VAT is a tax issued on the consumption or use of goods and services. It’s a consumption tax added to the service’s or product’s sale price. The value of the tax is directly proportional to the value of products and services.
VAT tax is an invoice based system where each seller charges a VAT charge on buyer’s invoice, which the seller then pays to the government. It’s a form of indirect tax levied in more than 180 countries around the world. VAT provides UAE a new source of income which assures high-quality pubic services.
Businesses are responsible for the documentation of cost, incomes, and associated VAT charges. All the registered companies and traders must charge VAT to their customers and incur VAT from the suppliers. The difference between these sums is paid to the government.
Introduction of VAT changes the way business operate in UAE, it requires your business to adopt updated accounting practices incorporating VAT. Most of the businesses are facing challenges while preparing themselves for VAT. They should keep up the rules and law of Federal Tax Authority (FTA) in order to avoid VAT fines and penalties. A & A associate is well-versed in handling with the new VAT taxation rules and regulations.
Implementation of VAT
- If the annual turnover of a company exceeds mandatory threshold limit of AED 375,000, then your company is liable to pay tax
- Voluntary registration threshold limit is around AED 187,500/- per year. Any entrepreneur can voluntarily register for VAT and continue with the normal compliance process.
What are the rates of VAT?
VAT rates are applicable as standard rate of 5% VAT. Apart from the standard rate, there are zero-rated industries and areas exempted from VAT.
- International transportation and related services
- Exports of goods and services outside the UAE
- Aircraft and ships
- Investment-grade precious metals like gold, silver, etc of 99% purity.
- Newly constructed residential properties.
Areas exempted from VAT
- Certain financial services
- Residential properties – sale and lease
- Local passenger transport
- Bare land – sale and lease
A & A associate will guide your business with up-to-date progress regarding VAT. All our VAT consultants will assist your business in developing internal VAT operations that involve finance management, bookkeeping operations in tune with other VAT system requirements.
We cover all the aspects of VAT such as,
If your business exceeds mandatory or voluntary threshold of taxable supplies within UAE, VAT registration is compulsory. Through VAT registration, companies get their Tax registration Number or TRN for further process. After getting the number, they can start collecting VAT and file their return on a monthly or quarterly basis. We ensure that companies who are eligible for a TRN must get the TRN on time.
After getting the Tax registration number, companies in UAE get an invoicing format according to the terms and conditions of FTA. VAT invoice must have the Tax registration number and it’s essential to follow the format issued by FTA. In other case, companies will have to face VAT fines and penalties.
VAT accounting is mandatory for every taxable person. It’s significant to maintain the book of accounts under VAT law. VAT accounting will ensure the companies to properly account for VAT and be responsible of VAT elements like VAT returns and VAT refund. We take care of your VAT accounts and organize books as per VAT laws.
VAT return filling
VAT return filling must be filed according to the specific date and duration mentioned on the VAT application. A & A associate provides VAT return filing services in UAE based on the dates mentioned on company’s VAT application.
Companies in the UAE must prepare themselves for the official audit. To ensure VAT standards, VAT experts will analyze the procedures and give necessary recommendations about do’s and don’ts. VAT audit makes sure that taxation procedures are in line with the requirements of FTA.
How A & A associate assist VAT services?
Our team is equipped with a team of VAT experts who help your business to overcome the expected hurdles such as
- lack of familiarity with rules and regulations,
- compliance issues,
- structure and compliance issues
- lack of resource, and
- Lack of accounting system.
Our team offers exclusive VAT consultancy services that include a complete understanding of the VAT laws and executive regulations. We understand your specific business model and evaluation of VAT’s impact on your business. We help to prepare and execute all the VAT related concerns!