Value Added Tax and its impact on Contracts
Dealing with Contracts in VAT Environment
With
VAT in our home countries and the moderate rate of 5% is unlikely to act as a
deterrent to investment in the UAE. However, it is interesting to see how the
VAT will impact the contracts.
These
contracts may or may not have any provision for recouping any direct or
indirect costs levied under the new tax legislation. As such for contracts
without adequate provisions for recouping costs, the costs will likely be
absorbed into the project accounts which could potentially result in loss
making projects where profit was once forecast. On the other hand, if contracts
have sufficient provision to enable contractors to recover costs from
employers, there may be a rise to legitimate claims for VAT on top of
historic payment entitlement. With six months to go, it is advisable for
contractors and subcontractors to get their contracts reviewed.
In
order to understand VAT on this issue
Have
you considered the impact of VAT on your business?
- Pricing and budgeting in contracts
- Business model with new and old contracts
- Contracts and other business documents
- Customer and vendor renegotiation
- Change in marketing campaigns by the companies
- Who will pay taxes
- Your mind set as an agent
- Adjustment of Contract Price for any increase or decrease in Cost with introduction of new law
- How clauses regarding Value Added Tax should be drafterd and their impact as contracts span number of years.
- Contract terms and conditions for prepayments and credit
HOW WE CAN HELP
Our Indirect Tax Team of experts is available in GCC Region to discuss and bring clarity to the specific challenges that your businesses might face in getting yourself ready for VAT. Please contact our indirect tax executives to learn more.
LinkedIn: Waheed Ensari
VAT Consultancy Services
VAT Advisory and Consultancy services are available for GCC (Gulf Cooperation Council) Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates
VAT Registration Countdown begins | Hurry Up and Get Registered
ReplyDeleteGetting registered for VAT in Dubai is priority number 1 for every organization, with a minimum turnover of AED 375,000 and above, for VAT registration VAT in Dubai with the Federal Tax Authority on the website www.tax.gov.ae. After registration for VAT, the tax Registration Number will be issued by Federal Tax Authority.
http://www.thebscon.com/how-to-register-for-vat-in-dubai/
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