Industry expert says over 5,000 finance/accounting jobs will be created in GCC as region introduces VAT

Published on Oct 12 2017 - - Gulf - -

Industry expert says over 5,000 finance/accounting jobs will be created in GCC as region introduces VAT

 

Australian taxation expert sheds light on potential VAT impact at UOWD workshop

 

Dubai, 11 October2017: It is anticipated that around 5000 finance and accounting jobs will be created within the GCC region with the introduction of Value Added Tax (VAT), according to Mr Paul Drum, Head of Policy at CPA Australia and an expert in tax law, who conducted a workshop at the University of Wollongong in Dubai (UOWD) explaining in detail what the new tax law means and what to expect once VAT is implemented in the UAE from 1 January 2018.

By way of introduction, Mr. Drum said VAT has been implemented by more than 150 countries world-wide. Government revenues from taxation are generally used to pay for public services including public health services, public owned or funded schools, parks and transport infrastructure.

“The UAE will apply a VAT rate of 5% on taxable supplies which is very low in comparison to the average tax rate of 19 per cent globally. 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”, Mr Drum explained.

The consumer will be taxed on 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.

Businesses with a minimum turnover of AED 375,000 are required to register for VAT,while companies with a turnover of below the mandatory threshold but exceeding the voluntary registration threshold of AED 187,500 have a choice to register. Voluntary registration will be especially beneficial to start-up businesses with no turnover at present. It is essential for VAT registered businesses to keep their business records as proof of tax charged and VAT they have paid to the government.

Mr Drum said although the VAT registration process has not yet commenced, there is a shrinking window in which to prepare for it by reviewing and changing financial management processes, implementing new technology and appointing tax advisors if required. 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 in 2018.

“The combination of the new excise taxes and the GST will have a moderate impact on inflation”, Mr Drum said. “But because of the low GST rate, it is 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.

UOWD runs a popular Bachelor of Commerce in Accounting program which is accredited by not only the Ministry of Education – Higher Education Affairs, but also by professional bodies such as ACCA, CIMA and CPA Australia.

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