Value Added Tax (VAT) is deemed an effective tool to improve economic performance, direct resources and control pace of growth in line with development requirements. The global experience demonstrates that the use of VAT has contributed to the upliftment of several economies and in curbing higher consumption as well as the resulting negative effects. Since its inception VAT has been viewed as an opportunity to make improvements in the jurisdiction and its economy.
With countries over the world implementing VAT as a key financial tool, here are some trends, outlined by Vikas Panchal, Business Head at Tally Solutions in the Middle East, a leading international accounting and compliance software provider which has recently introduced Value Added Tax (VAT) software in the UAE. Trusted by more than 1.2 million businesses globally, Tally Solutions includes a list of 50,000 satisfied clients across the GCC. One of the key strengths of the software is its simplicity. It can be seamlessly implemented for total accounting and business management solutions.
Global reach of VAT expands
Globally, VAT has made its presence felt across most continents. The Gulf Cooperation Council (GCC), particularly UAE and KSA which stayed away from this trend, also opened doors to the tax regime staring January 2018. New rules and regimes pose greater risk of non-compliance, but also bring in opportunities for the economy to grow and prosper.
Global restricted or reduced rates
In recent years, many jurisdictions had broadened their VAT base by removing exemptions and reducing VAT rates. The UAE and KSA implement a 5 per cent levy, which is one of the lowest in the world, making the impact on individual cost of living also minimal, which it a great achievement for both the countries.
Global Anti-fraud measures
As more and more governments view VAT as part of an overall solution to boost their economies, they have also taken a harder look at VAT fraud and its ramifications. Countries over the world and particularly the UAE have taken special measures to ensure that fraudsters and violations are dealt strictly with. A special team of commercial officers not only inspects a concerned field plan, but the Federal Tax Authority (FTA) in the UAE is also investigating and addressing complaints from victims on a regular basis.
Global Digital tax measures rise
Globalization and the digital revolution are transforming business at a dizzying speed. Similarly, businesses in the UAE are adapting to tax laws using technology to collect, analyze and share more taxpayer data than ever.This revolution has brought an exponential increase in taxpayers as it allows businesses to take care of compliance, addresses complexities and manages everything from operations to finances effectively and efficiently.