UAE rolled-out its new VAT law early this year to decrease the country’s dependency on oil prices and generate a new source of income to provide better public services. Every new regulation comes with its own set of benefits and challenges, and amidst all the chaos that this region’s unstable geo-political situation and fluctuating oil prices have already presented, the business community in the trading hub of Dubai is somewhat struggling to bring normalcy back into its processes and operations.
To convey how businesses are coping post implementation, Dharmendra Sawlani, President of Dubai Computer Group (DCG) sheds light on the importance of having such regulations in place. He, however, adds that these benefits are not without challenges and are yet to be resolved.
Commending the government’s decision of introducing this law, Sawlani said that VAT has streamlined business processes, and brought stability and accountability into the picture. “VAT will work to clean up the system and stop unfair practices. Previously, many resellers did not have an accounting system in place and were undercutting costs for better margins, affecting the entire business community. This will now change.”
VAT has affected the way business has been conducted and lack of clarity remains a big concern. Echoing similar sentiment, Sawlani says that the initial few days of January 2018 were more challenging and while businesses have accepted VAT as the new norm, exports are not yet back on track. There is ambiguity in certain processes, he says.
Even without VAT, price of IT products has already been on the higher side when compared to those in some other countries that were charging taxes, explains Sawlani. Now with another 5% increase, it is going to be even more challenging, especially when tourist purchases are not tax free and this avenue of sales seems to be narrowing. “This price hike has also reduced consolidated shipments and carrier business, where passengers purchased in bulk and travelled back to sell in their respective countries. Even online business has been adversely affected,” he adds.
Discussing further on the challenges, he explains that since it has not been too long since VAT has been enforced, some procedures that have not been streamlined. “Dubai has always been known for its seamless operations and ease of doing business. Human intervention has added delays in the processes and we need the government’s support in streamlining this.”
The DCG has come together on various occasions to discuss the members’ concerns and these have been forwarded to the FTA (Federal Tax Authority). “We keep an open line of communication among all DCG members. Our aim is to put together all issues and voice them to the right authorities while also passing on the correct information in a timely manner to our members.”
“The government has always been supportive and responded to our concerns efficiently. We are waiting for the government to address these issues soon and enable us to straighten out our processes,” he concludes.
