Wednesday, 30 November 2016

Taxes in UAE - How Taxes to Get Away From Taxes - How VAT 2018 Solves Recession ?

Taxes in UAE : GCC sounds hard to pay attention in paying tax by an individual, organisation or whomever deals with short term or long term business moreover, even a middle class, lower class and even high class never admire to do so. Since UAE in attention to bring the VAT (Value Added Tax) system by 2018 with an at-least advisable tax by a citizen is 5% of his/her income. Even the UAE government released the fact that its the lowest fact that individual should have to pay at the UAE Tax office without any failure. It's a mandatory that every individual to do this action alike what all govt. of UAE brings here for the development of Country.Recently Saudi Arabia Implemented VAT for the growth of Oil Trade for the development of Country.

As we all know that, for a thing that we handle attained with some sort of pros and cons, for example food that we use also contain digestive and undigested ingredients or in case of a coin, tail end and a head side indicates the best example of decisions that human in choosing the right turn or wrong turn. Well, In this case GCC Countries with min in 5% tax also sounds some pros and cons.

From the above, we came to know that the new tax system going to help an individual or a company which is lower class,upper class or middle class in paying tax in GCC countries.

Taxes in uae

Let's take a detailed survey on Highest Tax paying countries around the world from the below table:

Highest Tax Paying Countries

Taxes are of different type,the above table is just a brief of personal income tax by highest tax paying countries around the world.Every individual must concern about the tax system in which you were included.For example,you must concern about ;

  • Corporate Tax Rate
  • Personal Income Tax Rate
  • Sales Tax Rate
  • Social Security Rate
  • Social Security Rate For Companies
  • Social Security Rate For Employees 
Here UAE Value Added System isn't yet came in fact and since UAE is a very much and day by day a developing countries.As we all know that biggest money makers or what to say the biggest money making fishes can be hiding some where in Dubai,due to the fact that "NO TAX"
The time is going fast and we all know that Expo 2020 is very near and the development of a country sounds a best role in introducing world wide,the government of UAE implemented the System VAT in UAE.

As said above the 5% tax will be thoroughly validated for middle class,upper class and lower class in different manner.

Why Recession in GCC Countries ?How Tax Introduction can Solve Recession.?

Job seekers are very much scared of UAE now. Everybody picks a flight to abroad in dream of getting beautiful and high paying jobs in UAE. While the companies just bring tons of CV (Resumes) from Candidates and they weren't much knock of at the HR section. 

The interesting incident regarding the same and came at online new channels regarding this occasion and a boy up with CV inside pizza for the HR for a glance on his CV - Happened on October 2016 at United Arab Emirates. This all happening because of Recession. The High Corporate companies and small companies also in recession and government can't be able to take any solution to make a change over this word.

While We consider INDIA one of the biggest economy country in Asia and CHINA.These countries well know as the brick of Asia.These are least effected by recession,since both are developing countries.Philippines having the good fortune of low inflation and high GDP growth and a current account that is positive thanks to all the remittances from abroad. From the above chart we can see that the above said countries India and china well know in paying their respective TAX duties with the government of India.

Got Confused ??
  1. How Taxes makes good in development to UAE.?
  2. How to Get away from this TAX ( VAT system) ?
  3. How Recession and Tax relates ??

AED 1,000,000 <= Income <= AED 2,000,000
AED 2,000,000 <= Income <= AED 3,000,000
AED 3,000,000 <= Income <= AED 4,000,000
AED 4,000,000 <= Income <= AED 5,000,000
40 %
Income >= AED 5,000,000
Custom duties on CIF (cost, insurance, freight) value of goods imported (Sharjah)

The above table explains the VAT Percentage in AED with reference to an individual/firms income should be submitted to the respective Emirates.

How to Get away from this TAX ( VAT system) ?

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Many Confusions arises before you submit your income before the TAX Authorities.No worries. A & A Associates ( AA Dubai) will clear all confusions and makes the best Tax Deals.

While we can come to our point that How to get away from this VAT System that were introducing on wards January 2018 for the Upper Class,Lower Class and for the Middle Class with Example.

Ranges below 30,000: Sounds very lower middle class and might be hard terrain.
Ranges 30,000 - 40,000: Lower middle class. You have just enough to cover all expenses on a quiet lifestyle, rarely going out, rarely shopping, minimal travel. 
Ranges 40,000 - 60,000 : mid range middle class. You can afford the better international schools, a pleasant villa in Arabian Ranches or the Springs, dining/shopping and still save a good portion at the end of the year.
Above 60,000+ range: Upper middle class. Luxurious villa in the Meadows or in Jumeira or Umm Suqeim, more lavish travel destinations, nicer cars. 

Tips For Upper Class

As said above AED 60000 above in annual income shows the Upper class family income or whatever does jobs inside the family a total of 60000 AED will comes under Upper Class and the business that they were runs like cafeteria,sales or whatever may not comes under this personal tax fee.
So,How to include both business and Family income under 60000 or if happens to see an increment,what all things you should manage to submit your income under 60000 in the lower class department?
  • Change Personal banking account(SB) to Current Deposits Account.
  • Collect Maximum Charity Bills
  • Don’t Pay Off Your Student Loans : Interest you pay actually helps at tax time because you can deduct it from your AGI.
  • Contribute to a 401k or IRA : First method is to deposit pre-tax contributions into a 401k or other tax-deductible retirement account, such as an IRA.

