General Implications on VAT
VAT refers to Value Added Tax. It is a general consumption tax which is applied on goods and services as the Value incrementally increases at various stages of production, sales and marketing.
In Dubai, couple of items is exempted whereas; government has tentatively fixed the VAT percentage as 5% w.e.f January 2018.
Impact of various functions
Procurement and production
- Supplier’s pricing
- A/P invoice processing time
- Purchases from non-registered VAT businesses
- Supplier education
IT
- System changes
- Documentation (tax invoices)
- Reports for VAT returns
Sales and marketing
- Samples/marketing
- Pricing strategies
- Returned goods
- Education and communication with consumers
- Credit items
Legal
- Existing and new contracts
- Payments based on revenue or turnover (such as franchise or royalty arrangements)
Finance
- Bad debts
- Deposits/advanced payment
- Leases and hire purchase
- Loan of stock and equipment
- VAT return preparation
- Disposal of assets – Sales of scrap
Human Resources
- Fringe benefits
- Gifts to employees
- Employees allowance and claims