The incredible number of benefits offered to businesses in the U.A.E. attracts more business owners to set up their operations here. However, along with the benefits, entities must understand U.A.E. business law regarding VAT.
The VAT policy adopted by the GCC (Gulf Cooperation Council) countries has the potential to broaden the country’s economic scope by incorporating an additional source of revenue for the country. By shifting to a more sustainable consumption system, this new source of income will be used to fund high-quality public services. It also seeks to reduce the government’s reliance on oil and other hydrocarbons for revenue.
Value Added Tax (VAT) is an indirect tax levied on goods and services. Under this tax regime, the amount of value addition is first identified at each stage, and then the tax is levied on it. Being VAT registered enables the company to claim input tax credits. In other words, VAT paid on company purchases can be claimed as input tax and used to offset VAT liabilities.
The implementation of VAT in the U.A.E. has resulted in significant changes to the Emirate’s taxation system. Obtaining proper VAT services in the U.A.E. assists businesses in avoiding the risk of unnecessary tax payments, maintaining accurate VAT records, and track up-to-date information regarding VAT filing.
VAT consultancies in the U.A.E. offer a gamut of VAT services throughout the U.A.E., easing the activities associated with Value Added Tax registration, deregistration, accounting, return filing, advisory services, and so on.
The VAT legislation establishes mandatory and voluntary VAT registration thresholds. Therefore, it is essential to determine which business activities are considered taxable supplies for VAT registration purposes.
In some cases, it may be advantageous for certain businesses, such as start-ups with no sales and very high expenses, to register for VAT to recover their input tax sooner voluntarily. However, it is also essential that a company registers for VAT by the deadline in order to avoid penalties for late registration.
A number of documents must be submitted to the Federal Tax Authority (FTA) as part of the VAT registration process. Uploading insufficient or incorrect documents can cause significant delays in the approval process.
In addition, some sections of the application must be completed in Arabic. For the same, our team has created a simple checklist of all such documents and can provide samples of the different formats required by the FTA. We only submit an application after carefully reviewing all documentation to ensure a quick and easy VAT registration process.
VAT Registration Process
VAT registration is required for businesses with taxable supplies and imports that exceed AED 375,000 per year. Businesses can register for VAT voluntarily if their taxable supplies and imports exceed AED 187,500 annually. A company can choose between two types of U.A.E. VAT Registration procedures:
The mandatory registration threshold for a business is AED 375,000. This threshold, however, does not apply to foreign organisations.
The voluntary registration threshold for a company is AED 187,500.
VAT deregistration in the U.A.E. enables a taxable individual or business to cancel their VAT registration and suspend their Tax Registration Number (TRN). VAT deregistration is done online, and only businesses registered with the Federal Tax Authority (FTA) can de-register from VAT. With its good rapport in the industry, Alankit will assist you in removing your company from the FTA. We will ensure that the VAT deregistration process is completed without incurring any VAT fines from FTA.
Depending on the business size, VAT returns must be filed monthly or quarterly. These returns have specific deadlines, and there are incremental penalties for late submission. These declarations include standard-rated supplies, zero-rated supplies, exempt supplies, reverse charge transactions, imports, and applicable taxes. A well-maintained accounting system and process are required to produce the correct figures quickly and on time. Alankit can help clients file VAT returns correctly and on time, as well as guide them through the process of settling outstanding amounts.
VAT reconsideration allows a taxable person to request a review of the FTA’s decision. To run their businesses smoothly, all companies in the U.A.E. must be aware of the tax laws. Therefore, any business or individual who has received an FTA penalty may apply for VAT reconsideration in the U.A.E. within 20 business days of receiving the penalty. If the business can prove its case, the authority will review the decision and possibly waive the penalties.
The government will conduct a VAT audit to ensure that the business is following all VAT laws and implementing VAT in accordance with FTA regulations. FTA will check the VAT returns and VAT refunds submitted by the taxpayer during the VAT audit in U.A.E.
Alankit Management Consultancy is known in the market for its best tax consultancy for registering, filing, and providing accurate tax solutions to its customers. With the help of our tax experts, we make every tax procedure seamless and convenient for our customers.
Our VAT Return Filing services in the U.A.E. are tailored to our client’s specific needs. As a result, we understand your business interactions, maintain clear operations and cost-efficiency, and boost your revenue through streamlined and effective tax practices.