VAT

VAT Law OF UAE

• As per UAE VAT, the VAT is charged on the consumption or use of products and services, and the ultimate carrier of the cost is the end-consumer.
• The UAE charges 5% VAT on taxable supplies of goods or services at each stage of the supply chain on tax-registered firms. Businesses, on the other hand, collect and account for VAT on behalf of the government.
• Businesses in the UAE must register for VAT in compliance with Federal Decree-Law No. 8 of 2017 on VAT and Cabinet Decision (52) of 2017 on the executive rules of Federal Decree-Law No. 8 of 2017.
• The VAT applies to both tax-registered businesses on the UAE mainland and free zones.

Services we offer

VAT registration services:

We give assistance to businesses to understand their VAT registration obligations and aid them through the procedure efficiently. Our team of experts analyzes the activities of your business in order to guarantee compliance with UAE legislation while reducing your tax burden.

VAT registration is compulsory for:

• Businesses having taxable supplies and imports totaling AED 375,000 (USD 1,000) or more are required to register for VAT.
• Businesses having taxable supply and imports between AED 187,500 and 375,000 are permitted to file a voluntary application for VAT registration under UAE VAT law.
• Businesses with taxable supplies and imports of less than AED 187,500, on the other hand, are exempt from filing for VAT registration.
• The application for VAT registration may be made online, but businesses can use the services of efficient VAT Consultancies in the UAE to ensure that the procedure is carried out correctly. Furthermore, any name, whether business, owner, manager, or authorized person, must be entered in the precise Arabic language in addition to English.

Documents required for VAT registration:

Listed below documents required for applying for VAT Registration in the UAE:

1. Copy of trade license
2. Copy of passport of business owner and partners
3. Copy of Emirates ID of owner and partners
4. Memorandum of association (MOA) and article of association (AOA) of the company
5. Contact detail and address of the company
6. Details of bank account
7. The monthly income statement for 2017 till date as per FTA format
8. Details of the nature of business and activities performed
9. Expected turnover in the next 30 days
10. Customs registration details (if applicable)
11. Authorized signatories’ Emirates ID, Passport, and authorization documents

The FTA will assess the application after all of the required documents have been submitted. If all conditions are complied with, FTA will accept the application and issue a Tax Registration Number (TRN) within 2-3 weeks. The tax group registration procedure begins with a single company as described above, and then group information is entered. If a taxable person fails to register for VAT within 30 days, a penalty of AED 10,000 will be applied.

VAT return filing service

Our team of professionals ensures that VAT returns are filed accurately and on time on your behalf, alleviating the stress and complexity associated with this procedure. To guarantee that your returns are error-free, we keep thorough records and be up up-to-date on legislative developments.

What is VAT return

A VAT return is a procedure to submit details to the FTA regarding your tax period’s supply and purchases.

VAT return filing in UAE is an online filing process in which the registered party can present their sales and purchases to remit the tax due.

• If supplies are lower than purchased – The VAT registrant can apply for a refund.

Applicant requires to submit further documents to FTA for application of refund. During the approval stage of VAT registration, FTA determines the tax period that monthly or quarterly as the authority may deem fit. Upon registration of VAT, the FTA allot the tax period to your business.

VAT Refund

All registered taxpayers are required to file VAT returns for each tax period, containing their sales and purchases details. Output tax collected from consumers and input VAT paid during the relevant tax period must be correctly and precisely recorded.

The adjustment of VAT input and output tax can result in:

• If the output tax is higher than the input tax, the applicable taxpayer must pay VAT.
• VAT is refundable to the applicable taxpayer if the output tax is less than the input tax.

The taxpayer has two options for the refundable amount:

If the taxpayer wants, he can either forward the refundable amount to the following tax period so that the refundable amount can be adjusted in future tax payments, or he can claim the refundable amount in the same year.

Penalties in regard to VAT return filing in the UAE

VAT Advisory Services

Our team of experts is always proactive in assisting you and your business through the complexity of VAT legislation, so you can make informed decisions to ensure VAT compliance.

We Assist in:

VAT Registration and Structuring: It is crucial to understand when and how to register for VAT in the UAE. Our consultants will evaluate your business’s operations and structure to establish the most effective VAT registration strategy for you.

VAT compliance and reporting: Compliance with VAT legislation is essential to avoid penalties. Our team of professionals will assist you with the preparation and submission of your VAT return without delay and error, as well as ensuring that all essential documentation is in place. We keep ourselves informed of amended regulatory compliance to make sure that your business stays compliant.

VAT impact assessment: Your VAT obligations can change after your business changes, such as expansion, diversification, or supplier chain changes. We evaluate and determine potential VAT implications, as well as aid with strategic risk mitigation advice and tax outcome optimization.

VAT recovery and refund: Our team thoroughly reviews each transaction to identify VAT recovery opportunities and assists you in claiming qualifying input tax credits and refunds efficiently.

VAT due diligence: VAT due diligence must be conducted before considering any merger, acquisition, or other company transaction in order to examine prospective VAT obligations, risks, and possibilities, helping you to make well-informed decisions.

Deregistration in UAE VAT Law

Deregistration requires by the registrant under federal decree law number 8 of UAE if the following circumstances:

• If the registrant is no longer supplying taxable supplies
• If the aggregate value of Taxable Supplies made over a 12-month period is less than the Voluntary Registration Threshold (AED 187,500).

Within 20 days of the occurrence of both of the abovementioned events, the registrant has to apply for VAT de-registration.

Penal Provision for Non-deregistration in UAE VAT Law

Failure to file a deregistration application on time may result in a penalty of AED1,000 per month (maximum at AED10,000).

Other penalties VAT you must be aware of

• The penalty for failing to indicate VAT-inclusive prices is AED 5,000.
• Failure to issue a tax invoice or tax credit note can result in a penalty of AED 2,500.
• A variable penalty of 50% of the underpaid tax plus 4% of the underpaid tax each month from the due date of the VAT return if a voluntary disclosure is submitted/tax assessment is received after the taxpayer is notified of an audit by the FTA.