VAT Consultancy Services in Dubai, UAE
Federal Tax Authority of UAE was set up in the UAE in the year 2016 and is the government entity responsible for the administration, collection, and enforcement of federal taxes. It was established in 2016 by the President of the UAE, via Federal Decree-Law 13 of 2016.
Taxation started in UAE as a part of the GCC wide initiative to diversify regional economies. The introduction of VAT and Excise taxes will help the UAE diversify sources of revenue so that government departments can continue to deliver excellent public services and ensure a high quality of life for coming generations.
What is VAT?
FTA introduced VAT in UAE on January 2018. It is a consumption-based tax that is levied at each stage of the supply chain and borne by the end consumer. This tax is levied by the FTA but collected and deposited with the government by businesses. Hence here businesses act as collectors on behalf of the FTA. VAT compliance by businesses is a crucial compliance requirement with return filing and FTA VAT payments are the responsibility of businesses.
Business obligations under VAT
Businesses need to carefully understand the dynamics of VAT compliance and business obligations. The FTA provides extensive support and guidance to assist with this. It is the responsibility of businesses however, to make sure that any required compliance obligations are fulfilled. The FTA has the power to conduct audits on taxable persons and subsequently impose penal measures on those that are not compliant with the law.
Businesses might require making changes to financial management, the technology used, core operations, human resources, and book-keeping techniques in order to fulfil the VAT obligations and comply with the FTA VAT legislation.
The main obligation of businesses is to charge VAT and account for it.
Understanding UAE VAT
The UAE government has offered different resources through its website and other ways for companies to become familiar with UAE VAT and its Rules. It is important to explore all the details available on the government website. They have added blogs, and other informational stuff to get acquainted with VAT and its laws to stay compliant and understand how and what affects your company. You can even reach out to experts to get more info on this. It is also vital to find out whether this is applicable to your products or no.
- Keep track of your Tax return period & due dates.
- Emirate-wise reporting of sales and other productions.
- The report separately import of services and goods announced through UAE customs.
- Combine details as per the format of the FTA.
- The net value of standard-rated supplies and output VAT amount must be informed after contemplating credit notes.
- Purchases or expenses on which input VAT is restricted should not be included in Input VAT Recovery.
- Companies with an annual turnover of Dh 375,000 are mainly obliged to register for VAT. There is an administrative penalty of Dh 20,000 for those businesses have not yet been registered. Before it’s too late, get your businesses registered for VAT now or you can appoint a Chartered Accountant to help you in doing so.
VAT provisions in Business Contracts
- Given the fact that the VAT has become compulsory for businesses in the UAE, companies should include the VAT clause in their current and new agreements. If the agreement does not hold a VAT clause, the price in question will be deemed to be inclusive of VAT.
- In accordance with the VAT law in the UAE, the companies are obliged to file quarterly returns. The return and tax payment must be made within 28 days after completion of the tax period.
VAT Management and Control
- A most important part of implementing VAT in your business is going to be the proper and uninterrupted management of different VAT processes. It is critical that your organization has a professional who understands VAT laws and regulations and can take care of intricacies as and when required
- You should be in continuous contact with your accounting team to learn the method and status of VAT reporting. Also, keep a close eye on any changes announced by the FTA concerning VAT.
It is important to understand that VAT is not levied on the revenue of a business, but only on transactions. The revenue limit is used only in establishing the VAT eligibility of a business.
Furthermore, it is also essential that your company takes periodic assistance from a well-known VAT Automation company to ensure your business is compliant with the VAT rules and regulations.