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.
Big hitters Hemi Ahio and Mohammad Ali Bayat Farid will challenge for ... READ MORE
Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Member of the Abu... READ MORE
The new agreement will allow Logicom to make available to its channel ... READ MORE
Digital payments and financial solutions that make it easier to shop... READ MORE
Winds may cause blowing dust READ MORE
'David was a man who believed passionately in this country and in its ... READ MORE
Chennai amassed 192-3 with opener Faf du Plessis anchoring their... READ MORE
The event also saw felicitations of around 15 Pakistani students in... READ MORE