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VAT Services for Manufacturing Companies in UAE

A value-added tax is an indirect tax charged on the taxable supplies and is regarded as a consumption tax. A manufacturer, who is a taxable person, is expected to pay VAT on taxable supplies manufactured by him when they are marketed to customers. It is placed on a product whenever a value is added at the stage of production and at the point of retail sale. Both consumers and businesses who are the residents of a country are liable to pay VAT when purchasing services or products. The cost of the product, less any of the cost of materials used in the Product that has already been taxed is the Amount of VAT that the consumers pay.  On production, manufacturers are liable to pay VAT in UAE for the components used. VAT was introduced by FTA with a standard rate of 5% under the GCC VAT system. 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.

VAT Impact on Manufacturing Sector

The UAE Government and the federal tax authority (FTA) defined this process of the threshold for registration and reporting of VAT. All those businesses who have registered for VAT have to file their monthly or quarterly VAT return as prescribed by the FTA. For all businesses, it is a continuous challenge in managing VAT. VAT for manufacturing companies involves numerous complex and technical rules. Manufacturing consists of acquiring raw materials and producing finished goods and services. A manufacturer, who is a taxable person, is required to charge VAT on taxable supplies made by him when they are sold to the customers and he is also allowed to claim input tax credits on any purchases made for the business purpose.

VAT Categorization

Goods and services are alienated into three categories on which VAT will be applied:

1. VAT Exempted Category

It includes Health Sector, Education, Food and rent, local passenger transport, corporate businesses, first-time property buyers, residential leases and land buyers

2. Zero per cent VAT

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.

3. Five per cent VAT

This includes electronics goods, clothes, food, fuel, communication services, entertainment, etc.

How CDA helps you?

Businesses that fail to comply with the rules and regulations of VAT may have to face serious penalties. These penalties may harm the goodwill of the business as well as the reputation of the businessman in the market. Hence, it is reasonable to consult a VAT expert before VAT submissions to avoid these stumbling blocks. CDA offers quality accounting and VAT services for manufacturing companies in Dubai and UAE. CDA provides top-notch tax consultation services and the Implementation and Tax Reclaim Services at a very reasonable charge.

The CDA experts are chosen because they are insightful of the procedures of the VAT. They know the right protocol to follow for the UAE VAT registration. That is why CDA is the first choice to be considered by the companies for their business compliance with UAE VAT Law. At each distribution, channel VAT is added up to purchase and sales, that is why it’s called as a value-added tax which is obtained in multistage of productions. We provide various VAT services for manufacturing companies such as:

VAT Registration

VAT registration is necessary for all manufacturing companies. The entire process of VAT registration takes place on an online platform. In order to attain a tax registration number (TRN), one must fill the VAT registration form online and submit the essential documents required.

VAT Record Keeping

Our tax consultants help you to maintain the documents in a systematic manner which includes:

  • Sales invoices, purchases invoices
  • Debit and credit notes provided
  • Import and export documents.
  • Records of goods issued for free use
  • List of exempt, zero-rated supplies if any

VAT Calculations and Return Filing

Before calculating VAT, your business must comply with rules to avoid any penalty. VAT return depicts the tax amount due for a particular tax period. A taxable person prepares vat return filing on 201 forms and submits it to FTA authority. Small and medium businesses opt for monthly filing and large businesses go for quarterly filing through FTA portal.

VAT Implementation and Compliance

Compliance with UAE VAT law is a complex task. Following each law concept and filing the tax for all manufactured goods it can be finished or semi-finished is necessary to avoid the penalty. We assure your tax filings on time.

VAT De-registration

It is the process of cancellation of TRN. Deregistration occurs when the taxable supplies fall less than the threshold limit as prescribed by FTA. Our VAT deregistration services are at a reasonable rate.

Filing Reconsideration Form for VAT Penalties

Before submitting reconsideration forms you must pay the previous penalties and wrong filing fines. VAT penalties in UAE must be paid on time with FTA for smooth tax life.

Importance of a Tax Auditor in determining the Tax Liability

The implementation of VAT in Dubai and UAE has brought major changes in the taxation system of the Emirate. Getting proper VAT services in UAE helps businesses to avoid the risk of unnecessary tax payment. Tax auditors help in VAT compliance issues and control.

  • Data recording and maintenance
  • Identifying prospective tax planning opportunities
  • Identifying risk and suggests proper solutions
  • Minimising VAT liabilities
  • VAT Filing and payment

CDA Services

As a team of well experienced and certified professionals, we provide VAT services for manufacturing companies across the UAE. Our highly specialized teamwork sounds good to many clients.  We help manufacturing companies with Accounting services along with business advisory services, CFO services and Internal audit services.

Frequently Asked Questions [FAQ]

1. Is it necessary to pay VAT on imported goods?

Yes, VAT is due on imported goods and services under two circumstances:

  • If the recipient is registered under FTA a reverse charge mechanism is used for the VAT due.
  • If the recipient is not registered under FTA, VAT would be paid on imported goods from a place outside GCC before transferring the goods.

2. Can goods exempted from customs duty enjoy the VAT exemption?

It is not necessary that goods enjoy both the benefits simultaneously, there can be variances.

3. What are the VAT rates?

The standard rate of VAT is 5%. There will be exempted and zero-rated goods and services. The standard rate is applied to all goods and services that do not fall under an exempt or zero-rated goods and services category.

4. How long VAT invoices to be retained for?

Any taxable person must retain the VAT invoices and other notes for 5 years as per FTA.

5. under what circumstances VAT incurred on expenses cannot be claimed?

VAT is not deductible for nontaxable supplies. Customs duty cannot be claimed for payment of VAT. In some cases, input tax cannot be recovered. E.g.: Entertainment expenses.

6.what is the deadline for VAT return filing?

The deadlines are clearly mentioned in the TRN certificate and it is monthly or quarterly based. The payment of due tax is on the 28th day of the tax period.

7. Is it possible to issue Proforma Invoice or not?

For the purpose of VAT filings, Tax invoices are preferred. Proforma invoices are not valid for VAT return filings.

8. Do I need to register for Vat if all my suppliers are Zero-rated?

Yes, if your zero-rated supplies exceed AED 375,000, you will be required to register for VAT, however, you can also claim exemption from VAT registration if needed.

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