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VAT was introduced in the UAE on 1st of January, 2018 to diverse its source of income for the benefits of public. VAT was applicable at a standard rate of 5%. Registering under VAT means getting recognized by the government of the UAE as an authorized supplier of goods and services. As per FTA, only possible to collect VAT after registration under VAT. Also, it demands proper maintenance of books of accounts and other records for proper compliance under law in order to avoid penalty.
The business houses in UAE are facing difficulties in terms of registration process, return filing and compliances. But let’s have a look on the brighter side. VAT implementation has its benefits to the current business growth.The following points will help you understand:
- Better than ever Infrastructure : VAT is not only an addition to the government’s revenue but will also be a contributor to the infrastructure of the country. This will in turn make the growth of business easier. Investment in infrastructure often has a significant effect on economic development. Value-creating tax strategies will give all the GCC countries the benefits, as it is implemented by all of them.
- Higher Business Efficiency : Introduction of VAT may have increased the cost of running business, but if you look at the bigger picture, the VAT system will help to systematize the business. The systematic procedure of tracking your business growth will increase the efficiency of your business. With the increased efficiency, you will be easily able to multiply your business profits.
- Ancillary Business Benefits : The VAT regulation will help you manage the business and will also increase the economy of the country as a whole. The most important benefit of such tax regulation is improved liability management and check of cash flow. The proper managed business accounts and taxation records will help to reduce tax frauds, corruption and unwanted wastage of money.
- A Boost to Government : The new VAT law will significantly serve the purpose of a new stream of revenue for the government. This revenue will go into creating a more stable economy, which will have a positive impact all over the country.