VAT Services in Dubai, UAE
Make My Company has the best team of experts who will assist you in overcoming all obstacles, including a lack of knowledge about the VAT regulations or laws, the absence of funds, issues with compliance, and the absence of an up-to-date accounting system. Our top-of-the-line service for VAT within the UAE includes:
Make My Company contributes to developing our clients’ businesses by ensuring that accounting practices are tailored to the client and utilizing the latest technology to enhance compliance while cutting costs. We aim to provide top-quality speedy, quick, and easy VAT service to our customers from all areas of the market within Dubai, Abu Dhabi, and Sharjah, UAE. Our VAT process is straightforward and free of errors.
In the last few decades, Dubai has become an international hub for business. Because of the ease, the possibility of establishing their business here or expanding their operations because of the political regulations and a booming economy, which promises vast returns and profit, thousands of individuals not just from the country but across the globe have been to Dubai to establish their own companies.
When operating an enterprise in Dubai can be highly profitable, it's crucial to be aware that you must comply with specific regulations and rules of the government when it comes to running your business, just like in any other country. If you are a business owner, one of the requirements you must meet is the registration of VAT within Dubai.
It is not advisable to take VAT the same as sales tax. Both are consumption taxes, but there is a distinct distinction between them. Taxes on VAT within Abu Dhabi are imposed on every step of the supply chain. This includes as well as imports as well as goods and services. The sales tax can only be charged on the finalized sale and transactions involving products. VAT is a more sophisticated taxation method as it requires businesses to collect tax for the government and avoid tax evasion or misrepresentation.
The Dubai Federal and Emirate governments provide the public with a wide range of parks, amusements, and recreation activities funded by the government budget. By implementing VAT, the government can improve families' facilities and entertainment options, resulting in a delighted and content consumer. VAT in Sharjah will provide the government with alternative income sources and reduce its dependence on hydrocarbons and oil, resulting in substantial economic growth.
Here are a few ways how the new VAT services that are being offered in Dubai could affect your business:
- You'll need to accurately document your business expenses, income, and taxes in Abu Dhabi, UAE, and associated fees
- Every registered business and trader in Dubai (and in Dubai) will be legally required for VAT charges to their clients at the current rate of 5 percent. They will also have to charge VAT on all items they purchase. The difference between these two is the amount paid to government agencies.
If you are wondering how to get your business compliant with VAT, we can help. To avoid penalties, we can help you set up a system of VAT compliance. In addition to setting up your tax system, we can help you manage your records and file your VAT return on time. We provide a comprehensive service that covers all aspects of VAT registration for businesses in the UAE. Here are some reasons why you need a professional tax agent:
Whether you have a small or large business, VAT requires compliance with laws and regulations in the UAE. In addition, global VAT requirements change frequently. With a proven track record, we help our clients with their VAT compliance in the UAE. We are experienced and knowledgeable tax consultants in Dubai, and our team will guide you through the process step by step. The VAT consultant will also provide helpful tips for your business growth.
VAT Registration Services in Dubai UAE will help you with the process of filing your tax returns. To register your business, you must provide your business's address, contact details, and bank account details. Additionally, you will need to provide your tax registration number (TRN) to verify that you are operating in the UAE. These requirements make VAT registration easy. To get started, visit the official website of the FTA. There, you can find all the information you need to get registered.
VAT Registration Services in Dubai UAE are essential for all types of businesses, from small to large, big or medium-sized. In the UAE, private establishments and government bodies require this tax, and all business entities should maintain a record of all their financial transactions. In addition, the UAE is a GCC member and will implement VAT in January 2018. Registered businesses are admissible to do the following:
- Charge VAT on the taxable supply of goods and services
- Claim Input Tax Credit on VAT paid on their purchases
- Payment of VAT to the government
- Filing of VAT return as per VAT Law Dubai
If you're running a business in the UAE, you're probably wondering how you can keep VAT compliance up to date. While a VAT Health Check is not a legal requirement in the UAE, it is highly recommended to protect your business. For example, a leading delivery service company in another GCC country filed for bankruptcy primarily because it failed to pay its tax obligations and penalties. VAT Verification Services Dubai can help you keep your books up to date and avoid fines and penalties.
