Introduction:
In the year 2016, the Ministry of Finance announced the application of Value Added Tax (VAT) in the United Arab Emirates (UAE). With the announcement, the country ended a long period of discussion and speculation of when the value added tax would be introduced (Terton et al. 2015).
As per the announcement, the UAE shall impose VAT at the rate of five percent on goods and on services with effect from 1st of January 2018. The five percent rate has been agreed by the GCC countries as well. The framework of agreement and other implementation of value added tax is released in the month of July. The implementation shall take place all throughout the GCC. The implantation of vat on the GCC countries will have effect on the 1st of January 2018. The amount that shall be generated from the revenue of VAT in the UAE is expected between eight AED to 12 AED in the first year of its implantation (Delgado 2016).

As per the Minister of State for Financial Affairs certain exemptions from VAT will be made and the same has been agreed by the GCC countries as well. More than hundred staple items is exempted and there will be zero rate industries such as education, health care services and social services. Moreover, as per the Younis Ak Khoury, the implementation of the value added tax will take place in different phases. Thus, vat registration as part of phase 1 shall become mandatory on the companies of the UAE that generate more than 3.75 million AED (Backholer, Blake and Vandevijvere 2017).

For companies that have an annual revenue between 1.87 AED and 3.75 million registration of value added tax shall be optional in the UAE.  In phase 2, the registration shall become obligatory for all businesses. The introduction of the VAT in the UAE shall affect both the consumers and the business.With the announcement of the value added tax in the UAE new discussions was raised about the readiness of business on 2018 in the month of January. Some business owners were of the opinion that it will take a lot of time for the new system of tax to fit in their financial structures. There was a particular moment in the UAE, in which the application of the VAT model was not decided and whether the GCC shall follow the same model of vat or they shall comply with a different vat model. Three main models were taken into consideration namely, New Zealand, European and Japanese (Sharma 2017).

The model of New Zealand came closest to resembling the vat model that was to be levied in the UAE at a single rate of interest and the same shall depend on the consumption of goods and services. Many jurisdictions have adopted the European model of value added tax however; this was marked by multiple rates and different rates of exemption. In reality, no vat systems should show different rates, exemptions, coverage, refunds and thresholds (Jayakar Pai and More 2018).

The vat system that was implemented by the GCC was subject to speculation and the following factors should be taken into consideration:

• System of efficiency and ease of administration

• Economic impact
• Possible adoption of VAT that is implemented by other countries other than Arab and those in the Middle East.

VAT Readiness:To deal with the challenges and other business activities in the UAE we should evaluate the daily business activities by focusing on the following business points:

Understanding: On all types of operational process an analysis should be conducted and other business domains should be monitored so that the affected areas can be studied in a proper manner (Terton et al. 2015).

Preparation: Implementation of the strategy to prepare a checklist

IT systems: To make sure that the IT systems are enabled of VAT, important elements should be made active such as accounting, point of sales and resource planning. The IT systems should be complete for implantation of all types of legal solutions so that the VAT requirements are properly complied with (Delgado 2016).

Current accounting: the accounting books should be kept in a proper order so that all entries are made before 2018 and the same should be ready for any change.

Value added tax accounting: all the correct accounts and other codes of VAT is set up in a proper manner so that circulation of the responsibility is done to generate the return of tax.

Employees: the staff should be knowledgeable about the process of VAT and update regarding job descriptions should be given to reflect the duties and responsibilities of the employees.

Compliance:As part of the general custom around the globe, the principles of self-declaration and other prepayment is expected to be applied in the UAE. Companies that are registered taxpayers should be held responsible for the calculation of VAT that is payable as part of the self-assessment process and execute the prepayment during the first fiscal year (Backholer, Blake and Vandevijvere 2017).
At the end of a given assessment year the company shall submit the annual tax declaration and it is expected from the company to complete their duties and responsibilities in a particular manner so that mistakes can be omitted when applying the value added tax rules in UAE.
Taking into consideration all the above mentioned points the consequences in case of non compliance of the process of VAT shall create legal liability and thus it is advisable for the management of the company to avoid future errors and sanctions (Sharma 2017).

Conclusion
After implementation of the value added tax in the UAE it will practically influence the functions as part of the business. VAT is applicable on goods and services at every stage of the supply chain and it has the burden on being borne by the customer at least as part of the theory. If the same is not applied in a correct manner, VAT may become an additional cost as part of the business and non-compliance with the law of tax shall lead to severe penalties. Thus, all businesses should undertake and review their current situation in terms of the customers and suppliers (Delgado 2016).

References
Backholer, K., Blake, M. and Vandevijvere, S., 2017. Sugar-sweetened beverage taxation: an update on the year that was 2017. Public health nutrition, 20(18), pp.3219-3224.

Delgado, P.A.A.D.L., 2016. The United Arab Emirates case of economic success: the Federal Government Economic Policies (Doctoral dissertation).

Jayakar Pai, R. and More, B., 2018. Sustaining social entrepreneurship through networks in Dubai, United Arab Emirates. Journal of Social Entrepreneurship, pp.1-19.

Sharma, C.N., 2017. GLOBAL PERSPECTIVE. CHARTERED ACCOUNTANT, p.20.

Terton, A., Gass, P., Merrill, L., Wagner, A. and Meyer, E., 2015. Fiscal Instruments in INDCs: How countries are looking to fiscal policies to support INDC implementation. Geneva: GSI.