UAE has implemented VAT with effect from 1st January 2018. OECD countries except for the US have VAT (or a variation). While it feels exactly the same as a general sales tax to end-consumers, VAT is a more sophisticated tax and overcomes many challenges that affect the general sales tax.
A business shall register for VAT if the taxable supplies and imports exceed the manadatory registration threshold of AED 375,000 or the voluntary registration threshold of AED 187,500. All businesses coming under the threshold limit or anticipating to exceed the limit in the next 30 days (subject to the provisions of the relevant law) have to register for VAT.
Certain free zones have been specified as designated zones for VAT purposes. While special rules apply to supplies made in the designated zones, the businesses established in such zones may still need to register for VAT provided the criteria for registration is met.
Related businesses that share economic, financial and regulatory ties (either in law, shareholding or voting rights) may be able to register as a tax group,
if they have an establishment in the UAE and arelegal persons under common control. The representative member will file a consolidated VAT return covering the activities of the group.
FILING VAT RETURNS AND MAKING PAYMENTS
Once you have registered for VAT, you will have to charge VAT (output tax) on the supplies that you make, unless they are exempt or zero-rated. VAT return must be filed and related VAT payments made within 28 days from the end of your tax period. You will normally be allocated a quarterly or monthly tax period according to your annual turnover, but the FTA may allow a shorter or longer tax period if it considers that to be appropriate.
A VAT Registered person should go for De-Registration if he stops making Taxable Supplies or if the value of the Taxable Supplies made over a period of (12) consecutive months is less than the Voluntary Registration Threshold i.e, AED 187,500/ and he does not anticipate that they’ll cross the Voluntary registration threshold during the coming 30-days.
Our firm provides experienced chartered accountants as tax advisers. We assist the clients efficiently to manage their VAT transactions by complying with VAT laws. At the end of each VAT return period, we shall prepare the VAT return of behalf of your company in accordance with the provisions of UAE VAT law. We ensure that the VAT returns are filed within the specified time in each tax period. Precise and timely VAT advisory services are provided by our experts over client meetings, phone calls and mails. We undertake periodic amendments and VAT portal updations as required by the clients. You can count on us for the submission of additional documents requested by the Federal Tax Authority for the approval of your legitimate input claims.
To fully comply with the UAE VAT legislation, businesses may need to make some changes to their core operations, financial management and book-keeping, technology, and perheps even their human resources. It is essential that businesses try to understand the implications of the new taxes and make every effort to align their business model to government reporting and compliance requirements.