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


  • 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


  • Existing and new contracts
  • Payments based on revenue or turnover (such as franchise or royalty arrangements)


  • 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