Around 5,000 finance and accounting jobs will be created in the GCC region with the introduction of value added tax (VAT), a tax expert has predicted.
All the six member states of the GCC are set to begin implementing VAT from 2018, with the UAE starting the tax from January.
The introduction of the tax will prove beneficial to regional economies, official news agency WAM quoted Paul Drum, head of Policy at CPA Australia and an expert in tax law as saying.
Speaking at a workshop in Dubai, Drum said: “The UAE will apply a VAT rate of 5 per cent on taxable supplies which is very low in comparison to the average tax rate of 19 per cent globally.
“However, not everything will be charged VAT as the law makes provision for zero rated and tax exempted goods and services to ensure that the impact of VAT on consumers is kept to a minimum.”
The consumer will be taxed on goods such as electronics, smartphones, cars, jewellery, certain beverages, financial and accounting services, legal services, dining out and entertainment.
However, certain services and goods, such as nearly 100 food items, basic health services, transport and public education, will be exempt from the tax.
Businesses making a turnover of Dhs375,000 or more are required to register for VAT, while companies making less than that but exceeding the voluntary registration threshold of Dhs187,500 have a choice to register.
“Voluntary registration will be especially beneficial to start-up businesses with no turnover at present,” opined Drum.
All the registrations can be done on the website of the UAE Federal Tax Authority (FTA). The site also provides all the details regarding the tax.
Meanwhile Drum also stressed that it is essential for VAT-registered businesses to keep their business records as proof of tax charged and the amount that they have paid to the government.
The imposition of VAT is anticipated to provide a big boost to the GCC economies, which have been hit hard by depressed oil prices in recent years. In the UAE alone, the tax is expected to generate approximately Dhs12bn in its first year of introduction.