sending money back home,
experts said that there will be no VAT applicable on the amount remitted,
however VAT will be charged on exchange house charges.
Clarifying the situation with monthly energy bills, it was determined that
VAT will be charged on utilities, telephone and Internet bills, according to
regulations set by authorities. VAT will also be charged on vehicle service
and repairs, as well as on fuel.
In the healthcare sector, consultancy and medicines are going to be zero
rated for preventive and treatment related charges. Experts revealed that
there will be a list of zero rated medicines and medical equipment announced
by the UAE Cabinet. Elective and cosmetic related treatments will be subject
to VAT.
December 15, 2017 |
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Courtesy Khaleej Times
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