The impact of VAT implementations in UAE
The consumer prices inflation is the direct effect, however. Tax is a mechanism to improve the quality and standard of services to the public folk through different measures by government. UAE focus only or a minor amount tax to be implemented but the list of exempted items from tax is not declared by the Federal government.
The cost of free zone company formation
The cost of company formation will affect in different way such as 5% being taxed on all leased property regardless in free zone, local market or smart offices. The lease of smart offices, smart desk and E offices are affected the the taxation. Any company have office outside the free zone will have to pay 5% VAT towards their office rent or warehouse rents.
Immigration and other government department fee are increased due to the VAT implementations. A slight variation is occurred for all companies in free zone based immigration services.
Tele-com industry is also going to be affected with effect from 1st January 2018 onward in terms of its cost of calls. This will make an impact in the initial phase but considerably ignorable.
Automobile industry might get affected due to the implementation of tax. The percentage of tax will be affected, for example a car costs one million need to make a TAX of 50,000 AED is a massive difference.
There are issues to be sorted and federal government has not declared officially the list of items to be included for tax and exemptions list. However, we expect to have good range products and services are going to be affected by the implementation of tax in the country.
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