Top-rated VAT services in Dubai, UAE

Businesses are required to register for VAT in case their taxable supplies and imports surpass the mandatory registration threshold limit of AED 375,000.

Also, businesses can opt to voluntarily register for VAT if their supplies and imports are below the mandatory registration threshold limit, but exceed the voluntary registration threshold of AED 187,500.

Likewise, businesses can opt to register voluntarily if their expenses amount is above the voluntary registration threshold. The provision to voluntarily register for VAT is conceptualised for the purpose of enabling start-up businesses with no turnover to register for VAT.

All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date. Businesses that meet the minimum annual turnover requirement (as evidenced by their financial records) will be required to register for VAT. Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in case we need to establish whether they should be registered.

All businesses operating in the UAE are required to make a record of their financial transactions and maintain their financial records in an accurate and up-to-date manner. Businesses which adhere to the minimum annual turnover condition (as verified by their financial records) would need to register for VAT. Businesses that do not consider registering for VAT, must maintain their financial records in any event, in case we need to establish whether they should be registered.

VAT-registered businesses generally:

• - Should levy VAT on the taxable goods or services they supply;
• - Can reclaim any VAT amount they have paid on business-related goods or services;
• - Maintain a collection of business records which will enable the government to track if they have got things right

As a VAT-registered business, it is a must for you to declare the VAT amount you have levied and the VAT amount you have deposited to the government on a regular basis. This will be considered a formal submission and the reporting will possibly be made online.

If you have levied the VAT amount more than the amount you have paid, you will be required to pay the difference amount to the government. If you have paid more VAT compared to the amount you have charged, you have the option to reclaim the difference.

Concerned businesses have time to prepare before VAT will come into effect in January 2018. Businesses will need to meet requirements to fulfil their tax obligations. Businesses should have started so that they will be ready later. To fully comply with VAT, we believe that businesses may need to make some changes to their core operations, their financial management and book-keeping, their technology, and perhaps even their human resource mix (e.g., accountants and tax advisors). It is necessary for businesses to know the implications of VAT, and once the legislation is passed, they attempt to align their business model to government reporting and compliance requirements.We endeavour to support businesses on the way to completely adhere to VAT once the legislation is issued. The ultimate responsibility for complying with the law lies with the businesses.

VAT registration has opened in October 2017 for businesses that are required to get registered by 1 January 2018. Any business which needs to be VAT registered and levy VAT from 1 January 2018 must get the registration done prior to that date

As per the Federal Law No. (7) on Tax Procedures, the Authority can review and respond on registration applications within a time-period of 20 business days.

The applications for registration must be submitted through the E-Services Portal on the FTA website www.tax.gov.ae www.tax.gov.ae

VAT returns with the FTA should be filed by taxable persons regularly, within 28 days of the end of the Tax Period, which shall be:

• Quarterly for those businesses who have an annual turnover less than AED150m
• Monthly for those businesses who have an annual turnover of AED150m or more

The Tax returns should be filed online using eServices

Businesses must maintain records that will allow the Federal Tax Authority to track details of business activities and review transactions. The required documents and the time period for keeping them are specified in Federal Law no. (7) of 2017 on Federal Tax procedures and the Cabinet Decision No. (36) of 2017 on the Executive Regulation of the Federal Law No (7) of 2017 on Tax Procedures.

Any taxable person must retain VAT invoices issued and received for a minimum of 5 years.

The place of supply will determine whether a supply is made within the UAE (in which case the UAE VAT law will apply), or outside the UAE for VAT purposes.

The place of supply of goods must be the location of goods when the supply is done with special regulations for certain categories of supplies. (e.g. water and energy, cross border supplies).

For the supply of services, the place of supply should be where the supplier is established with special rules for certain categories of supplies (e.g. cross border supplies between businesses).

VAT would be payable, in addition to custom duties paid by the goods importer and cannot be deducted. VAT will be calculated basis the value including the customs duties.

The VAT treatment of real estate will depend on whether it is a commercial or residential property.

Supplies (including sales or leases) of commercial properties will be taxable at the standard VAT rate (i.e 5%).

On the contrary, supplies of residential properties will mostly be exempt from VAT.Thus, VAT would not constitute an irrecoverable cost to persons buying their own properties.To enable real estate developers recover VAT on construction of residential properties, the first supply of residential properties within a period of 3 years from their completion will be zero-rated.

Sectors involved in supply of education related services, the supply of important goods & services and the supply of Healthcare related services;

• Exports of goods and services to outside the GCC;
• International transportation, and related supplies;
• Supplies of certain sea, air and land means of transportation (such as aircrafts and ships);
• Certain investment grade precious metals (e.g. gold, silver, of 99% purity);
• Residential properties which are newly-constructed and are supplied for the first time within 3 years of their construction;
• Supply of certain education services, and supply of relevant goods and services.
• Supply of certain Healthcare services, and supply of relevant goods and services.