To avoid losing out on valuable VAT credits and protect consumers from price manipulation and profiteering, the Federal Tax Authority has introduced a TRN (tax registration number) verification service. This service enables consumers to check whether the tax invoices are genuine and whether the merchant is registered with the FTA. Also, it has introduced the VAT Calculator, which allows consumers to find out the amount of VAT they owe instantly, ensuring complete transparency in the VAT process.
What are Goods and services under VAT in Dubai?
What are Goods and services under VAT in the UAE? The UAE applies to VAT on goods and services if the turnover of a business exceeds AED375,000 per annum. This amount is equivalent to USD$95,000, and companies that earn less than this amount are exempt from VAT. Three categories of goods and services will be subject to VAT: food, education services, and packaging materials.
A supply is an exchange of goods or services for consideration. A supply occurs when at least one person involved in the transaction is a registered taxpayer. A supply can take many forms, including buying and selling goods, outsourcing services, and conducting imports and exports. Generally, supplies are exchanged for consideration and are intended to advance the business of one person or company. While the supply may be made across borders, it must be during a business transaction.
While the UAE Executive Regulation defines goods as tangible properties, VAT law takes a much broader view. A supply of goods can be either a physical item or an intangible property. While the UAE VAT laws have strict requirements on defining goods, many businesses operate in the service sector and must take extra care to determine whether the supply is a service or not. In addition, VAT law applies to the supply of goods and services to foreign residents.
VAT Refund in Dubai UAE
The process is straightforward, but you must follow several steps to get the refund. It includes:
- VAT refunds Dubai for foreign businesses.
- VAT refund Dubai for tourists.
- VAT refund for Dubai nationals building new residences.
- VAT refunds for Foreign Governments, International Organizations & Diplomatic Bodies.
Once you have completed the application form, you must provide the relevant supporting documents, including your Emirates ID and the Family Book. You must provide accurate and complete details, including the international bank account number. The name of the applicant must match that on the Emirates ID. You need to include your TRN number if you paid for housing.
To expedite the process, the government of Dubai has implemented self-service kiosks at the airports. These kiosks can help tourists get their VAT refund, verify that they have the goods, and prove that they paid the correct tax. There are representatives at nearby offices if you need assistance. The kiosks are currently located at the Al Maktoum Airport and Dubai International Airport, and you can use the self-service kiosk at either location
Guidelines on Filing VAT Return in Dubai, UAE
If you own a business in the UAE, you must follow the guidelines on filing a VAT return. There are three types of VAT registration: mandatory, voluntary, and exempt. Compulsory VAT registration is required by law for businesses that make taxable supplies over AED 375,000. VAT returns must be filed by the end of the Standard Tax Period, usually the end of three calendar months. If you are not registered for VAT in Dubai, you must follow the guidelines to avoid the Federal Tax Authority’s penalties. The form is called VAT 201. It comprises distinct categories taxpayers need to complete to finish the process for VAT tax filing within Dubai, UAE. The types of the form include:
- Taxable Person Details
- The VAT Return Time
- VAT on sales as well as all other outputs
- VAT on expenses as well as other inputs
- Net VAT Due
- Additional reporting requirements
- Signature Authorized and Declaration
When filing a VAT return, you need to include details and figures in the correct format. Your VAT return should reflect the total purchases and supplies you made during the tax period. You must have invoice numbers to prepare your tax return, which you must submit electronically through the FTA e-portal. Registered taxpayers must file a VAT return at least once every tax period. The tax period can be month-long, quarterly, or yearly, depending on the prescriptions on your VAT certificate.
What are VAT Penalties in Dubai?
If you have failed to comply with VAT rules in Dubai, you may be penalized up to 50,000 dirhams. This penalty can be higher than the tax due if you have not issued an appropriate tax invoice, alternative document, or credit note. If you have not given a valid tax invoice, you can also be penalized up to 50% of the tax.
