The UAE is a ‘tax-free’ nation – take the statement with a pinch of salt. The nation is largely tax-free but that doesn’t mean that business persons are free as a bird bidding adieu to the annoying three-letter word (TAX) forever. Contrary to popular belief, UAE also has some taxes. For instance, the corporate taxes levied at the federal level from the international banks and energy firms operating in the UAE. Municipal/property taxes, excise taxes (on specific products), customs duties (on imports), etc. are some of the other forms of taxes imposed by the UAE government on businesses. Have you ever paid heeds to that additional 10% tax on your hotel and restaurant bills or that council tax component on your utility bills? Also, how can alcohol slip your mind! That too is heavily taxed upon import and purchase. And last but not least, VAT – introduced not too long ago. It was implemented in the UAE in 2018, at a rate of 5%. Perhaps we can rectify the statement by saying ‘the UAE is free of personal and corporate taxes”. The UAE tapped into charging taxes so the country doesn’t have to depend only on the oil and natural gas companies for funds necessary to run the country especially when the world is shifting its focus to sustainability and thus renewable forms of energy. You don’t have to sing a different tune if I say you have to pay taxes when you are doing business in any of the emirates of UAE. But before you fly the coop let me tell you – not every tax is for everyone.
Value Added Tax (VAT) in UAE
The term VAT doesn’t need much ink to be spilled on it. Businesses or consumers, no one is a stranger to the Johnnie-come-lately in the UAE, Value Added Tax. Over 160 nations use a VAT system (most of them belong to the European Union). UAE was not one of them until the UAE government decided to diversify its income sources. VAT or consumption tax in the United Arab Emirates came into effect on the 1st of January 2018. With VAT implementation, the government relieves the businesses from the additional tax burden and allows them to collect VAT on their behalf from customers at the point of sale and pay it to them. The standard VAT rate that applies to most goods and services in the UAE is 5% and the rest of the supplies are either subject to either a 0% rate or exempted for VAT (provided they are meeting certain criteria). The websites of the Federal Tax Authority and Ministry of Finance can give you detailed information about VAT.
VAT Registration in UAE
Businesses in UAE can register themselves for VAT voluntarily or mandatorily depending on certain criteria defined by Federal Tax Authority (FTA). VAT registration is done online on the FTA portal. Companies receive a Tax Registration Number (TRN) after a successful registration.
FTA has set a VAT registration threshold for companies segregating the process into two types – voluntary and mandatory. Companies have to analyse which category they fall in before registering for VAT or applying for TRN. Both the categories have different conditions to fulfil based on the total annual turnover of the company. There are various factors that businesses should take into consideration before they choose to register voluntarily or mandatorily. Another aspect to registering for VAT is they can choose either choose to apply as a single entity or a Tax group.
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VAT Registration Types
VAT registration is done in either of the two ways –
Hassle-Free VAT Registration for Your UAE Business
Whether voluntary or mandatory, the VAT registration process is the same. The tax authorities have a particular portal for the process where they can easily register their company. However, one has to be very mindful while undergoing the application procedure as this should be done correctly in order to get approval from authorities. Any discrepancy in the application can lead to hefty fines and/or rejection of the application. That’s why most businesses seek VAT registration service providers in UAE. Outsourcing the VAT registration task to experts in the field not only brings peace of mind to you but also helps you keep the unnecessary fines and delays in approval at bay. You don’t have to take pains when you have Adam Global in your city. We have VAT specialists who are active in the field for years.
Post VAT Registration
If you think that VAT registration is approved and you are all set then let us tell you that it’s just the tip of the iceberg. There are tons of things to deal with after you are registered for VAT in the UAE. You have got to notify the FTA about every big little change occurring in your company or any important information regarding the business. Case in point: address. Furthermore, you may have to adjust your business’ accounting process and prices of supplies if you will be registering for VAT. Registering for VAT means you won’t have to spend time and resources in making the modifications, particularly if you go through the voluntary registration process early on. Most VAT-related tasks including VAT record keeping and VAT return filing also demand expert hands. Plus, remaining VAT compliant is also not as easy as you think. We are not scaring you but showing the true picture basis our decades of experience. You might want to know what duties you are going to take as a VAT-registered entity in UAE. Keep reading.
Responsibilities of VAT-Registered Entities in UAE
After achieving the status of a VAT-registered business voluntarily or mandatorily, you will have to:
- Submit VAT returns
- File VAT refunds
- Keep records and take into account all VAT transactions
- Pay VAT due to the FTA
- Charge VAT
- Meet obligations of VAT-registered businesses
- Abide by the requirement of maintaining records for VAT and report them to the authorities regularly
Adam Global: Your VAT Registration Service Provider in UAE
Registering a business for VAT in UAE is an easy-breezy process if we compare it with that in most of the other countries across the globe. Thanks to the user-friendly online portal of FTA. But that doesn’t mean there is no paperwork involved. You still have to gather plenty of documents to upload on the website for FTA’s review while applying for the VAT registration in UAE such as documents identifying authorised signatory, trade license of the company, certificate of incorporation, supporting documents for customs registration for each emirate (if applicable), supporting document for 12-month sales, and article of association, just to name a few. You have to provide tons of information while filling up the application such as the estimated value of exports/imports in one year from each GCC country, description of business activities, bank account details and whole nine yards. Even a single mistake or incorrect piece of information can result in application rejection and hassles to reapply not to mention the fines. No wonder most businesses outsource their VAT tasks to specialists in the area. No matter, what sort of VAT assistance you are looking for, Adam Global is your one-stop shop that has been handling all the aspects of business inception and expansion for almost 20 years. VAT is a part and parcel of business. We help your business remain in full compliance with relevant laws and regulations and make you and your finance team VAT ready as well by training them. Partner with us only if you are looking for qualified and experienced VAT advisors, VAT trainers or VAT support professionals in UAE who can provide you quality VAT advisory and compliance services.
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Don’t wait until it’s too late. Contact Adam Global Auditing & Accounting today to learn more about how we can help your business comply in the UAE and maximize your savings.
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