The following categories of supplies will be exempt from VAT:

• The supply of some financial services (clarified in VAT legislation);
• Residential properties;
• Bare land; and
• Local passenger transport

Businesses that meet the requirements included under the Legislation (such as being resident in the UAE and being related/associated parties can register as a VAT group. For some businesses, VAT grouping is a beneficial tool to simplify VAT accounting.

It is possible for VAT registered businesses to curtail their output tax liability by the amount of VAT that pertains to bad debt that has been written off by the business registered under VAT. The legislation will encompass the conditions and limitations regarding the use of this relief.

To escape double taxation wherein second-hand goods are obtained by a registered person from an unregistered person for resale, the VAT-registered person shall be able to account for VAT on sales of second-hand goods with regard to the difference between the purchase price of the goods and the selling price of the goods.The VAT that should be accounted for by the registered person will be counted in the profit margin. Additional details of the conditions to fulfil in order to apply this mechanism is available in the Executive Regulations of the Federal Decree-Law No.(8) of 2017 on Value Added Tax.

Where a VAT registered person incurs input tax on its business expenses, this input tax can be recovered in full if it relates to a taxable supply made, or intended to be made, by the registered person. In contrast, where the expense relates to a non-taxable supply (e.g. exempt supplies), the registered person may not recover the input tax paid.

In some cases, an expense could concern both taxable and non-taxable supplies done by the registered person (such as activities of the banking sector). In such scenarios, the registered person is required to distribute input tax between the taxable and non-taxable (exempt) supplies.

Businesses will be expected to use input tax (ratio of recoverable to total) as a basis for apportionment in the first instance although there will be the facility to use other methods where they are fair and agreed with the Federal Tax Authority.

Penalties shall be charged for non-compliance.

Instances of actions and omissions that may lead to penalties include:

• • A person failing to register when obligated required to do so;
• • A person not submitting tax return or making payment within the stipulated period;
• • A person not maintaining records mandated under the issued tax legislation;
• • Tax evasion offences wherein a person makes a deliberate act or omission with the purpose of violating the provisions of the issued tax legislation.

There are no special rules conceptualised for small or medium sized enterprises. Yet, the FTA is offering through its website, materials and resources for assist entities in their enquiries.

Special rules shall be given to tackle various situations arising with regards to supplies that span the introduction of VAT. For example:

• Where a payment is obtained for supply of goods before the introduction of VAT but the goods are actually delivered after the introduction of VAT, thus implying that VAT must be charged on such supplies. Similarly, special rules will be applicable for supplies of services spanning the introduction of VAT.
• Where a contract is concluded before the introduction of VAT with regards to a supply that is wholly or partly done after the introduction of VAT, and the contract does not comprise clauses pertaining to the VAT treatment of the supply, then consideration for the supply will be treated as inclusive of VAT.Nevertheless, special provisions will be made to enable suppliers to levy VAT in cases where their recipient is able to recover their VAT but where there is no VAT clause.

Generally, insurance (vehicle, medical, etc) will be taxable. Life insurance, however, will be treated as an exempt financial service.

It is expected that fee based financial services will be taxed but margin based products are likely to be exempt.

Islamic finance products are in accordance with the principles of sharia and thus mostly work in a different way from internationally known financial products.In order to ensure there are no inconsistencies between the VAT treatment of standard financial services and Islamic finance products, the treatment of Islamic finance products shall be done in alignment with those of equivalent standard financial services.

In order to ensure there are no inconsistencies between the VAT treatment of standard financial services and Islamic finance products, the treatment of Islamic finance products shall be done in alignment with those of equivalent standard financial services.

To enable a UAE national who is not VAT-registered to reclaim VAT paid on goods and services, a scheme will be implemented for designing a new residence that will privately be used by the person and his family. This shall help in the recovery of VAT on such expenses as contractor’s services and building materials.

Refunds shall be done after the receipt of application, subject to verification checks with a particular emphasis on avoiding fraud.

During interaction with taxpayers, the FTA may offer insights on various matters in the law. Taxpayers have the choice to challenge these views. It is important to note that taxpayers could be charged with penalties if they are found violating any tax law and regulation.

A VAT-registered supplier or a supplier required to be VAT-registered should issue a valid VAT invoice for the supply. To be treated as a valid VAT invoice, the document should have a ceratin specified format as stated in the legislation. In some situations wherein a supplier could issue a simplified VAT invoice. The terms for VAT invoice and simplified VAT invoice have been provided in the legislation.

VAT shall not be deductible with regards to expenses incurred for making non-taxable supplies. Also, input tax is not deductible if incurred for specific expenses viz. entertainment expenses e.g. employee entertainment.

