An Essential Guide to VAT Obligations for Businesses in UAE

Value Added Tax (VAT) in UAE was affected in 2018, subsequently, businesses are compelled to comply with the VAT regulation and standards. Thus, it is advisable for taxable persons to seek the expert services of VAT Registration UAE to seamlessly implement tax standards and to stay compliant. 

Vat Obligations for Businesses in the UAE

Businesses that are registered for VAT in the UAE are compelled to meet VAT obligations, as mentioned below:

• Determining the scope of VAT registration for businesses –

The first obligation for a business is to determine its VAT taxability. Businesses are required to register for VAT if the total value of taxable supplies and imports exceeds the VAT threshold value of AED 375,000 in the last 12 months.

• Determining the category of the transaction:

 The transactions subject to VAT are divided into 3 categories: 5% or the standard VAT rate; zero-rated; and exempt. Businesses must ensure that they classify their transactions in the correct category in order to have a clear VAT treatment of the same. Thus, it is advisable for businesses to seek the expert services of top tax consultants UAE to effectively determine and implement VAT transactions.

• Maintaining VAT records and documents:

Businesses are under an obligation to maintain the tax records of the last five years as per Article 2 of Cabinet Resolution 36 of 2017. Some of the key records that are supposed to be kept are as follows:

1. Record of the business’s supplies and import records
2. All tax invoices, credit notes, and any other alternative documents
3. Records of goods and services for which VAT has not been deducted
4. All records related to the exports of the company
5. record of adjustments and corrections, if any, made on the accounts or tax invoices.
6. record of adjustments and corrections, if any, made to the accounts or tax invoices.
7. Record of goods and services that the company has disposed of or is using for an activity that is not related to business, like VAT paid for such goods and services.

VAT registration Consultants UAE assists taxable persons to maintain tax records properly and in sequence for any future references.

• Tax invoices should always be issued for all taxable goods and services.

As per the law, VAT-registered businesses in the UAE must issue tax invoices to the receiver of goods and services that are taxable by law. The tax invoice must always contain the following information:

1. The invoice must mention the term “tax invoice” clearly on it.
2. The tax invoice must also mention the name, address, and TRN (Tax Registration Number) of the business that is supplying the goods and services.
3. The invoice should also have a clear mention of the receiver of the goods, their address, and their TRN number, if applicable.
4. The date on which the tax invoice has been issued to the receiver
5. supply date of goods, in case it differs from the date of issue of the invoice.
6. Details of the goods and services supplied
7. Any discount rates offered
8. The unit price, quantity, or size of the materials being supplied, the applicable VAT rate, and the amount due in AED for each of the goods and services
9. The total payable amount is in AED.
10. the total payable tax in AED with the applicable exchange rate at that time.
11. In case the recipient demands the calculation of the tax, the invoice must mention the details of the same.

• Timely returns:

The next important obligation for VAT-registered businesses in the UAE is to file their VAT return on or before the deadline. Often, the FTA allocates a time period of 3 months for tax periods, but it can be shortened or lengthened as per the description of the FTA. UAE taxable persons are compelled to file their VAT returns on or before the 28th day after the end of each tax period to which noncompliance accrues hefty fines. Therefore, it is essential for taxable persons to consult tax consultants UAE to timely file their VAT returns.

• Settling the VAT due amounts timely

VAT-registered businesses are also obliged to settle their payable VAT in time, they must settle the payable taxes on the tax return dates. This assists taxable persons to stay compliant and to avert penalties for noncompliance. 

Consult VAT Registration UAE Today!

It is advisable for taxable persons to seek the expert services of VAT Registration UAE to seamlessly implement tax standards and to stay compliant. Thus, contact us today and we shall be glad to assist you!