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VAT for Shipping/Marine Companies

The UAE has the geographical advantage of accessibility towards all the directions and people. The long coastline and sea routes made it a perfect destination for trade and tourism in the marine industry. The tax jurisdictions apply taxes to the transportation of goods locally. The marine industry is amused due to:  Economic diversification, Efficient implementation of the latest technologies, Multimodal logistics in the UAE, inbound and outbound transportation is zero-rated, the transport of goods is subject to VAT at 5%. There are several different rates of VAT on the shipping sector based on goods or services. UAE VAT Law prescribes marine transport-related services as shipment, packaging, securing cargo, customs documents, container management, loading, unloading of movable goods.

VAT Categorization for Marine Companies

Standard rate - 5%

  • Local transportation of goods 
  • Local transportation of passengers in qualifying means of transport for pleasure, sight-seeing, etc. 
  • Local transportation of passengers in non-qualifying means of transport 
  • Transport related services for local transportation of goods 

Exempted

  • Local transportation of passengers in qualifying means of transport 

Zero-rated

  • Inbound and outbound transportation of passengers and goods (including intra-GCC)
  • Transport related services for inbound and outbound transportation 
  • Local transport which is part/for the purpose of inbound and outbound transportation 

Outside the scope of VAT

  • Transportation originating and terminating outside UAE 
  • Transport related services for cross-trade transportation 

There are a number of service providers in the supply chain they are: Porters, Vessel agents, vessel management companies, bunker suppliers, 

Vessel owner (shipowner): The vessel owner is the entity who owns the vessel. VAT Implications on shipping services are:

  • International transport of goods which starts or ends in UAE, or passes through UAE, shall qualify as zero-rated supply. If the vessel owner undertakes international transportation of goods then such activity may qualify as zero-rated supply.
  • The place of supply of transportation which begins outside UAE and ends in UAE may be regarded as outside the scope.
  • If transportation is undertaken within the UAE, then it may be taxable at 5%.
  • The place where the means of transport is placed at disposal [provided the recipient is not in UAE and does not have a Tax Registration Number (TRN)] subjected to zero-rating provisions.

Vessel operator: If the vessel operator is in relation to international transport then it may qualify as zero-rated supply. Leasing or charter hire of means of transport could be zero-rated.

Repairers: The place of supply for washing, repairs, cleaning, and maintenance services, if performed within UAE, VAT would be leviable and the service may not qualify as zero-rated export since the service is undertaken in UAE

Freight Forwarders: Ocean freight for international transportation would be zero-rated, it needs to be established whether other charges can be regarded as transport-related services. As per UAE VAT Law the supply of ship, boat, or floating structure that is designed or adapted for use for commercial purposes is subjected to zero VAT liability.

How CDA helps you?

CDA VAT experts having relevant industry-specific experience in taxation in compliance with international standards can help you successfully complete all your VAT activities without any fail. Our VAT services on shipping include:

VAT Registration

Our tax experts will help you to obtain TRN for the company by submitting essential documents which include:

  • Trade license
  • Authorized signatory documents (Emirates ID, Passports)
  • Power of Attorney
  • Bank details
  • Financial statements of the previous year

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 exempted, 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. CDA experts prepare VAT return filing on 201 forms and submit it to FTA authority. 

VAT Implementation and Compliance

Business compliance with UAE VAT law is a complex task. Following each law concept and filing the tax 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 must be paid on time with FTA for smooth tax life.

Why a Tax Auditor or Tax Consultation is considered to be Important?

In Marine companies Tax auditing helps to maintain the documentation system with:

  • Safeguarding the financial records for 5 years
  • Helps in Tax refund at times mostly
  • Reduced complexity in proving the sales as zero-rated

CDA Services

With well-versed Tax experts, we provide Tax auditing to a large number of clients across UAE. Our team includes certified professionals serving Marine industry clients from both in the UAE and overseas. Our team is well experienced in providing VAT on shipping services. Our services include Bookkeeping & Accounting, VAT Consultancy, CFO Services, Management Accounting and Internal Audit.

CDA experts provide excellent VAT services for shipping and marine companies in compliance with the UAE Law. For more information, contact us at +971 426 100 89 or [email protected]. Our VAT specialist will support you with a free consultation.

Frequently Asked Questions [FAQ]

1. What is voluntary registration for VAT?

Voluntary registration occurs if the total value of supplies exceeds the voluntary registration threshold of AED 187,500 over the previous 12-month period.

2. How is the date of supply calculated?

Date of Supply of services shall be the earliest of any of the following: 

  • Date on which provision of service was completed 
  • Date of receipt of payment 
  • Date on which tax invoice was issued

3. What are Voluntary disclosures?

VD is a form provided by the FTA in which a taxpayer notifies the FTA of an error or omission in a tax return. If there is an error required by more than AED 10,000 then the taxable person shall file VD within 20 business days of the date.

4. What are the courier services?

The courier service delivered from outside the UAE to within the UAE or vice versa may qualify as zero-rated supply. It includes:

  • Freight forwarding 
  • International courier services
  • Domestic courier services
  • Warehousing services 
  • Cash on delivery services

5. How is cross border trade treated?

Since transportation would originate outside UAE, the place of supply would be regarded as outside UAE and hence may be regarded as out of scope.

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. When can I claim my input tax?

If you have missed out any bill in the previous filling or the vendor submitted the invoice late, FTA allows you to claim the input tax in the next subsequent period.

8. How can I refund my Tax from FTA?

VAT is refundable if the output VAT amount is lesser than the input VAT amount, the excess balance will be VAT refundable. After determining the amount:

  • Login to FTA website 
  • Click on VAT refund Request
  • VAT refund form 311 Will be available to edit the fields asked 
  • Authorised signatory declaration needs to be made before submission of the form

9. What is the timeline for a VAT refund?

VAT refund is made within ten business days after submitting and verifying the refund form.

10. Is Vat Group Registration possible? If yes, what are the conditions to be met?

Yes, VAT group registrations are available, A VAT group is a group of two or more persons registered with the FTA as a single taxable person. The conditions to be followed are:

  • Each person should have a place of establishment or fixed establishment in the state
  • The relevant persons shall be related parties
  • In partnership businesses tax person should have control over the other

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