VAT UAE: The next step for businesses after the issuance of the Tax Procedures Law

It has been a few days now since the Ministry of Finance (MOF) issued the Tax Procedures Law (TPL), which it is now clear, “sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority (FTA)”.

The detail in this law further clarifies that it “defines a clear set of common procedures and rules to be applied to all tax laws in the UAE” (MOF). While the MOF states that this TPL will apply to VAT and excise tax, that is not all it will apply to. It will be the foundation for any and all future taxes that the government may wish to impose.

Although the issuance of the TPL remains a huge step forward in terms of VAT implementation, the actual VAT Law itself has yet to be released.

So, what are we now waiting for, with respect to VAT? Based on international best practices, the impending events that we await from this point forward are:

• The VAT Law
• VAT Executive Regulations

The above two are likely to be issued simultaneously, within the next few weeks, and in time for the next event.

• Registration Commencement – 1 October 2017
• Finally, the VAT go-live date – 1 January 2018

What does all this mean? In summary, the government of UAE is on track for a 1 January 2018 start date.

What’s the bottom line? Businesses in UAE need to start preparing for VAT, if they have not already done so. This is currently the topic of many newspaper articles and discussions between VAT specialists and businesses. Depending on which source is being quoted, anywhere between 25% and 49% are only somewhat ready for VAT, which is extremely low. This by implication means that potentially up to 75% of businesses may not be ready on 1 January.

The following quote appears on my website in multiple places and is very apt for the situation faced by the overwhelming majority of businesses in UAE:

“By failing to prepare, you are preparing to fail.”

– Benjamin Franklin

The key to success here is preparation. The first, and biggest, step is to get in touch with a VAT Specialist and establish a plan for the less than five months that remain before 1 January 2018. Contacting the right specialist for your company will set you on the path towards a successful and, hopefully, headache-free VAT implementation in the new year.

“By failing to prepare, you are preparing to fail.”

– Benjamin Franklin

Written by: Azeem Zafar, founder and CEO of VatMan Gulf Limited.

VatMan Gulf is the first choice for businesses requiring VAT specialist services in UAE and the rest of the GCC. We provide the best client experience and deliver value for money. VMG’s mission is to provide a VAT focused service; thus differentiating itself from the majority of firms in the region that take a very general accounting approach. At VatMan Gulf we stay well versed on VAT law developments, providing a comprehensive service that includes, but is not limited to, imparting VAT knowledge, implementing training procedures and ensuring VAT compliance on a continual basis.