What are the major differences between VAT and sales tax?

When you are the owner of any business, then you have to go through a lot of logistics and legalities to make it sound and sturdy. Often private business owners are liable to pay taxes to the government, but there are different types and names of the taxes, which make it a bit confusing for the consumers and sellers to understand.

If you are in the Gulf countries, then the only tax that existed before was sales tax, but now the government has implemented the value-added tax (VAT) on the businesses, so the rules and regulations have changed as well as the perspective of doing business. When you are running a business, then you need to have a better understanding of all the taxes. Given that you are not skilled enough, then you can actually take on the professional assistance of the best VAT consultancy in Dubai so that your business is right on track.

There are a number of differences when it comes to understanding VAT, and sales tax and this article has highlighted top ones. So read on!

Differences between VAT and sales tax

Difference between VAT and sales tax:

You might have heard or seen VAT or sales tax added on a bill you have recently paid. Most of us just payout without thinking whether they are charging you right or not. Not only for business owners but the general people should also be aware of the difference to make a better decision. Often people think that sales and value-added tax are the same things, but they are not

Following are some prominent differences between VAT and sales tax:


Sales TAX

It is placed on consumption items It is the tax imposed by the government
The seller pays it It is funded by the consumer but submitted by a seller
It is implemented on the products from every point of sale The government decides the tax on goods and services offered
The amount of tax is based on the cost of the product Different industries have different sales tax like retail will be different than health
By rules, it is based on the consumption of the taxpayer and not on the income The service provider should separately state the sales tax in the invoice
It provides robust incentives to generate more revenues The service providers need to align with the general rules

Take away!

If you are in the business industry then you that tax might be different in nature, but most of them compulsory. To get a better idea of how and why you need to pay them to government.  These taxes bring in transparency for the business for consumers and sellers. There are a number of ways business owners can utilize the knowledge regarding VAT and other taxes for better growth.

However, during the case filing or actual logistic process, one would need professional assistance. If you are looking for such help, then check out the best VAT consultancy in Dubai so that your business is legally sound.


More Recommended Posts:

All You Need To Know About Bookkeeping Service Providers

Top basics of bookkeeping a new business cannot ignore

Difference between Zero-Rated & Exempted VAT in UAE


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s