Dubai: As the UAE prepares to implement Value Added Tax (VAT) on New Year’s Day, a Dubai-based tax and audit firm is going all out to educate end-consumers about what it means to them.
Rakesh Pardasani, partner at the firm RSM, said since VAT is an indirect tax paid by consumers, there are many things they should keep in mind and can act upon before the tax kicks in.
While businesses worry about the repercussions of VAT in terms of cash requirements, record keeping and administration of effective systems to avoid financial and non-financial penalties from the Federal Tax Authority, consumers can consider doing the following things before January 1, 2018.
Settle your restaurant bill before the clock strikes 12 on December 31.”
- Rakesh Pardasani, partner, RSM
Buy that watch: If you have had your mind on that Rolex for a while now, this is the time to go cash out that dream. Come January 1, be prepared to pay an extra five per cent on all your purchases. In that sense, this could be the last chance to buy that watch at an effective five per cent discount.
Change your car: A five per cent difference on the cost of a new car is almost equal to the interest that you’ll play on your car loan for two years. That’s excellent reason to go and lock that price down.
Do remember that for you to effectively escape the charge of VAT, you not only have to book the purchase but also get delivery of the vehicle before December 31. Considering the high demand in the last month, and the typical demand in colour and interior choices, it is best to act now.
Transfer personal phone connections to your company name: If you’re a business owner who falls within the scope of VAT, you could convert any mobile connections that you hold in your personal name to your company name. That will allow you to claim the VAT on your telecommunication bills as input tax against the VAT payable on your business sales.
Get into the habit of cutting down on non-essential spending: As everything non-essential is five per cent more expensive, it only makes good sense to cut down on binging on online or in-store purchases. Window-shopping goes out the window.
Settle your New Year bill before the clock strikes 12: A fancy restaurant having dinner on December 31 sounds like just what the doctor ordered to end an eventful year. Make sure you settle your bill before the New Year’s toll of the clock, since all invoices starting January 1 at 00:00 hours will involve a payment of an additional five per cent as VAT.
Pre-booked and paid-for dinners and parties will escape this tax. Restaurants may consider the impact of VAT on their New Year dinner pricing but think of it this way: that’s the last meal you’ll enjoy before paying VAT on it.
What steps are you taking ahead of the implementation of VAT? Write to us at firstname.lastname@example.org or whatsapp: 056 508 9988