March 5, 2021

Does VAT have any benefit for Dubai and the UAE as a whole?

3 min read

VAT, or Value Added Tax, is the most trending topic, in the UAE currently. There is a lot of discussion around it among people regarding the effects of VAT on their businesses and lives. However, there is a growing concern about the misuse of this tax by retailers. To ensure you do things within the legal framework, it is prudent to collaborate with reputable Dubai VAT consultants.
Many businesses initially face the pressure of VAT because they come face-to-face with it for the first time in the UAE. However, as an Indian entrepreneur, you will be happy to hear that VAT in Dubai is merely 5% opposed to 18% or more in India. You can also expect a few minor issues when the tax is implemented for the first time. However, this is just one side of the coin and there are actually more advantages of VAT and Dubai VAT consultants can fill you in.

The main purpose of the value added tax is to reduce the dependability of the government on oil and gas in UAE. Also, the price of oil in the international market is falling rapidly and there is very little hope of restoration of prices. The government had to take this step of introducing VAT in order to face the competition in the new era. Using VAT, the UAE government will be able to diversify its economy. Even though people are worried about the new implementation of VAT there are several benefits to it in the coming future that Dubai VAT consultants will be able to highlight.
Here are some of the important benefits of VAT for the country, businesses and lifestyle in general.

  1. One of the main benefits of VAT is to diversify the economy. It has by large reduced the government’s dependency on the oil and gas sector. If the oil prices reduce considerably in the international markets, then the UAE government can be in a fix and various international businesses can run into losses. The public life, in general, can be affected to a large extent and the government will be forced to extract capital from other means including VAT.
  2. Natives and residents of the UAE drive the economy through indulgence, like shopping, and they do not pay taxes on their purchases. Because of this people often end up overspending and also create a lot of wastage by purchasing things that they do not need. The introduction of VAT and other similar taxes will prevent people from excessive shopping and involve in buying unnecessary items. In the long run, it is beneficial for businesses and the whole society.
  3. The government of the UAE has taken a brand new initiative and declared that the majority of the revenue from VAT will be forwarded to local governments. This type of revenue will be utilized for the general welfare of the people and providing amenities like roads and also improve health facilities. This is an indication that the residents of the UAE will be the ultimate beneficiaries of VAT in the long run.

However, Indian companies that are functioning out of one of the many free zones in Dubai need not register for VAT as it is not mandatory. This said, if you intend to open your business in any other part of the city, it is best to collaborate with Dubai VAT consultants, who will correctly guide you, so that you don’t fall afoul of the tax authorities in the city. The consultants can make unburden your stress to a large extent with regards to legalities, which are very different from what you find in India. it is a easy approach for brands, companies to set up a business in Dubai and  we are at your door step to help with the company formation work.

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