Moreover, to avoid penalties, filing your VAT return on time is essential. If your turnover exceeds AED150 million, you must file your VAT return in 24 months. If you fail to submit the return on time, you can be penalized up to AED 20,000, and the penalty will be deducted from the representative’s funds. Therefore, it is crucial to keep the VAT file in order.
There are different penalties, including the first and repeated offenses. Failure to submit the VAT return on time can result in a penalty of AED 1,000 and AED 2,000, whichever is greater. A penalty of AED 2,000 is applied for the second offense. As a VAT registered person, you must keep accurate records and submit them on time. Failure to do so can result in a fine of AED 50,000 or more.
What is VAT Audit in Dubai?
A VAT Audit is a formal assessment of the financial health of a business. A skilled VAT auditor will review and compare accounting records to VAT returns to ensure compliance. These audits also check that a company is appropriately accounting for VAT and that no blocked inputs or non-recoverable taxes are claimed. To prevent such penalties, businesses should use accounting software that complies with the UAE’s strict VAT regulations. An experienced tax consultant will review and ensure that all transactions and financial records are properly recorded.
While the Federal Tax Authority (FTA) can audit any business at any time, they typically select a business randomly to conduct the audit. This way, companies are not subject to a huge rush and can prepare their accounts before the audit. By planning, companies can avoid penalties, loss of reputation, and last-minute rush. And because audits are usually timed around tax deadlines, companies can prepare themselves by scheduling a pre-tax audit.
How does VAT in Dubai aid in Business Growth?
When it comes to taxation, the introduction of VAT in Dubai helps businesses in many ways:
It contributes to the public infrastructure, making business more accessible.
VAT helps companies manage their cash flow more efficiently.
VAT allows companies to grow more efficiently as a whole, which in turn multiplies profits.
However, introducing VAT in Dubai may also have some adverse effects.
Companies with annual turnovers of AED150 million or more are required to file a VAT return every month. However, some businesses may benefit from voluntary VAT registration, which allows them to improve their input tax before the deadline. However, failing to register for VAT may result in fines, and these administrative penalties are outlined in Cabinet Resolution No. 40 of 2017. Further, VAT registration is a crucial step for businesses aiming to grow.
While the rate of VAT in Dubai may seem high, it is relatively low compared to other countries in the GCC. Currently, the rate of VAT in the GCC is around five percent, the lowest in the world, and other countries charge as high as 20 percent. Furthermore, VAT helps diversify economies and diversify public service mandates. While the GCC has some challenges in this area, many positives should be celebrated.
What are VAT Designated Zones in Dubai?
You’re not alone if you’re wondering what a Designated Zone is. The UAE Federal Tax Authority has guidelines for companies operating within them. Listed below are some of the most commonly used zones in the UAE. If you’re unsure of your eligibility, read the guidelines and find out for yourself. Then, start your VAT compliance journey! You’ll be glad you did!
A Designated Zone is a particular location within the Emirate of Dubai. There, goods and services manufactured in a specific area are exempt from VAT. The administration officials of designated zones must comply with these rules and regulations. To maintain these zones’ integrity, they must be adequately fenced. In addition, proper fencing around the designated zone’s perimeter should be in place to prevent mass traffic and unaccounted goods from entering or leaving the zone.
While free zones have traditionally been excluded from UAE VAT rules, the Designated Zones are eligible for preferential VAT treatment now that the Emirate has introduced a Cabinet Decision. Therefore, enterprises should carefully consider how their supplies are VAT treated if they enter or exit the free zones. Contact a tax professional in Dubai to help you understand how your business is taxed in Designated Zones.
What is VAT Profit Margin Scheme in Dubai?
If you are selling taxable goods, you must understand Dubai’s VAT profit margin scheme. The VAT profit margin scheme applies only to goods purchased and sold during transitional periods, which are not subject to VAT before VAT implementation. The GCC agreement stipulates the conditions under which a profit margin scheme can be applied. Here’s an example: suppose you purchase a car for AED 100,000, then sell it to a consumer for AED 120,000. The profit margin scheme applies to the sale, and the VAT on the VAT amount of AED 20,000 is AED 1,000.
