An extension of our Bookkeeping Services. This is to make the recorded transactions compliant with International Accounting Standards, IFRS
It is a percentage (%) of the sale price. VAT is a type of tax that is added to the price of goods or services at every stage of production or distribution. When a business sells a product or service, they add VAT to the price and collect it from the customer. The business then pays th is collected VAT to the government ’ s arm, Federal Tax Authority [“ FTA ”] , after adjusting for VAT paid on its eligible purchases/expenses .
In UAE, VAT was introduced from January 1, 2018, with a standard rate of 5% on all residual items . There are four (4) defined goods/services categories which are Exempt from VAT and fourteen (14) other defi ned items/categories chargeable @0%.
VAT is chargeable in UAE only if the Place of Supply is UAE. There are separate rules for Goods and another set of rules for Services.
VAT R egistration in UAE is the process by which businesses register with the Federa l Tax Authority (FTA) to obtain a VAT number and become eligible to charge, collect, and remit VAT on their taxable supplies. It is mandatory for businesses that meet certain criteria to become eligible for VAT Registration in UAE.
1. Mandatory Registration: This registration type is mandatory for businesses that meet the following criteria: o
2.Voluntary Registration: This registration type is optional for businesses that do not meet the mandatory registration criteria but wish to register for VAT voluntarily. Businesses that register voluntarily can benefit from being able to reclaim the VAT they pay on their business purchases/ expenses. The Voluntary Registration t hreshold shall be AED 187,500 [USD 50,000 equiv.], whether on the basis of supplies (turnover) or purchases/expenses.
It is important for businesses to determine which type of registration they need to apply for based on their business activities and turnover .
Once registered, businesses must comply with VAT regulations, mainta in proper records, issue tax invoices, and submit periodic VAT R eturns ( generally Quarterly, not necessarily calendar quarter ) to the FTA. Failure to comply with VAT regulations can result in penalties and fines.
Failure by a Taxable Person to submit a registration application within the timeframe specified is AED 10,000 [USD 2,725 equiv.] . [ As per Table 1 of Cabinet Decision No. 49 of 2021 on Amending some Provisions of Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE
i.Federal Decree-Law No. 8 of 2017 and its amendment effective 1 Jan 2023 on Value Added Tax
ii.Executive Regulation of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (Cabinet DecisionNo. 52 of 2017 and its amendments)
iii.Cabinet Decision No. 49 of 2021 on Amending some Provisions of Cabinet Decision No.40 of 2017 onthe Administrative Penalties for Violation of Tax Laws in the UAE