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VAT Preparations

Value Added Tax (VAT)


What is VAT?

A Value Added Tax (VAT) is a consumption tax and is levied on the price of goods and services.  VAT is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destination based tax, where the tax rate is based on the location of the customer.

VAT in Gulf

VAT is a new phenomenon in Gulf as businesses in the region are mainly tax-free and have no statutory requirement of accounting and maintaining books of accounts.

However, Increased growth and pressure on the GCC’s governments to provide infrastructure to support growing urban centers, the Member States of the Persian Gulf Co-operation Treaty, which together make up the Gulf Co-operation Council (GCC), have felt the need to introduce a tax system in the region. It is principally agreed among the GCC members to implement VAT in every country latest by 1st Jan 2019.


In particular, the United Arab Emirates (UAE) plans, on 1 January 2018, to implement VAT. Economic Department is currently finalizing legislation and will release more details in coming months. It is anticipated that compliance will be mandatory for businesses meeting the threshold limit and in case of non-compliance heavy penalties and fines will be levied.

Introduction of VAT will bring major changes and businesses will have to adhere to VAT regulatory and statutory compliances and report the same on a periodic basis.  We foresee business community in general will face a real challenge to understand the new law and implement the same well before due date. Also, it will be mandatory for each business to maintain complete books of accounts under UAE VAT law.

Effect of VAT

VAT is complex and can be a real burden and area of risk for owner managed businesses. We will make a pre-evaluation of:

  • If your business needs to be registered for VAT
  • How you will implement new system in your business?
  • How you will ensure compliance?

VAT Advice

Specialist VAT advice is key for owner managed businesses, to ensure compliance with the complex rules and to identify opportunities for repayments. Tax advice is particularly important with restructuring transactions, given high costs and liabilities associated with wrong VAT analysis.

What Kingsway can offer Clients?

  • VAT support on transactions
  • A proactive service in identifying opportunities to reduce VAT liabilities or obtain repayments
  • Advice on the alternative VAT schemes available to your business
  • Support on VAT Enquiries
  • Training and support on VAT compliance