VAT: a new era arrives in less than 10 days
The introduction of VAT is imminent and won't be delayed. It will, of course, bring many changes to our lives
It is now less than ten days until we step into life with value added tax. For many of our readers the uncertainty over what happens next has become a persistent concern that life is about to get not just a little pricier, but significantly more expensive. Over the weeks and months, this newspaper has run the rule over what areas of our lives will be affected by the new tax and what changes it will bring. More of that reporting will be presented in print and on our website over the time between now and 7am on January 1, when VAT finally arrives.
As the clock ticks down on the deadline, it is worth repeating some of what we do know. As The National reported, Obaid Al Tayer, Minister of State for Financial Affairs, told FNC members this week that there will be no delays on the introduction of VAT. “The government does not like to postpone anything,” he said, in answer to one of the council’s members who had called for implementation to be postponed while businesses and industries better worked out their systems.
The minister also reminded the chamber of the positive effects of VAT, particularly that companies who never used to study their accounts or budgeting, will now regulate their work.
In those words, he articulated one of the key benefits of the tax. We know, of course, that it is expected to generate Dh12 billion in revenue for the Government in its first year. We know that the International Monetary Fund sees the introduction of the indirect tax as a necessary and important step for the country’s maturing economy. We also know that the IMF considers VAT to be an important source of funding for Gulf countries, particularly against a background of softer energy revenues, but the other significant gain the tax will bring is transparency.
With businesses required to regularly report and submit their VAT returns, the Government will be able to get a much sharper view of the engines of growth and expansion in non-oil sectors, as well as the ebb and flow of revenue generation. In time we would expect that data to have an impact on policy making and on the further development and expansion of the knowledge-based economy.
Part of the unknown about January 1 is how much the cost of living will be impacted, but an equal part of the other side of the coin is the transformation our economy is about to take.
Updated: December 21, 2017 07:24 PM