The United Arab Emirates (UAE) government has decided before to implement the tax system in order to completely break away from its dependency on oil-generated revenue. Although tax seems to be daunting for some, the UAE chose to apply it with one of the lowest rates in the world at 5%.
There is a high compliance in just a few months of its first year, and it says a lot about how orderly the country is. However, there are still issues that arise that businesses find it difficult to deal with any problems that bother companies as it might happen to the country as well, like VAT Cheats.
Who are VAT Cheats?
There are always people who want to gain more than they should. These traders would charge VAT even when they are not allowed to, even if it does not apply, and even if it is against the law.
What Do They Usually Do?
This has happened recently in Oman, wherein traders have raised their costs for goods that were brought in from the UAE and Saudi Arabia; two countries that have implemented VAT.
It has been agreed by the Gulf Cooperation Council (GCC) countries that those countries that have not introduced VAT will not see any changes in prices. Basically, people in Oman are already experiencing the load that they have to carry with VAT even though the tax system is yet to be introduced in Oman in 2019.
There are also issues that are seen to be possible to happen in UAE although not the same as the one that happened in Oman.
Can We Expect this in UAE?
There are questions with regard to free zones as there are free zones that are not taxable and there are others that are. Fraud is seen to be possibly an occurrence in the future or it can be happening now.
There can also be a case wherein companies from another country will send an invoice that includes tax using the VAT law as the foundation of their claim. This is an act of fraud especially when they are not registered and given the right to collect tax from any company in the UAE.
What Should Be Done to Avoid This?
Experts have been advising people to ensure what their rights are and when exactly VAT applies. That is why it is important to have a Tax Agent in UAE to make sure that you are updated and knowledgeable about the law. You can get clarifications on certain things when you are not convinced of why you are being taxed.
In addition to that, the Dubai Business Women Council (DBWC) also has decided to cooperate with Metis in order to help women in the country. They are trained to have the knowledge and skills that they would need in order to handle any business issues that come with VAT. There are workshops to help them understand its impact and pinpoint any fraudulent activities.