VAT in the UAE Impacted due to Covid-19 :

VAT in the UAE started in January 2018 and from that point, it has been followed and executed effectively. VAT in the UAE was referred to as a new source of revenue for the Government of UAE which will be kept on being used to offer the best quality public facilities and services. This will help the government to reach its vision of lessening its dependency on oil and different hydrocarbons as a source of revenue. Having said that in the year 2020 there were many SME businesses that were affected by the COVID-19 pandemic. The VAT payment capacity and overall business have been affected due to Covid-19 as everyone knows by now. Therefore, various measures have been taken by the UAE government to offer help and relief to businesses. Different measures have been taken by the UAE government to impede the impact of Covid-19 on the economy. 

Measures Taken by the UAE Government to impede the COVID-19 pandemic:

  1. The ‘Targeted Economic Support Scheme’ is an essential measure presented: –  This scheme has been presented on 15th March 2020 in UAE and carried out to give transitory alleviation as far as supporting banks to urge lending to privately owned businesses that have been affected due to the pandemic. The Central Bank of UAE has announced that 30% of the AED 50 billion funds is already been distributed to meet the urgent liquidity needs. Abu Dhabi has also provided AED 3 billion to the SME guarantee scheme and 1 billion is allocated for liquidity enhancement and maintaining a balance between supply and demand for stocks. 
  2. Keeping market fees @ 2.5% for 3 months
  3. Reduction of municipality fees from 7% to 3.5%
  4. 10% reduction has been applied in water and electricity bills for 3 months
  5. 90% decrease of fees imposed for submitting the customs records
  6. The government is canceling 25% of the down payment on installment-based government fees on renewal of license
  7. 20% customs fees refund has also been provided on imported goods which are being sold in Dubai
  8. Zero-interest-rate loans to banks
  9. The UAE government has delayed the eviction of those struggling tenants who fail to pay rent during this pandemic phase
  10. Free Zones are also taken care of by giving waiver support on licenses, Annual fees, work permits, refunding security deposit, canceling fines, etc.
  11. A few of the different measures are a decrease in fees for renewing licenses, postponing the date for VAT return filing (March 2020), tax payment, and stimulus packages for supporting local economies.
  12. Also, there have been changes in employment regulations so that employers and employees have better flexibility during the pandemic, for example: reducing working hours, the Quarantine period is not considered as sick leave, remote working requirement, etc.
  13. According to newly-released Cabinet Decision No. 49 of 2021, taxpayers who currently have penalties pending can see those reduced to 30 percent, provided they settle them before December 31, 2021. Going forward, late payment penalties will be reduced to four percent per month, a substantial reduction from one percent per day while an overall cap stays at 300 percent. The new provisions will be applicable 60 days from April 28, 2021.
(Please note that the above information is taken from various sources and Accountant’s Box is not liable for complete authenticity of it)

Above mentioned and many other measures are taken by different entities have enabled UAE to sustain the business and come up from the hurts of Covid-19. UAE has been one of the leading countries to overcome the impact and rise above it gradually. We at Accountant’s Box are also trying our best to bring value to customers in these difficult times by giving them correct guidance to avoid any unnecessary fines and penalties as well as giving our services at a very cost-effective rate. 

We provide VAT consultation and support SME businesses by helping them in understanding the latest rules and updates for VAT in the UAE which is related to their business. 

Apart from that we also offer various kinds of services including Outsourced Accounting, DIY (Do It Yourself) Accounting and Administrative Support Services, Payable and Receivable management, etc. 

For information, you could reach us at contact@accountantsbox.com or contact us here