Here is a simple four-step guide to help companies in the UAE to prepare for VAT implementation, which can take between eight and 12 months. It may take longer if some of the activities are outsourced, for example IT.
1. Project preparation
Businesses need to prepare a project plan and secure the necessary internal and external resources and ensure the stakeholders in the business are informed, as VAT is not just a finance project. It affects all transactions and so touches every aspect of the organisation. VAT affects IT systems, finance, human resources, legal teams and even inter-organisation transactions. IT systems are integral to the process because they need to be updated to handle the VAT. Preparation will entail a cost that companies will need to be aware of.
2. Impact assessment
Businesses need to complete an impact assessment to understand VAT and its commercial effects, prioritise issues and prepare for implementation. This is a key step as it sets the foundation for implementation. The assessment looks at its various effects on the organisational, operational and financial levels. Typically, an impact assessment needs between eight and 12 weeks to complete and that leaves a relatively short time, no more than nine months, to affect implementation.
3. Design and implementation
Businesses need to design the systems and train their staff on the process requirements for VAT. They must implement necessary changes to systems, controls, reporting and governance. Based on the impact assessment, they need to develop a road map for identifying the changes required, understanding the scheduling requirements and planning for work. Implementing the changes across various levels in the organisation usually starts with mapping the transaction footprint to understand the VAT obligations of the business. This should form the basis for making changes across different verticals in the organisation such as IT, supply chain and human resources.
4. Registering and testing
Businesses need to register for VAT and test their business systems to ensure they are capable of compliance and reporting. Businesses need to integrate the changes made into the operations and train relevant staff about their new roles and responsibilities to achieve the desired result. Testing the VAT system, processes and controls during a “live” phase (expected from January 1, 2018) is important to allow for the complete and accurate completion of the first VAT return.
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Value Added Tax in the GCC
Pawan Singh / The National
■ Analysis: All in the details for value added tax in the GCC
■ Saudi Arabia approves an end to tax-free living
■ VAT to generate Dh20 billion in second year for UAE, Minister of Economy says
■ Q&A: Sultan Al Mansouri, the UAE Minister of Economy, and his views on VAT, infrastructure spending and the investment law
■ Comment: The basics of value added tax
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Sources: EY, PwC, Deloitte, KPMG
dalsaadi@thenational.ae
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).
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COMPANY PROFILE
Company name: Letstango.com
Started: June 2013
Founder: Alex Tchablakian
Based: Dubai
Industry: e-commerce
Initial investment: Dh10 million
Investors: Self-funded
Total customers: 300,000 unique customers every month