Tips For Middle Class

As said above Between AED 40000 - 60000 AED in annual income shows the Middle class family income or whatever does jobs inside the family a total of Between AED 40000 - 60000 AED will comes under Middle Class and the business that they were runs like cafeteria,sales or whatever may not comes under this personal tax fee.
So,How to include both business and Family income Between AED 40000 - 60000 AED or if happens to see an increment,what all things you should manage to submit your income under 40000 in the lower class department?
  • Change SB Account to Current Account in terms of Low Income Business.
  • Collect Maximum Charity Bills as you can and submit at the time of Tax day.
  • Don’t Pay Off Your Student Loans : Interest you pay actually helps at tax time because you can deduct it from your AGI.
Tips For Lower Class

Since Lower Class Families have to concentrate only on  Charities and they live on daily wages and that will be for that day.As said in above,you can also do the same action as much you can along with try to maintain income certificate under BPL.

For Business Corporate How does this happens and How to Recover  from this ? 

Corporate tax (expect in all oil and gas companies and subsidiaries of foreign banks)
0%. There are no taxes levied by the Federal Government on income or wealth of companies and individuals.
Tax applicable for all companies: the duty deducted by the municipality in each Emirate at the time of issuance or renewal of a trade licence.
10% of the annual amount of the rent of offices and warehouses and 5% of the annual amount paid by a company to accommodate its employees.

Follow these points to get rid from at-most of VAT from Business firms:

{1}Select the Correct Filing Status in the tax application form:  If you are married, you can choose between married filing mutually and married marching separately. However, In case of; Single parents can file as unique but can often get a promising deal on their taxes by filing as head of household.
{2}Contribute to a health savings Insurance : if you have a high demonstrable medical plan. The charity unused for medical expenditure can make a deal for the foreseeable future  and grow tax-free assets in a pension or says retirement account.
{3}Own real estate: For Small Scale business owners, if not able to own a real estate business, try to deal with brokers or act as brokers and maintain the bill commission in current bank account and maintain this bills at tax stations. For large scale sectors, try to own a real estate side business and maintain all in and out go bills by Contributing to a 401k or IRA.
{4}Uphold Dowry: Dowry system is illegal  in most of the countries, but in fact, showing the Dowry in form of Gold or Plot or any other commodities in form of dowry legally can be shown and maintain a loan on it.

How Taxes makes Treasure in development to UAE.?

Most of the highest paying tax countries demands VAT system for many government purposes and for introducing new government system inside the country and for other legal procedures and paying remuneration to the government employees.

  • Increase VAT rates in Beverages.
  • Increase VAT rates in Theatres.(without Increasing Current Price).
  • Increase VAT in Large Sectors and Decrease VAT from Small Scale Sectors.
  • Decrease VAT in Hospitals and Tourisms.
How Recession and Tax Relates ??

As we all know the government and private sectors are very much in a complicated situation while the term recession attacks our UAE. Still 2017,the government collected the Tax for UAE government citizen in form of Tourism as well as Hospitality. The people who comes for tourism as well as those who were hospitalized was always and going on trouble because of this issues. Once VAT gets introduced, the problem facing by each individual in tourism as well as Hospitality can save their money.

Still Confused How Recession can be solved this VAT ?

People visits UAE in hope of getting big salary jobs and they leave their family in dream of many big companies are waiting for. However, most of them can't be able to fulfil their dreams. Those guys search for job will keeps on waiting for the HR or Staff's for getting an appointment to submit their CV's. But the bad luck or Best luck can't be predicted.
Some of the CV's will be forwarded to HR's Desk and other will be at the Receptions or some of them will stuck as toilet papers.
Feels Ugly and Guilty on the action, with those who were doing this kind of action. Right?

Tips for the Companies -Follow this tips to Make Recession be solved once VAT arrives in UAE 2018 :

  • Announce the Vacancy via Medias, Conduct Paid Interviews which were VAT Authorized with Municipalities in your Area.
  • Participate your Company in all the Exhibition's, which were VAT Free, moreover, company can gain more clients through it, such that wages can easily paid and can secure your company from the part of recession.
  • Once VAT arrives, Start your Trading with Oil and Other Big Competitors which were home available like Gold,Steel...etc., can solve the recession in your companies.
  • The VAT System will helps in development of Countries, which include private sectors also, so that most of them will gets UAE government jobs through it in categories of Accountants,BCA as well as for locals in UAE in their related studies. So, that private firms can introduce new employees for their companies, which can maintain 20% recession inside the corporate companies.
  • Merge your company with Medical and Life Insurance corporates, such that once VAT introduces, your company will provides all kind of medical facilities with free of cost and life assurance will be guaranteed, so that employees don't want to look over for other medical insurance and the work will be undergone at the right time and profits will be awarded accordingly.
  • Claim the Company with Audit Firms, such that in and out flow of cash can be maintained once VAT system arrives, in such away that the Audit firms will give the advice on how much low income in and out flow should be presented to the Tax representatives and attain company profits in doing so.
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