Value Added Tax Case Study - 710 Words

Despite the fact that UAE has long been famous for its zero tax status, the introduction of Value Added Tax(VAT) is expected to happen at a rate of 5%, with some limited exceptions including basic food items, health care, and education. The UAE is planning to implement it on January 1st, 2018. According to Nikola Kosutic, the Research Manager for Euromonitor International Middle East, the UAE’s first major tax will have varying degrees of impact on different segments of the retail sector. The value-added tax is a tax on the amount by which the value of a good or service has been increased at each stage of its production or distribution. The imposition of which are highly related to products’ elasticity of demand -- the more elastic the†¦show more content†¦Nevertheless, VAT does not bring all bad news. Although 0% to 1% has a much bigger impact than 10% to 20%, the impact of 5% tax on the customer is expected to be minimal. Because the margin in the country is so great, that the retailers will have some cushion for the introduction of the tax. They will be able to introduce markups which are so huge that it is unlikely to happen in any other place around the world. Therefore, a 5% tax is not going to change Dubai’s popularity as a shopping destination. The government officials in UAE and Saudi Arabia expected to use the money earned through VAT to reinvest in the development of new projects, which will likely create new jobs and strengthen the economy in the long run. In terms of business, may corporations and retailers respond to the tax fairly positively. A spokesperson from Lulu group international said that he doesn’t think the tax is going to affect business since many of UAE residences are from countries that have VAT in place. The financial officer of Brands Trading, Imran Khalid, believes that there will be some minor problems in the first few days but overall it won’t cause any major impacts. KBBO Group which owns Fathima Supermarket believes that the trend is not expected to be different due to the fact that groceries will not be affected by the VAT. Consumers generally, are expected to adapt quickly to these kinds of changes. Tourism and aviation, for example, have always had new taxes added on themShow Mor eRelatedAccounting Aspect of Value Added Tax in Bangladesh1634 Words   |  7 PagesAccounting Aspect of Value Added Tax in Bangladesh Term Paper On Accounting Aspect of Value Added Tax in Bangladesh Prepared By : Name : Md. Mahmudul Hassan Roll : University Roll : Class Roll : Supervisor’s Name and Designation Mr. Md Nurajjaman Assistant professor Department of Accounting Govt. 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