Taxation expert sheds light on VAT impact in UAE
Looking for a well paid job? VAT could create 5,000 accountancy posts in GCC, expert says
There has never been a better time to train as an accountant.
Thousands of finance and accounting jobs will be created in the GCC region with the introduction of VAT.
That's according to Paul Drum, head of policy at Certified Practising Accountants (CPA) Australia, who gave a wide-ranging talk at the University of Wollongong in Dubai about the introduction of VAT here on January 1.
Mr Drum said the tax has been implemented by more than 150 countries across the world.
“The UAE will apply a VAT rate of 5 per cent on taxable supplies which is very low in comparison to the average tax rate of 19 per cent globally," he said.
"However, not everything will be charged VAT as the law makes provision for zero rated and tax-exempted goods and services to ensure the impact of VAT on consumers are kept at a minimum."
VAT will apply to goods such as electronics, smartphones, cars, jewellery, certain beverages, financial and accounting services, legal services, dining out and entertainment. However, certain services and goods, such as nearly 100 food items, including basic health services, transport and public education will be exempted from VAT.
Mr Drum explained that the difference between zero-rated and exempt tax is that suppliers of zero-rated goods and services are eligible to reclaim their input VAT, whereas suppliers of exempt goods are unable to do so. Zero-rated and exempted goods and services have no direct impact on the consumer.
Consumers can expect a spike in sales of certain items prior to the official implementation of VAT, which in turn could lead to a drop in sales in the same sectors next year.
Mr Drum added that the new taxes could have a moderate impact on inflation but it would unlikely to be an "economic showstopper".
Referring to job openings, Mr Drum said VAT brings good news to current finance and accounting students and graduates as this form of taxation will create ample employment opportunities.