Vat Implementation in UAE | Alankit Management Consultancy



With every passing day, business entities are heading closer to implementing VAT in UAE. Value Added Tax (VAT) is an indirect tax charged on goods and services stated into the Indian taxation system on 1st April 2005. In order to replace Sales Tax, VAT is generally used to reclaim the taxes they have paid while trading goods and services in a business. VAT provides a new source of income to the UAE that is continued to be utilized to provide superior services. Services under VAT include VAT Filing & VAT payment, VAT accounting services, all compliances related to VAT, and organizing & managing the data. The VAT has become an important document in the UAE; the standard rate of VAT is 20% and it is applied to most goods and services sold.


VAT Implementation Services


Below-listed are the VAT Implementation Services offered:


a. Understanding the business model:


The VAT Professionals visit your office for understanding the business model to design a suitable VAT Implementation plan that aligns your business needs.


b. VAT Registration:


To comply with the VAT law in the UAE, the VAT experts’ advice regarding the procedural formalities and the expected registration date, taking into account whether the company got any exemption in this respect or not.


c. Evaluating the impact of VAT


In order to streamline the operations of the business by complying with VAT requirements in UAE, VAT experts study the impact on the business on working capital, cost, and efficiency.


d. Managing the VAT transaction process:


i) VAT team leader:


To shift the transactions into UAE VAT compliance and for the smooth functioning, a responsible individual/ team from the company is selected to be the head of the VAT Implementation project known as VAT Implementation Project Manager.


ii) Accounting systems under VAT


The current accounting systems are taken under scrutiny. A proper chart of accounts suitable for the VAT regime is categorized. Important guidelines are shared with the accounts team for preparing the first VAT return to the FTA.


iii) Invoicing under VAT


The VAT invoicing requirements under the VAT in UAE are implemented. Proper training is given to the accounts team and IT people.


iv) Filing of Return VAT Return


The support and guidance for preparing and filing the first VAT return by taking the appropriate input of tax credit against the VAT liability.


VAT implementing plans and approach


VAT implementing plans and approach contains:


Assessing business transactions:


All business transactions must be evaluated in an accurate manner for hassle-free VAT implementation.


Recognizing implications:


It is very important for every business to identify the implications as per the current business model to build the most appropriate VAT implementation plan for business.


VAT readiness evaluation:


Businesses are required to evaluate the VAT readiness of their technology tools and platforms to ensure that possess the capability to incorporate the new VAT implementation.


Issuing a VAT blueprint:


To design a VAT blueprint on a business model, keeping into account the several ways it may affect trade, is necessary.


Identifying requirement of resources:


Recognizing resource requirement for VAT enables business entities an easy migration to the VAT regime.


IT Configuration:


According to VAT law and regulations, the configuration of IT systems is mandatory along with providing assistance to VAT team members about VAT implementation in the UAE.


Impact of VAT on UAE


All the business entities whose total value of taxable supplies exceed AED 375,000 over the previous months or expect to exceed that threshold in the next 30 days have been implementing VAT in UAE and it has been becoming a tradition nowadays. There are various impacts of VAT implementation on business entities listed below:


  1. ➢ New revenue stream to the UAE government
  2. ➢ Business proficiency gets multiplied
  3. ➢ Non-financial benefits like reduction in the rate of civil fraud, corruption, etc.
  4. ➢ Enhanced infrastructure of the country
  5. ➢ Open market for advisory firms expert in VAT terms

Phases of VAT implementation


Dealing with VAT is considered as a complex task. Organizing the VAT process plays a significant role in the assessment, service design and implementation, change management, technical analysis, etc. VAT implementation hosts a variety of phases that is mandatory for an organization to carry out VAT services; some of them are listed below:

Phase 1: VAT Impact Assessment


Phase 1 involves the revenue part to be drafted and take care of exclusive of any new operative cost added to the business.


Phase 2: Planning and Implementation


In the second phase, the service design for VAT along with new supply chain structures gets initiated. The arrangement of VAT training materials for internal management is taken care of; IT projects are built to deliver tax-technical results.


Phase 3: Transition and Output Testing


The projects built are considered for sample testing, get reviewed from a VAT perspective. Trial run-generated VAT report is developed and issues discovered are highlighted.


Phase 4: Post-Implementation Assistance


The fourth phase is a post-implementation process. Reviews and double-checking the efficiency of supply-chain management and sample transactions take place. Also, highlights the possible areas in terms of VAT compliance.



Why Alankit


  • ➢Relevant Tax Advisory Services
  • ➢Qualified Chartered Accountants with professional experience
  • ➢Customized solutions to cater to specific business needs
  • ➢Effective management of VAT transactions by complying with the VAT laws and advising on transactions
  • ➢Strong and widespread network as Alankit provides VAT Advisory Services in Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah & Umm Al Quwain, offering a wide range of services.
  • For any queries or information required related to our services or company, please feel free to get in touch with us at any point of time. Fill in the form below and one of our executives will contact you at the earliest possible. (Within 24 hours)

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