Inayat-ur-Rahman

WTS Dhruva Consultants, a boutique tax advisory firm and FTA registered Tax Agent with presence in the UAE, Saudi Arabia and Bahrain, has published another comprehensive guide on ‘Impact of Indirect Taxes on Retail Sector in UAE’ for companies engaged in the retail business.

This is the company’s third publication, previous being the VAT publications on the Healthcare sector and the Shipping and Logistics sector in the UAE.

With the presence of more than two years, WTS Dhruva Consultants have been working closely with large conglomerates across the GCC region and have assisted in VAT implementation, VAT compliance automation support, VAT structuring, litigation support, Support in Excise Tax matters etc.

The firm believes that as VAT and Excise Tax regulations are evolving in the region, it is imperative for the businesses to ensure that the business processes are aligned with the indirect tax positions / procedures prescribed.

It is equally important for the business to re-evaluate the tax positions taken at the time of implementation; as the same could undergo a change considering the regular publications, guides, clarifications etc. issued by the Tax authorities. The re-evaluation may have an impact on the previously submitted tax returns and the exposure to the penalty may persist on the businesses. Further, retail sector is largely impacted by both VAT and Excise Tax.

It becomes very crucial to have adherence to the tax procedures considering both the legislations.

The guide is prepared by WTS Dhruva’s team of VAT experts with hands-on experience in the retail sector and covered a wide range of topics.

This will be relevant and useful to a wide cross-section of organisations in the sector as it highlights the VAT treatments on multi-structured revenue streams such as POS, supplier incentives, consignments etc. and also on the promotion and loyalty schemes which are one of the key drivers for the consumer buying patterns.

The guide also intends to simplify the Excise Tax requirements for the retail sector and highlights the importance of tax technology in the complex and evolving retail sector environment.

Dinesh Kanabar, CEO and Founder at WTS Dhruva Consultants, said, “UAE is the land of retail tourism and top destination for international tourists as well as global retailers. Therefore, the retail sector is one of the key pillars for the growth of the UAE economy. Any tax on retail sector thus needs to balance between the government priorities, legislative requirements and revenue enhancement.”

The guide discussed key challenges faced for E-commerce transactions, whether barter transaction would be taxable considering it may not involve transaction in money, how the promotion schemes including Loyalty Programmes should be considered for VAT purposes etc. The guide also highlights the implications of Tourist Refund Schemes and the role of tax technology in the functioning of retail sector.

“It’s very important Indirect Tax guide for the retail sector in the UAE. It touched upon all the important indirect tax implications and provides a comprehensive overview of tax web around retail sector. We aim to simplify VAT treatments even on remote parts of retail business such as Shop-in-Shop, intermediary services, second-hand goods, during and after-sales services, barter transactions, impact on expenses, free zone movements etc.,” said Pratik Shah and Sampada Borkar (Partner and Senior Associate at WTS Dhruva Consultants).

Pratik Shah and Sampada Borkar further added: “It is worthwhile to understand and evaluate whether companies can apply a blanket discounting model for all the promotion and loyalty schemes or are there any exceptions to the rule. Inevitably, while there will be exceptions, some of the schemes could continue to be considered as discount while few would have an impact of 5% VAT being considered as tender.”

WTS Dhruva Consultants offers single-window tax consultancy services to businesses that are in the process of adapting to the changing tax scenario in the Middle East. Headquartered in Dubai, with an additional operational office in Bahrain, WTS Dhruva Consultants has a dedicated force of tax specialists working across sectors. WTS Dhruva Consultants is an affiliate of Dhruva Advisors, a leading tax advisory firm in India, which is known for its commendable work during the introduction of Goods and Services Tax (GST) in the country in 2017. WTS Dhruva Consultants has a formidable team with deep industry experiences across virtually all sectors including hospitality, FMCG, Oil & Gas, Real Estate, Insurance, IT and other financial services.