It was business as usual on Monday on the first day of implementation of value-added tax (VAT) in the UAE as the residents took the five per cent consumption levy in their stride.
Most of the groceries, cafes and shops in malls reported normal activity with residents and tourists shrugging off the small hike in prices.
Though there were some minor hiccups reported at the small grocery level with some of them having VAT charge hand-written on the invoices, all the major brands and companies seem to be fully prepared for a smooth transition.
In fact, some of the large group entities such as Landmark Group and Pure Gold have already announced that they would absorb the prices. However, many grocery owners said they still had the old stock so there was no change in the prices. The prices would be revised once the new stock comes in with VAT included in it.
Saif Mohammed Al Hajeri, chairman, Department of Economic Development (DED) in Abu Dhabi, said the business sector's and consumers' concerns regarding the implications of implementing the VAT are exaggerated since the impact is going to be very limited.
"The impact will not pose any risks that might lead to confusion in price increase in general or major additional financial burdens on the part of the private sector companies and the consumers," he added.
Abu Dhabi's Department of Economic Development said it would supervise the implementation of VAT across the emirate as per their respective competence and tasks that are determined by Law No. 2 of 2009 regarding its establishment.
Suresh Chander Panwar, chairman, The Institute of Chartered Accountants of India (Abu Dhabi Chapter), said there was sufficient time for businesses to plan and implement VAT systems.
"Those who planned well, will have smooth transition while those who didn't plan it in a proper way will face difficulties. But then they should have a smooth operations in the next one to two quarters."
He said that from small scale businesses point of view, it more to do with the change of mindset because most of them don't maintain account record. But now they have to maintain a proper record.
Ministry of Finance (MoF) on Monday said that the system for VAT was in place across all federal entities for a smooth transition.
In a statement, the ministry said that all federal entities linked to the Federal Financial System can perform VAT-related transactions as it has been updated in order to implement VAT in a smooth and efficient manner. The ministry has also dedicated a technical team and toll-free telephone number to respond any inquiries related to VAT from federal departments about the Federal Financial System.
The ministry is expected to collect Dh12 billion revenues from VAT implementation this year and Dh20 billion in 2019.
This initiative has been taken following a GCC agreement to implement five per cent VAT from January 1, 2018.
"MoF is committed to developing the Federal Financial System, improving its quality of service through advanced information technology and enhancing the service level provided to ministries and federal entities," said Younis Haji Al Khouri, Undersecretary, Ministry of Finance.
According to the Federal Tax Authority (FTA), more than 350,000 companies are projected to register for the Tax Registration Number (TRN) for VAT. It is mandatory for companies whose turnover reach Dh375,000 or above have to register for TRN.
However, those companies who failed to register by January 1, 2018, have to pay Dh20,000 penalty for missing the deadline.
The FTA had set December 4, 2017 deadline for all companies meeting the Dh375,000 threshold to register for TRN. The authority has been issuing provisional TRNs to companies who failed to apply for TRN before the deadline.
The FTA has set April 1, 2018 as the deadline for filing of first tax returns. The date could be prepone for large businesses.