VAT has been implemented in the UAE and KSA from January 1st 2018,as mandated by the GCC.
5% VAT will be implemented on the supply of goods and services. It is mandatory for businesses to maintain books of records for a minimum of 5 years henceforth. Read on to get answers to any questions you may have related to VAT.
What is VAT?
Value Added Tax (VAT) is a general consumption tax which will be levied on the majority of
transactions of goods and services. It is charged at every point of sale, from manufacturing to
sale to an end consumer. The mechanism of input tax deduction ensures that the businesses
act as tax agents or tax collectors on behalf of the government by collecting tax from the end consumers, account the collected amounts and pay the tax.
This is achieved by adjusting the tax paid on purchases referred to as ‘Input Tax Credit’ or
‘Input VAT’ with the VAT collected on sales referred to as 'Output VAT.'' If there is any balance
liability after adjustment, the same needs to be paid to the government.
Your books of accounts act as evidence for minimum annual turnover threshold limit for VAT registration. Based on this, either you will be mandated to register or you can request for exemption from registration.
Thereby, you must ensure that your books of accounts are updated with accurate information. Start recording all your financial transactions in a VAT compliant way. Choose a VAT software which will make your life easy.
5% VAT will be implemented on the supply of goods and services. It is mandatory for businesses to maintain books of records for a minimum of 5 years henceforth. Read on to get answers to any questions you may have related to VAT.
What is VAT?
Value Added Tax (VAT) is a general consumption tax which will be levied on the majority of
transactions of goods and services. It is charged at every point of sale, from manufacturing to
sale to an end consumer. The mechanism of input tax deduction ensures that the businesses
act as tax agents or tax collectors on behalf of the government by collecting tax from the end consumers, account the collected amounts and pay the tax.
This is achieved by adjusting the tax paid on purchases referred to as ‘Input Tax Credit’ or
‘Input VAT’ with the VAT collected on sales referred to as 'Output VAT.'' If there is any balance
liability after adjustment, the same needs to be paid to the government.
Ultimately, the entire tax is paid by the consumer. Refer our article How Does VAT System
Work for more information.
Work for more information.
Get VAT-ready before it is too late
Manage books of accounts with a VAT software
Thereby, you must ensure that your books of accounts are updated with accurate information. Start recording all your financial transactions in a VAT compliant way. Choose a VAT software which will make your life easy.
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