VAT IN UAE

UAE Government announced the implementation of Value-Added Tax (VAT), which is slated to be in effect from 1st January 2018.

WHAT IS VAT?

VAT is an indirect tax, it is imposed on supplies of goods and services that are bought and sold in UAE. Occasionally, you might also be referred to as a type of general consumption tax. VAT is one of the most common types of consumption tax found in over 150 countries.

DOES VAT REQUIRE ACCOUNTING?

Yes, businesses will be required to keep accounting records which will enable the Federal Tax Authority to identify the details of the business activities and review their transactions. The time period to retain accounting books is minimum 5 years.

IS VAT APPLICABLE TO YOUR BUSINESS?

Yes, it is applicable to the majority of transactions in goods and services in every business sector. However, it is expected that only utilities like health care may be exempted from the tax.

VAT RATE

VAT imposed rate will range from 0% to 5% and few activities are exempted from tax.

VAT REGISTRATION

VAT is applicable to every business sector whose turnover is more than AED: 375,000/- per annum.

VAT RETURN FILING

Taxpayers must file VAT returns within 28 days from the end of the tax period in accordance with the procedures specified in the VAT legislation.

VAT PENALTIES

Several types of penalties will be levied for non-compliance of VAT law. Few examples of actions and omissions that may give raise to penalties include:

  • A person failing to register when required to do so.
  • A person failing to submit a tax return or make a payment within the required period.
  • A person failing to keep the accounting records required under the issued tax legislation.
  • Tax evasion offences where a person performs a deliberate act or omission with the intention of violating the provisions of the issued tax legislation.

    HOW FINHUB CAN HELP YOUR BUSINESS

There is a relatively short time to consider the implications of the introduction of VAT in Dubai and for the clients to make the necessary changes needed. The amount of work required will, of course, depend on the size and complexity of the business concerned which is why it is important to take steps to assess how best to deal with the reality of VAT in Dubai as soon as possible.

FINHUB has professional experts in VAT, who undertake the following step for successful implementation of VAT in your business.

  •  Understand your business:

FINHUB Experts visit your office to understand the business model for designing a VAT Implementation plan, which suits the UAE VAT regulations for your business.

  • VAT registration:

To comply with UAE VAT Law, FINHUB Experts will advise regarding the procedural formalities and the date by which registration must be made, considering whether the company will get any exemption in this respect or not.

  • Studying VAT impact on your business:

FINHUB will study the impact of VAT on working capital, costing and profitability of business to streamline the operations by complying with UAE VAT LAW.

  • Managing the accounting records for VAT:
  1. Dedicated FINHUB Expert: – For shifting the transactions into UAE VAT compliance and to function smoothly and in a timely manner, we will provide a dedicated FINHUB VAT Expert to complete your accounting records.
  2. Accounting systems under VAT: – The present accounting systems will be scrutinized. Proper classification with an appropriate chart of accounts suitable for VAT regime will be suggested. Necessary changes will be made to file the first VAT return to the Federal Tax Authority (FTA).
  3. Invoicing under VAT: – FINHUB Experts will give proper guidance to the clients to implement VAT invoicing under the UAE VAT Law.
  4. IT Software: – To incorporate the changes in the billing, accounting, and other administrative procedures to comply with UAE VAT formalities, necessary guidance or information required will be communicated to the client.
  5. Filing of VAT Return: – FINHUB Experts will provide the support for preparing and filing of the first VAT return by taking the correct input tax credit against the total VAT liability.