For expenses incurred by a business, VAT can be deducted in the following circumstances:

• The business should be a taxable person (the end consumer is not allowed to claim any input tax refund).
• Levy of VAT must done appropriately (i.e. unduly charged VAT is not recoverable).
• The business should possess documentation confirming payment of VAT (e.g. valid tax invoice).
• The goods/services obtained are used or intended to be used for making taxable supplies
• VAT input tax refund could be claimed only on the amount paid or intended to be paid prior to the expiry of 6 months post the fixed date for the payment of supply.

Non-residents making taxable supplies in the UAE shall be required to get VAT registration unless there is any other UAE resident person who is in-charge for performing accounting for VAT on these supplies. This exclusion shall be applicable, for instance, when a business based in UAE is required to account for VAT as per a reverse charge mechanism with regards to a purchase from a non-resident.

VAT is due on the goods and services purchased from abroad.

In case the recipient in the State is a registered person with the Federal Tax Authority for VAT purposes, VAT would be due on that import using a reverse charge mechanism.

If a recipient in the State is non-registered for VAT purposes, then VAT shall be paid on import of goods from a location outside the GCC. Typically, it is necessary to pay such VAT before the goods are released to the person.

Usually, supplies done by the government entities shall be subject to VAT. This will bring government entities and private businesses on same page as they will not be unfairly advantaged.However, some supplies by government entities shall be exempted from the scope of VAT if they are not competing with the private sector or where the entity is the sole provider of such supplies.

Possibly, certain government entities could be entitled to VAT refunds - this is planned to prevent budgeting issues and deliver a level playing field between outsourced and insourced activities.

In case of supplies made for government entities, the treatment of such supplies shall be based on the same supply and not on the recipient of the supply

Hence, in case the supply is subject to the standard tax rate, the treatment shall be the same even if it is provided to a government entity.

Businesses will need to complete additional information on their VAT returns to report revenues earned in each Emirate.

Further detail on this can be found in the Executive Regulation of the Federal Decree-Law No. (8) of 2017 on Value Added Tax.

This may not be necessary. Certain imported goods may be exempt from customs duties yet may be subject to VAT.

Yes. As a vital source of revenue for the UAE, tourists are required to pay VAT at the point of sale. However, VAT rate is set deliberately low so that VAT becomes a less burden on all consumers.

It is intended that we will allow foreign businesses to recover the VAT they incur when visiting the UAE. This is important as it encourages them to do business and also, because a lot of other countries have VAT systems, it protects the ability of UAE businesses to recover VAT when visiting other countries (where the rates are a lot higher).

All Federal Tax Laws, Executive Regulations and Cabinet Decisions are published under the “Legislation” section on the FTA website.

Going by the global best practice, the UAE is also exploring other tax options. Yet, as they are still being analysed, their introduction in the near future is unlikely. However, the UAE is not presently

Tax is a mode of revenue generation by any governments in order to make expenditure for public services. Government revenues obtained from taxation are usually spent for things such public hospitals, schools and universities, defence and other important aspects of daily life.

Taxes are of various types:

• A direct tax which is collected by the government from the person on whom it is levied (e.g., income tax, corporate tax).
• An indirect tax which is collected for the government by an intermediary (e.g. a retail store) from the person that is ultimately responsible to pay the tax (e.g., VAT, Sales Tax).

As per global best practice, the UAE is exploring other tax options as well. However, these are still being analysed and it is unlikely that they will be introduced in the near future. The UAE is not currently considering personal income taxes, however.

Our analysis suggests that it will help the country strengthen its economy by diversifying revenues away from oil and will allow us to fund many public services. This is a sign of a maturing economy.

The government delivers awareness and education campaigns aimed at educating the UAE residents, businesses, and other impacted groups.

As part of its awareness campaign, the Ministry of Finance has launched the first phase of the awareness sessions during the period from March till May 2017. The Federal Tax Authority has run the second phase of awareness sessions during the period from August to November 2017. These sessions were held in the different Emirates.

All presentations of these sessions as well as guides and videos explaining VAT are published on the FTA website.

A telephone hotline has been set up so that you can call and speak to one of our employees directly on 600599994.

When VAT is introduced, the government will provide information and education to businesses to help them make the transition. Each business is accountable for purchase of new technologies or hiring of tax specialists and accountants, rather than the government spending on behalf of businesses.However, we shall offer assistance and information as well as time for businesses to prepare

All are urged to completely adhere to their VAT responsibilities. Presently, the government is working on defining the exact fees and penalties for non-compliance.

Administrative penalties in case of violations have been issued by Cabinet Decision No. (40) of 2017 and will be found under the Legislation section on the FTA website.