VAT may impact cash flow of UAE companies: tax consultant

Companies have little time left to be VAT compliant, says BDO official

moving out

we are already looking to open another office elsewhere where the current VAT system is in place with full transparency and a tried and tested system, I hate to think of the problems of implementation here.

Cashflow problems for small businesses are already stretched to the max, never mind having to hold out for any VAT refunds..

The next 3 years are going to be a total mess, better together out early and re-enter the market once its sorted itself out

Nightmare in the making sadly...

One guy

Finally people are starting to wake up to all of the negative consequences of the introduction of VAT. Thus far the lead in has been executed in silence with minimal public information issued for business to understand and plan for. Not wise. Secondly people are wildly underestimating the dual fold impact on consumer spending and cost of doing business. Now we are hearing suggestions that the rate will soon increase to 10%. That will absolutely mark the end of any notion of creating a competitive retail environment. Should all of this come to pass salaries are going to have to increase my at least 50% over the next 2 to 3 years. Or the cost of living to be reduced by a similar amount, as things stand the economy is completely out of balance.

OmarF

i agree. this will be a big deal with lots of ramifications.

Chris

Goods here are already more expensive than in Europe where they have had VAT for long-time. So where is really the benefit of being here any longer if faced with the same tax regime like everywhere else in the tax burdened Western world???? Also companies will try to hike prices more than the 5% tax to make up for whatever expenses they may or may not incur. This might curb consumption quite a bit as people realise that money goes out the window even faster than before. The only ones frolicking are the tax advisors and auditor/accounting firms as that will bring in tons of new business for them. Who else will benefit from that? So let's have tax like the Western countries and see who will survive. As with the introduction of one tax there will soon be more coming as governments always try to leverage that to the max. Not sure if UAE will really benefit from the long-term implications...and killing small businesses as a result.

OmarF

SMEs are suffering at this current economic cycle. and many are confused how the process will work. (ask your mom/pop grocer - cafeteria - laundry-pharmacy-tailor-hair saloon etc... about it. they have no idea)

Muhammad Ali

The problem is already there are a lot of expenses, that the company are bearing, from visa charges to labour charges. In Malaysia, you don't have to pay so much for visa expenses, and most of them get PR (permanent residency). This helps a lot with the expenses. When you run a business, the most important aspect are the expenses. If expenses are high, goods will be sold at a higher rate. People no more will buy goods which are expensive, and buy mostly where there is a cheaper rate. Electronics,for example will be much more expensive than other countries. Already a lot of electronics, clothes, which have been there for 40 years, have gone in recent years. the service industry might thrive because of tourism. So I think VAT is not a good idea for the moment. All the good companies, will find alternative solutions, to allocate themselves somewhere else, and this will be a problem.

Benku

The fact that customers are already paying their invoices with enormous delays, if at all, without consequences, is already an enormous issue for SME's cashflow position. Ideally, the VAT introduction, should be introduced alongside a law forcing companies to pay their dues according to signed contracts and payment terms. This is not the case today across the GCC. So if nothing changes, this VAT may kill 1000s of SMEs.

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