Value Added Tax or VAT is a form of indirect tax imposed on the use or consumption of goods and services at each point of sale. The cost is ultimately borne by the end-consumer. Businesses and organizations collect the VAT on behalf of the government. With the introduction of VAT in UAE on 1 January 2018, consumers are expected to pay 5 percent for the product or service they use. By availing the right VAT services in Dubai, UAE, you can easily manage the VAT aspects of your business. Being registered under the UAE VAT law stipulates that your business is recognized by the government. Consulting a VAT service provider in UAE eases all your VAT-related processes, thereby making your business abide by the Emirati VAT laws and regulations. CDA is one of the leading VAT service providers in Dubai and UAE, which offers exclusive VAT services including VAT registration, VAT deregistration, VAT return filing, VAT accounting services, and more.
The United Arab Emirates introduced a new form of indirect tax called Value Added Tax (VAT) in UAE on 1 January 2018 with a rate of 5 percent on goods & services. The VAT policy assumed by the GCC countries potentially widens the economic scope of the countries by integrating an additional source of revenue in the wake of the oil crisis. This new source of income will be utilised for high-quality public services by shifting to a more sustainable consumption system. It also aims to reduce the government’s dependence on oil and other hydrocarbons as a source of revenue. VAT consultancies in the UAE provide various VAT services in Dubai and across the Emirates easing the activities related to Value Added Tax registration, deregistration, accounting, return filing, advisory services etc. The implementation of VAT in UAE has brought major changes in the taxation system of the Emirate. Getting proper VAT services in Dubai and UAE helps businesses to avoid the risk of unnecessary tax payment and maintain accurate VAT records, tracking up-to-date information regarding VAT filing.
Value Added Tax or VAT is a tax on the expenditure or use of goods and services imposed at each point of sale. The bearers of the cost will eventually be the end-consumer. Organisations are obliged to collect and account for the tax in aid of the government. VAT in UAE is applicable uniformly on tax-registered businesses running both on the UAE mainland and in the free zones.
A taxable supply refers to a delivery of goods or services made by a company in the UAE that may be taxed at a rate of either 5% or 0%.
Now businesses must have a fresh look at their business model. Proper continuance of accounting records will be one of the initial requirements for any business to endure the new legislation. Appropriate recording of all the invoices, outflows, etc. will be fundamental so that VAT return filing can be made timely without any errors. Only hiring a reliable and experienced VAT consultant can help you ease your VAT processes effectively. To avail the best VAT services in Dubai and UAE, you need to find a professional VAT consultant who can help you with proper accounting and Value Added Tax Services. At this juncture, outsourcing all accounting services will be the better option for the businesses that lack internal capabilities and sufficient resources to support VAT implementation. A competent VAT consultant improves your business performance, operational efficiency and VAT compliance.
VAT compliance issues and control
Minimising VAT liabilities
Identifying risk and proper solutions
Identifying prospective tax planning opportunities
VAT Filing and payment.
Data recording and organization.
Accounting & Bookkeeping.
Basically, a business can opt for any of the two types of UAE VAT Registration process:
1. Mandatory Registration
The threshold for mandatory registration of a business is AED 375,000. But this threshold is not applicable to foreign organisations.
2. Voluntary Registration
The threshold for voluntary registration of a company is AED 187,500.
Businesses can register for VAT in UAE through the e-Services portal on the FTA website.
Businesses are required to maintain proper records to file the VAT returns for your following transactions:
a) Local Sales falling under normal VAT procedure,
b) Taxable Export Sales (GCC Sales),
c) The VAT Exempted sales,
d) Local Purchases and Import Purchases.
d) Zero-rated Export Sales.
It is indispensable that organisations should try to understand the implications of the new taxes and make every endeavour to line up their business model to government reporting and compliance provisos. Businesses may need to make some changes to their mainstay operations, accounting and book-keeping, technology, and maybe even to their human resources to wholly abide by the UAE VAT legislation.
VAT implementation in the UAE has brought some fundamental positive changes to the region that are discussed below.
Amplified lucidity and responsibility,
Advanced universal competitiveness,
Organisations with sophisticated ICT,
Improved functioning competence,
New resource of financial support for socio-economic programmes.
All the VAT registered organisations or the ‘taxable persons must submit a ‘VAT return’ at the end of each tax period to the Federal Tax Authority (FTA). VAT return filing declares how much VAT is to be paid by the taxpayer or reimbursed by the tax authorities. A VAT return recapitulates the assessment of the supplies and purchases a taxable person has made during the tax period and shows the taxable person’s VAT liability.
VAT Liability is the distinction between the output tax payable (VAT charged on supplies of goods and services) for a specified tax period and the input tax (VAT incurred on purchases) recoverable for the same tax period.
