VAT being introduced in Saudi Arabia and UAE from January this year came as a major disappointment to many businesses because of the unusualness of corporate and personal taxes in the GCC region. However, VAT is no new concept to the world at large. VAT is the most common consumption tax implemented in almost every country throughout the world; the GCC countries have implemented or are considering implementing one of the lowest VAT rates at single digit percentage.
Due to the very low standard VAT rate in the GCC region, the negative impacts to businesses and consumers alike can be broadly considered to be insignificant. The UAE specifically has always been an attractive destination to do business and the call for tax implementation helps validate the factors that businesses look for while setting up, ensuring clarity and compliance with best practices globally. Furthermore, VAT in the UAE has a better standing as the rights of tax-payers are protected due to the Double Taxation Avoidance Agreements signed by the UAE with 103 countries.
In comparison to other countries in the world, the UAE continues to remain tax-free in more ways despite the implementation of VAT.
Businesses and industrialists in the country can continue knowing that VAT is here to stay and has its own perks, if we can just focus on them. Given that audited financials are a requirement only for a few companies in the UAE, the transparency that comes through VAT regulation will have broader positive implications than can be currently imagined.
Let’s embrace VAT and hope for improvisations; after all hope is the beginning of tomorrow.