How you can use VAT to your advantage in the UAE

Mansoor Sarwar warned businesses against using credit cards to pay their tax
Mansoor Sarwar, regional technical director of business solution firm Sage Middle East.
By Lubna Hamdan
Tue 27 Mar 2018 09:58 AM

Start-ups can make money out of value added tax (VAT), if they have the right payment options, accounting software and payment methods with customers and suppliers, according to Mansoor Sarwar, regional technical director of business solution firm Sage Middle East.

Speaking at the Arabian Business Startup Academy, he said start ups can benefit from the governmental fee, which was introduced in January this year.

“You’re not spending money, you’re making money out of [VAT], because otherwise this money would have gone directly towards some other cost, any input tax, any tax benefit that you can get from your purchase would have gone to some cost,” he said.

Sarwar added that the easiest and cheapest methods to pay VAT is in e-dirhams or through UAE funds transfer system (FTS), and urged businesses not to pay their taxes using credit cards.

“If you pay by credit card, which most of you must be thinking is a good way, you are attracting 3-5% processing fees, on top of the 5% you are paying. So your total tax goes much higher. Don’t use credit cards to pay your VAT. Register for either e-dirham or UAEFTS,” he said, both of which are available through the UAE government.

“If done properly, you can make the most of this opportunity,” Sarwar said.

The Arabian Business Startup Academy, which took place on March 26 in the Dubai Technology Entrepreneur Centre (DTEC), discussed the effect of VAT on SMEs in the region. It also featured an on stage interview with Souq.com co-founder Ronaldo Mouchawar, who touched on the different ways larger companies can help smaller, regional start ups develop.

The academy takes place quarterly every year.

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Last Updated: Thu 05 Apr 2018 06:31 PM GST

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