Value Added Tax or VAT is not a new term for most of the people in the world, but the businesses in the UAE are going to be exposed to this tax from 1st of January 2018 for the very first time. This tax is indirectly implemented at all the stages of the business, whether it is related to production, distribution or sales. VAT is added incrementally on all the stages and is the most popular method of collecting consumption taxes in the world.

As it is a new concept in the United Arab Emirates, so the VAT rate is going to be 5% at the start. The government of the UAE has announced it already so the businesses are now planning to implement Value Added Tax on their businesses and more than 50% of the companies have prepared themselves for this upcoming tax. But there are many companies which do not know how to deal with it so for them, following steps of procedure must be followed to prepare the organizations for the upcoming changes:

  • The most important thing to learn is the VAT law implemented by the government of UAE.

  • It is also important to mention that you must see the provisions which are directly related to the industry of your interest.

  • The company should try to find out the transaction processes on which the company business runs.

  • The contracts of the organization with the parties which are engaged with you in the business must also be considered and necessary requirements should also be incorporated.

  • For the companies, the training of the employees is a must as they are going to implement the VAT law accordingly.

  • The management must consider the impacts of the VAT on the business.

  • The application should be submitted for VAT registration if you have reached at a particular solution.

  • The education of the customers is also the part of the steps for the implementation of value added tax in the business as it is going to affect the normal procedures of the business.

  • If there are issues in the implementation, try to resolve all immediately.
  • Derive a plan through which this new law is going to be implemented in the organization.

  • The software team must be engaged in the procedure as they are the actual people who are going to implement it.

  • The difference in the financial books should also be reconciled before the implementation.

  • Trial run is a must so that you will get to know the value added tax, which is going to be refunded or become the part of the refund.

If you need more details about the upcoming VAT law which is going to be implemented in the UAE, there are numerous business financial consultants like BTC who can offer best solutions for all types of taxes and provide the best possible ERP solutions according to UAE laws and regulations.

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