Paul Drum, Head of Policy at CPA Australia and an expert in tax law, has said that it is anticipated that around 5,000 finance and accounting jobs will be created within the GCC region with the introduction of Value Added Tax, VAT.
In a workshop at the University of Wollongong in Dubai, UOWD, on the new tax law, Mr. Drum said that VAT has been implemented by more than 150 countries world-wide. Government revenues from taxation are generally used to pay for public services including public health services, public owned or funded schools, parks and transport infrastructure.
"The UAE will apply a VAT rate of 5 percent on taxable supplies which is very low in comparison to the average tax rate of 19 percent 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," Drum explained.
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 exempted from VAT.
Mr. Drum explained that the difference between zero-rated and exempt tax is that suppliers of zero-rated goods and services are eligible to reclaim their input VAT, whereas suppliers of exempt goods are unable to do so. Zero-rated and exempted goods and services have no direct impact on the consumer.
Businesses with a minimum turnover of AED375,000 are required to register for VAT, while companies with a turnover of below the mandatory threshold but exceeding the voluntary registration threshold of AED187,500 have a choice to register. Voluntary registration will be especially beneficial to start-up businesses with no turnover at present. It is essential for VAT registered businesses to keep their business records as proof of tax charged and VAT they have paid to the government.
Referring to job openings, Mr. Drum said VAT brings good news to current finance and accounting students and graduates as this form of taxation will create ample employment opportunities.