VAT Liability is calculated taking into account the following factors:
The entire sales and purchases of your business in the germane return period
The amount of VAT you owe for sales
The amount of VAT you are able to claim for the purchases made
If the output tax exceeds the input tax amount, the difference must be paid to the FTA. If the input tax exceeds the output tax, the taxable person will have the excess input tax recovered. He will be at liberty to set this off against subsequent payment owing to the FTA.
Businesses have to file for tax returns electronically through the FTA portal ‘eservices.tax.gov.ae’ and fill in Form 201:-
Particulars of the taxable person
The period of VAT return
VAT on expenses and all other inputs
VAT on sales and all other outputs
Net VAT due
Added Reporting Requirements
Statement and Certified Signatory
Form 201 is a statement that is required to be made by the taxpayer by the end of every tax period. It involves:-
Particulars of the taxable person
The Period of VAT Return
VAT on Expense and All Other Inputs
VAT on Sales and All Other Outputs
Net VAT Due
Added Reporting Requirements
Statement and Certified Signatory
What are the Benefits of Filing VAT Return?
VAT compliance brings goodwill to the business.
Good business collaboration. In effect, many large companies are habitually indisposed to carry out business with non-VAT-registered companies.
The business picture gets highlighted once registered under VAT law.
VAT is easier to administer when compared to any other indirect tax.
The standard tax period for VAT return is:-
Quarterly for businesses with an annual turnover below AED150 million
Monthly for businesses with an annual turnover of AED150 million or more.
The FTA may, at its discretion, allocate a different tax period for a certain type of businesses.
The businesses are liable to charge the tax to the customers based on the output and input tax.
Output tax is the VAT collected on selling goods or providing services to the clients. Input tax is the VAT paid on purchasing raw materials for the goods or services.
Hence, the formula for VAT assessment is:
Ignorance is bliss, but it is a blunder in the case of VAT. Businesses that fail to comply with the rules and regulations of VAT may have to face serious penalties that may harm the goodwill of the business as well as the reputation of the businessman in the market. Besides providing top-notch VAT services in Dubai and UAE, CDA offers Tax Consultancy Services and Implementation and Tax Reclaim Services at a very reasonable charge. Having a huge number of clients, CDA is acclaimed as a leading platform that has been dealing with VAT services in UAE of start-ups and established businesses across the Emirates. CDA also provides Accounting & BookKeeping Services, Accounts Outsourcing Services, Internal Auditing Services and a lot more other services related to the business in the UAE.
If you are looking for any services related to VAT in UAE, feel free to contact CDA; our vat consultants will be always there for your assistance to provide the best VAT services in Dubai and across the Emirates
VAT Registration is mandatory for those businesses, whose taxable supplies and imports exceed AED 375,000 per annum. While businesses can voluntarily register for VAT if their taxable supplies and imports exceed AED 187,500 per annum.
Quick view on the registration process:
Firstly, sign up for an e-service account by logging into https://eservices.tax.gov.ae and provide the details as required.
Secondly, login to your account and start the VAT registration on clicking ‘Registration for VAT’ on the dashboard.
Registration would not take more than 15-20 minutes, provided, the documents are readily available.
‘Non-residents’ are those businesses that are not established in the UAE or are not present locally. If they make taxable supplies in UAE, they are required to register for VAT, provided there is no UAE resident responsible for VAT accounting on these supplies. Non-residents can register for VAT in UAE with the help of a Tax Consultant. The tax consultant would assist in obtaining the Tax Registration Number (TRN).
No. A registered taxable person will issue a TAX INVOICE as defined by FTA. There are two kinds of invoices: Simplified TAX Invoice specifically for supermarkets as well as retail industries and Detailed TAX Invoice.
Once the claim for refund is submitted, FTA will review the application within 20 business days and notify the applicant (taxable person) via email, the acceptance or rejection of the submitted claim. Once your claim is approved, the refund will be made within 5 business days.
Yes, they can claim subject to Vat Law. There are various VAT refund schemes benefitting and supporting the UAE Nationals, even for those who are unregistered. This scheme is available to those constructing new residences in UAE solely for the use by the owner and family.
Below are listed under Exempt Supplies:
Yes. The tax paid on the import of goods is eligible for input tax recovery. This can claim back through the Reverse Charge Mechanism.
Yes. Fuel expenses specifically for business purposes can be claimed.
Good and Services on which zero-rate (0%) tax rate is levied are Zero-Rated supplies. For zero-rated supplies, input tax can be recovered. Examples:
Goods and Services on which VAT is not levied are Exempted supplies. Also, if all your supplies are in the category of exempted supplies, you are not required to register for VAT. And even you cannot claim for Input tax as well.
No. Businesses supplying exempted good or services are not allowed to claim input tax paid on purchases. The input tax paid would be considered as a cost to the company.
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