How Vat Will Affect The Newly Registered Companies In The Light Of Expo 2020

Dubai was selected as the titleholder to host The World Expo 2020 with the theme 'Connecting Minds, Creating the Future'. As of now, a total of 190 countries have confirmed their participation in the mega event. The international business exhibition is going to be hosted by Dubai from 20th October 2021 to 10th April 2021.

The organising committee of the Expo 2020 reiterates that the theme 'Connecting Minds, Creating the Future' resonates the powerful spirit of partnership and co-operation that has been the driving force behind the UAE's success in the creation of new paths of growth and revolution. 

It’s a matter of great euphoria that the Expo 2020 will be a golden chance for many businesses to nurture as well as exposure.

The official participants of the grand event are different countries and intergovernmental organizations which are invited by the government. The transactions associated with Expo 2020 are subject to UAE VAT. The UAE VAT Law that are applicable to a UAE company will also be applicable to the official participants of the event and the Bureau Expo 2020 Dubai will be the governing body for the refund scheme.

Article 54 of the Federal Decree-Law no 8 of 2017 on Value Added Tax states that a person may only recover VAT incurred in the UAE on Goods and Services, where the Goods and Services are used or intended to be used for making taxable supplies. 

The VAT is not recoverable if the incurred expenses do not relate to any taxable supplies made by the person.

Nevertheless, the FTA has announced certain guidelines to the official participants of 2020 Expo Dubai in relation to VAT, which may provide some relaxation to the participants.

Expo 2020 is a 6 months continuous event. So, the newly registered companies need to have complete planning with reference to the following aspects: -

When the companies have proper planning on the above scenarios, they can decide on tax registration and its accounting effect. So, the management will always have a strategic tax decision.

The UAE Government has released Cabinet Decision No. (1) of 2019 related to the refund of VAT paid on goods and services connected with Expo 2020 Dubai, along with the User Guide to elucidate the details of its implementation. The highlights of the Scheme are as under.

An Official Participant, holding a valid Expo 2020 trade license number and having no intention to use more than20% of the exhibition space or presentation for non-official or commercial purposes is eligible for a VAT refund.

Import of goods is subject to VAT under the reverse charge mechanism (RCM). A participant can avail upfront exemption by using the Bureau’s special Tax Registration Number in coordination with the Bureau.

Sale of goods for which the refund has been claimed is allowed subject to payment of VAT and necessary consent from the Bureau.

 As per Article 48 of the Federal Decree-Law No 8 of 2017 on Value Added Tax states that: -

The official participants should not include goods in any refund application if they have obtained the special TRN.

Conduct an impact assessment for your business in the light of Dubai Expo 2020. Plan how your products or services will reach the visitors in the Expo.

Face-to-face contact with relevant business owners, can often prove a refreshing change rather than e-mail or telephone-based sales. Creating solid relationships is what the business world is all about. Ensure that you and your team get the necessary training as early as possible if you lack proper interpersonal skills. 

Your interaction with the participating companies will give you the opportunity to join the Expo buyer and supplier network. Create contacts and network within your given place which will lead to partnerships, ancillary services or new clients.

Work with a digital marketing firm to ensure a strong presence on international search engines and social media outlets to reach out other countries. 

For the offline world, prepare your brochures and other marketing tools written or translated by a native speaker of the language which will be more impactful to the native speakers. 

Create relationships with logistics companies to ensure variety of payment methods to cater the needs of the different nationalities who can ship your goods around the world. Ensure that your network is so widened that not even a single visitor is left unattended. 

You must ensure that you have the right number of trained staffs who are multilingual to care the different nationalities. This will give you a chance to create a good impression on the visitors.

Make sure that you fulfil and follow the tax compliance and filing procedures properly to avoid any future issues. Be in touch with an expert who can advice you on this regard so that all your VAT related procedures will be smooth and you can be relaxed throughout.

A business may deal in multiple transactions that need to be traced and upheld at every step. Good accountants are more than just preparers as good bookkeeping makes tax preparation much easier. Proper maintenance of the Profit and Loss Statement, Payroll, Taxes, Sales and Purchases, Expenses, Bank statements, Cash flow analysis are highly important and must be exact as it ensures the goodwill and sustainability of the company. Keeping good books is a business necessity as it ensures you comply with the tax rules and make the payment in time saving your time and monetary loss. 

Since the participating companies need to comply with the tax regulations of the country, proper accounting and bookkeeping will help them ease their tax planning.

CDA’s well qualified and professional tax team will ensure VAT compliances for your business when you take part in the Expo 2020 and support you in the following ways: -

CDA is a team of Big 4 experienced professionals who have thorough insight into the market trends and the elasticities in the market. Our skilled experts can extend a wide range of services regarding your entry in to the Expo, and help you establish a better market position in the future.

We offer various Advisory Services to your business to make it follow the global standards. CDA team makes sure that your business complies with the tax regulations and is free from all tax burdens, and takes the rhythm to achieve your goal line.

CDA Accounting & Bookkeeping Services LLC also efficiently handles CFO Services, Auditing Services, Accounting & Bookkeeping Services in Dubai, Accounting Software services, Due Diligence Services, and Tax Filing & VAT Consultancy services on time according to the convenience of our good clients. 

Feel free to contact us. Our experts will give you one-hour Free Consultation to drive away your reservations!