Dubai: VAT will remain a major revenue generating tax for the UAE, with the total receipts distributed at the state level from the tax having reached over Dh95.4 billion since its implementation in 2018 until October 2021.
The likely implementation of e-invoicing will further reinforce the need for businesses to ensure that their VAT affairs are in order, according to new report from WTS Dhruva, the consultancy.
VAT in the UAE is imposed at 5 per cent on most goods and services sold locally, and has ‘required a paradigm shift in the way businesses and government organisations conduct their activities’.
“Now that we have passed the five-year mark since the introduction, it is fair to conclude that the tax has been a success and a true testament to the UAE’s ability to adapt to the new economic realities,” said Nimish Goel, Partner at WTS Dhruva Consultants.
The report by the firm discusses the legislative and procedural developments concerning VAT over the past five years. This includes the recent changes to the penalties, voluntary disclosures, and the statute of limitation provisions, which now make it financially more attractive for businesses to disclose errors voluntarily, rather than have them discovered by the FTA during a tax audit.
The report provides an overview of ongoing challenges faced by businesses in 13 sectors.