VAT IN UAE
The UAE Ministry of Finance has announced to implement VAT in UAE , as an indirect tax applicable on goods and services at the rate of 5%, and is likely to be introduced from 1st January, 2018. Concerned businesses will have to prepare before VAT will come into effect so as to fulfill their tax obligations. VAT is expected to be introduced with some limited exceptions including basic food items, health, education, social services, etc…
Difference between VAT and Sales Tax
A sales tax is also a consumption tax, just like VAT. For the general public there may be no observable difference between how the two types of taxes work, but there are some key differences. In many countries, sales taxes are only imposed on transactions involving goods. In addition, sales tax is only imposed on the final sale to the consumer. This contrasts with VAT which is imposed on goods and services and is charged throughout the supply chain, including on the final sale. VAT is also imposed on imports of goods and services so as to ensure that a level playing field is maintained for domestic providers of those same goods and services.