What is VAT Profit Margin Scheme in Dubai, and how does it benefit you? This VAT scheme applies to certain specified goods and supplies, and certain conditions apply. Essentially, the scheme allows a taxable person to calculate VAT on eligible supplies based on the profit margin instead of the original selling price. It also applies to antiques, collector’s items, and other historical, scientific, or archaeological goods.
If you sell a second-hand car, the VAT profit margin on the second-hand vehicle should equal the total selling price. Unless the car is being sold at a profit margin, you should charge VAT on the total selling price of the vehicle and consider the warranty. The VAT profit margin on the second-hand car can be 5%, the maximum profit margin you can get under VAT in Dubai.
What is VAT Reverse Charge Mechanism in Dubai?
If you are importing goods into the UAE, you are probably wondering: What is VAT Reverse Charge Mechanism? This mechanism makes VAT reporting easier and reduces fraud by letting you deduct VAT when you pay for a product. It also allows you to avoid paying VAT on goods you import because you don’t have to. Instead, the FTA will report the VAT to the recipient, who will deliver it for the goods they purchase.
Reverse charging is a concept introduced by the UAE government to prevent tax evasion. It essentially shifts the tax liability from the supplier to the recipient, who may not be a UAE resident. Requiring the recipient to register for VAT in the country where the goods are being purchased protects local suppliers and avoids situations where a recipient may prefer to buy products from outside the UAE.
A VAT-registered person in the UAE purchases goods from a UK company and the UK company is not tax-registered in the UAE and does not file VAT returns in the UAE. In such a case, Mr. ABC must record a reverse charge on his VAT return. Since UAE Supplier purchased the goods from a non-UAE supplier, the Reverse Charge Mechanism applies. However, the net result is the same as when the recipient accounts for VAT on a forward charge basis.
What are the duties and eligibility for Tax Agent in Dubai, UAE?
A person who wants to work as a Tax Agent in Dubai UAE should be qualified. The role requires the successful completion of the FTA Tax Agent Exam. Successful exam completion will make a Tax Agent eligible for valuable work in the UAE. This professional should be physically and medically fit, have a valid tax license, and hold professional indemnity insurance. Anyone who meets the requirements may apply for registration. Upon receiving all the required documents, the FTA will review the application and will render a decision within 15 days.
If a company is in the UAE, hiring a tax agent is essential. These professionals will handle all the tax matters for a company, allowing the owner or key management employees to focus on other duties. Tax agents in Dubai are appointed under Federal Law No. (7) of 2017 on tax procedures. Tax agents represent taxable persons before the Federal Tax Authority and help them fulfill their tax obligations. Tax Agents can save time and effort by taking care of the compliance process.
Before you can work as a Tax Agent, you must pass all the FTA exams. You should be medically and physically fit to practice in the UAE. You must also have professional indemnity insurance before you work in the UAE. You must maintain confidentiality and not engage in any activity that might violate the law. It is important to remember that as a Tax Agent, you are bound to provide documents and information to the authorities.
Is there a deadline for VAT Return filing and payment in Dubai?
The date for filing your VAT return in Dubai UAE is the 28th of the month after the end of your tax period. However, the law allows you to extend the filing date to the next business day if your tax period is longer than three months. If your VAT period is more than three months, your due date is the 28th of the following month. Businesses that file quarterly returns should file them by the 28th of the next month.
The VAT return is an important document and requires proper treatment of your business transactions. The VAT rate for your business must be standard-rated at the level, meaning that you must provide only the eligible expenses and purchases. Manually collating transactions is a significant hassle and may cause missed deadlines. Moreover, you need to keep track of every single detail. That’s why it’s essential to file your VAT return in Dubai UAE online.
The FTA is enforcing this requirement. If you file your VAT return late, you could end up paying penalties for non-compliance. You’ll be charged AED 1,000 for the first time and AED 2,000 for subsequent delays. So, if you’re unsure, don’t wait any longer. Just remember: there’s always another deadline – and you need to know the one in Dubai first.