How to Make Sure Your Business is 100% Compliant with UAE VAT Law
If you want to make sure that your business is compliant with UAE VAT law, don’t worry. Here are some ways to meet the unique needs of your business ensuring complete, VAT compliance. Value Added Tax is an indirect tax on consumption and it is mostly applied on goods and services at 5% standard rate. GCC introduced VAT to diversify income sources as developments are negatively affected by revenues in the region. The businesses can also reclaim the VAT incurred on goods and services as it’s subject to some restrictions and acquired for business purposes, for example, purchase of raw materials and other materials. Problems with VAT compliance are common, either because a business does not have the right systems in place or because of a specific complication. There are some VAT compliance requirements for ensuring your business is 100% complaint with VAT law. It has an inherent feature for the self-assessment nature, every business required to be VAT registered must record and report its VAT obligations according to the law. Following procedures can ensure cent percentage of business compliance with VAT law:
Register Your Business with the Federal Tax Authority for VAT Returns
For every business exceeding the mandatory VAT registration limit themselves to go for VAT registration. It is the process of obtaining Tax Registration number under VAT law. VAT is charged on the value-added at each stage of a product. All business organizations and manufacturing houses need to be registered if their threshold limit exceeds. A business register for VAT if their annual turnover exceeds the threshold of AED 375,000 as per the current year. There exists an option for voluntary registration if there is a threshold of AED 187,500.
Record Maintenance in respect of a business transaction
A business transaction is an event that takes place with a financial value in business. It can be measured in monetary terms as it is recorded in the books of accounts. By maintaining and keeping the records on the track, the businesses can easily measure the value added by them. It is also helpful to become VAT compliant.
The record maintenance of VAT includes:
VAT Invoice: The document issued by a VAT registrant indicating that a taxable supply has been made and that VAT has been charged on the value of the goods or services supplied. The Purposes of Vat Invoice are
- It serves as a notice that the supplier is charging tax
- It serves as a reference for cross-checking, the tax credit of a value-added tax
- It acts as the principal evidence that supports a registrant recipient’s claim for deduction of input tax
Debit and credit note: The debit notes are issued by a buyer to seller and credit notes by the seller to the buyer to indicate the return of funds due to damaged goods received or cancellation of purchase under circumstances.
Systematic categorisation of supplies to zero-rated and exempted categories
Zero rated-supplies refers to items subject to a 0% VAT on their input supplies. This category includes goods and services listed for export and international services, precious metals, certain education, and health services and supplies, residential properties that are newly constructed and supplied within three years. Exempt supplies refer to 'supply of goods or services conducting business in the State, where no tax is due. Therefore, VAT is not charged on exempted goods. It includes Health Sector, Education, Food and rent, local passenger transport, corporate businesses, first-time property buyers, residential leases and land buyers.
Prepare and submit VAT return statements before deadlines
'Tax return' is a statement which a VAT registered business needs to submit to the FTA. The details to be submitted are mentioned in the UAE VAT executive regulations. All the details need to be prepared in accordance with the VAT Return format. The VAT return filing period is on a quarterly basis. The deadline to file VAT returns will be the 28th day. The subsequent month following the end of the tax period.
Hire a Tax consultant for effective Tax planning
Hiring a tax expert can help you in tax planning and protect you from penalties. Consider this as an end to end process and solution. Tax experts can help to bring better communication and provide training to the accounts team in preparing and handling the documents. They assist to choose the right accounting system and automate the transactions with end-user flexibility. One shouldn’t underestimate their skills and timescale as they provide the pathways and protects you to meet the deadlines.
Why Choose CDA?
CDA team includes experienced tax advisers who have relevant industry-specific experience in taxation complying with UAE Laws to meet their VAT filing requirements. We are committed to providing the best VAT consultancy services to the clients in compliance with the rules and regulations of the FTA. By availing CDA VAT consultancy services in Dubai, you are getting access to the best possible means to fix the VAT structure that facilitates the entire VAT processes including VAT registration, VAT record keeping and maintenance, VAT return filing, VAT accounting, VAT deregistration and everything related to the Value-added tax in UAE.
CDA offers a wide range of services that include CFO Services, Auditing Services, Accounting & Bookkeeping Services, Accounting Software Consultancy Services, Due Diligence Services, VAT Return Filing & VAT Consultancy services.
If you want to make your business compliant with UAE VAT law, feel good to contact us. CDA is there for your assistance!