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VAT IN UAE

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VAT IN UAE

VAT IN  UAE Like wise India, which implemented GST i.e Goods And Services Tax in the mid of year 2017.   Now  UAE is ready to implement VAT i.e Value Added Tax from 01 January 2018.

What is The difference between VAT and GST ?

Apart from name there is no major difference between VAT and GST.  Both are indirect tax or we can say GST works upon the VAT principle?

Also read GST History India

VAT IN DUBAI UAE

Image Source www.marketresearchreports.com

What is VAT? and How it Works?

VAT is an indirect tax levy on VALUE ADDITION of consumable goods or services. For Example trader  A sells goods to trader B in DH 1000 and tax rate is 5% the trade price would be

Trader A to B

Goods Cost            DH 1000

VATax (5%)              DH   50

TOTAL                        DH 1050

Now If Trader B sells it to Consumer C after adding its margin (ex DH 200) at 1200, the end price payable by consumer:

Purchase Price(Without VAT)    DH 1000

Margin(Value Addition)                  DH 200

Sale Price                                                DH 1200

VATax (5%)                                             DH   60

TOTAL   PRICE for C                         DH 1260

Now Tax Payable BY A to Government                 DH 50

Tax payable by B to Government (60-50)            DH 10

 Impact of VAT on UAE

The implementation of value-added tax (VAT) will have the biggest impact on the UAE’s middle class earning around Dh20,000 a month with the highest increase in cost going into buying food items. However government may provide exemption and relief to small sectors.

Will it be similar to GST in India?

The concept, theme and motive seems to be same  but VAT in UAE  appears to be easier as compared to GST of India.

Reasons

Tax Rates : No Multiple tax slabs and all taxable services or goods are charged at 5 per cent.

Zero Rated Category:  There is a category of zero rate, besides exempt goods and services. Under zero rate category, the business need not pay tax but can claim input credit for the levy paid earlier.

Schools are under zero rate.

VAT IN UAE will boost the economy of UAE  however it may impact the middle or lower middle class because of increase in price of consumer goods.