Value Added Tax (VAT) is a levy added on to most goods and services. It is collected from customers by vendors and paid over to the Government. Accordingly, a business enterprise will pay VAT on the goods and services it buys (on the purchase price) and collect the VAT from its customer on the goods and services it sells (on the sales price, which might also include the value for any value addition undertaken and profit on the goods before selling). The difference between the amount which the business enterprise has paid and collected is to be paid over to the government.
Standard rate of 5% will be imposed on the supply of goods and services.
Annual turnover is more than AED 375,000 in the last 12 months (a must registration)
Annual turnover/expenses are less than AED 187,500 in the last 12 months (optional)
VAT is applicable / levied in UAE from January 01, 2018 being its implementation date
Registration of the company with the Federal Tax Authority
6 Months Contract – Taxation & VAT only
Accounting Service, from 1st Jan 2018 until June 30th 2018.
12 Months Contract – Taxation & VAT only
Accounting Services from 1st Jan 2018 until Dec 31st 2018.
Value added tax (VAT) is a type of tax that is applied to the goods or services produced. It is also known as a multi-stage tax. The UAE government has decided to implement this tax to have an additional source of revenue to provide a better service to the citizens of UAE.
As per the criteria released by the Federal Tax Authority, all businesses with taxable supplies worth more than AED 375,000 need to register for VAT.
All businesses with taxable supplies worth more than AED 187,500 and less than the mandatory registration threshold of AED 375,000 may opt for voluntary registration for VAT. This option is developed to give the opportunity for startup businesses to register for VAT whilst they still haven’t generated any revenue.
Starting on 1 January 2018, VAT will be implemented in the UAE. All businesses that are operating in the UAE are expected to be registered by then or penalties will be faced
The standard VAT rate of 5% is agreed to be charged on certain goods and services in the UAE. Non-taxable goods and services will not be charged, such as health, education, and local transport, etc.
Non-residents or tourists will pay VAT at the point of sale. 5% VAT will be applied to perfumes, makeup, luxury bags, and big-ticket items additional of the sale price. There can be an exemption wherein there is a requirement for a certain business to use a reverse charge mechanism for the purchases from any non-resident when accounting for VAT.
With the Cabinet Decision No. 40’s release, the violations for non-compliance and respective penalties are all listed in its provisions. Consumers may also lose confidence in the business that does not comply with the laws of the land, hence the impending sinking of the business.
All businesses that have exempted supplies as goods shall not charge from their
customers. VAT cannot be claimed as well on purchases made.
However, all businesses that have partially exempted supplies as goods shall register for VAT. The VAT incurred can be claimed as well on taxable supplies.