Legal experts believe that there might be a possibility of a delay in the implementation of the GCC’s Value Added Tax (VAT), which is scheduled to go into effect by January 2018.
With legislation still under process and no official release date announced, VAT experts worry that there will not be enough time for governments and business to prepare for the tax by next year.
“I heard that a couple of countries might have to delay to June 2018”
Jeremy Cape, partner at law firm Squire Patton Boggs, told Construction Week: “I heard that a couple of countries might have to delay to June 2018,” he said, though he explained that an actual push in deadline is only speculated and has not been officially confirmed.
“It is going to be very tough, and will be extremely challenging to implement in such a short amount of time. Therefore, I wouldn’t be entirely surprised if governments decide to push it to a later date.”
Registration for VAT will begin in October 2017, which Cape believes will be “really tight” for companies to register before the 2018 deadline.
All companies with annual revenues in excess of $100,000 will be subject to the tax, which will also affect building material and property costs.
Though residential property and bare land will be exempt from the tax, commercial real estate will be standard rated, or fully subject to the 5% tax.
The ministry of finance confirmed recently that residential property will be zero rated for the first supply and then after that will be exempt, which means the cost will be recoverable for property developers.
“A lot of this will depend on the legislation we get once it is released,” Cape said.
Major developers in the UAE have already started gearing up for VAT and are currently in the process of preparing full audits within their organisations.
(Source credit – Construction Week)