Come January 1, the UAE will be introducing its 5 per cent Value Added Tax (VAT) on most goods and some services nationwide, setting the nation on course for a new era in regulatory fiscal management, business discipline and governmental income. The introduction of Vat represents a monumental administrative shift for consumers and businesses — and every effort must be made by the Federal Taxation Authority (FTA) to fully explain the range of goods and services that are included in the new tax system.
As it stands now, most goods and services will be included in Vat, and businesses with a certified minimal income of Dh375,000 annually will be required to register for Vat. As with any new scheme, there will be teething problems that will have to be ironed out, both at the implementation and collection levels.
The challenge facing those in FTA is to ensure that all the information regarding VAT is readily available, that businesses and the public are fully up to speed, and the implementation stage goes as smoothly as possible. While the FTA has rolled out a new website to explain the system, there are still many with questions on the minutiae of Vat, what goods are included — and what are exempt — and who must pay and when. Its full public education programme must include seminars, brochures, workshops, apps, social media and be multilingual.
The FTA must ensure public education plans are effective, fully explaining the entire process to as many people as possible — and in as many languages as is necessary for this. This is critical to the success of a smooth rollout of the new tax regime.
