Tax is a financial charge imposed upon a taxpayer (who is an individual or a legal entity) by a government organization in order to allocate fund for various public expenditures like Education, Transport, medical and public causes. Taxes consist of two types one is direct and other is indirect tax. Most of the countries have a tax system at a flat percentage rate on personal annual income or scale based annual income amounts. Some countries impose no taxation at all, or a very low tax rate for a certain area of taxation. Some country charges tax both on corporate income and share which is known as double taxation, an individual shareholder(s) receiving the payment from the company will also be levied some tax on that income.
Increased cost of public service and the responsibility on the GCC's governments to provide infrastructure to support growing urban centers, the Member States of the Gulf Co-operation Council (GCC), Have felt the need to introduce a tax system in the region. The tax is introduced to shift away the source of revenue from natural resources (oil and other hydrocarbons).
The default way to implement a value-added tax involves assuming a business owes some fraction on the price of the product minus all taxes previously paid on the goods.
By the method of collection, VAT can be accounts-based or invoice-based. Under the invoice method of collection, each seller charges VAT rate on his output and passes the buyer an invoice that indicates the amount of tax charged. Buyers who are subject to VAT on their own sales (output tax), consider the tax on the purchase invoices as input tax and can deduct the sum from their own VAT liability. The difference between output tax and input tax is paid to the government (or a refund is claimed, in the case of negative liability). Under the accounts based method, no such specific invoices are used. Instead, the tax is calculated on the value added, measured as a difference between revenues and allowable purchases. Most countries today use the invoice method.
By the timing of collection, VAT (as well as accounting in general) can be either accrual or cash based. Cash basis accounting is a very simple form of accounting. When a payment is received for the sale of goods or services, a deposit is made, and the revenue is recorded as of the date of the receipt—no matter when the sale had been made. Cheques are written when funds are available to pay bills, and the expense is recorded as of the cheque date—regardless of when the expense had been incurred. The primary focus is on the amount of cash in the bank, and the secondary focus is on making sure all bills are paid.
The business has to register in the countries that have a VAT system to record their VAT transaction. VAT registered businesses can be individual persons or legal entities, but countries have different thresholds or regulations specifying at which turnover levels registration becomes compulsory or to register voluntarily. Businesses that are VAT registered are mandated to include VAT on goods and services that they supply to others by the relevant TAX rate and account for the VAT to the Federal tax authority. VAT-registered businesses are entitled to deduct VAT for the VAT they pay on the goods and services they acquire from other VAT-registered businesses.
Increased cost of public service and the responsibility on the GCC's governments to provide infrastructure to support growing urban centers, the Member States of the Gulf Co-operation Council (GCC), Have felt the need to introduce a tax system in the region. The tax is introduced to shift away the source of revenue from natural resources (oil and other hydrocarbons).
Considering this the member state, United Arab Emirates (UAE) plans to Introduce VAT on 1 January 2018 along with Saudi Arabia. The registration will be mandatory for companies whose annual revenues meets $1m (Dh3.75m), Initially GCC countries have agreed to introduce the VAT slab as 5%.
for VAT Implementation