The UAE VAT laws allow all firms that are operating in the UAE to get themselves registered for VAT if their taxable supplies in a year exceed AED 375,000. This article will help the readers understand how VAT implementation can be done in the UAE tax realm. UAE VAT implementation process can be made effective with the help of the services that are available with VAT registration UAE. Let us dive into the concepts of UAE VAT implementation.
Read also: VAT Treatment for Motor Vehicles
Implementing VAT in your business
The UAE VAT implementation needs various checkpoints. There is a UAE VAT step-by-step guide that must be followed for all the businesses operational in the UAE if they wish to register themselves for VAT and implement VAT in their business.
Explaining the UAE VAT compliance guide in detail:
- VAT registration– Should your taxable turnover include the cost of the products and services you provide as well as any imports, but not any supplies that are excluded (For instance, specific financial services and life some real estate transactions and insurance & regional passenger transit) – surpasses AED 375,000 over the course of a year, or if you anticipate a higher taxable turnover than within the next 30 days, you are worth AED 375,000, it is mandatory to register for VAT. If your taxable income is generated by costs that the amount you spend that is liable to VAT is less than 375,000 AED, but over 187,500 AED It is voluntary for you to register for VAT.
- Explaining the tax groups for UAE VAT Implementation– If related enterprises have an establishment in the United Arab Emirates and are legal entities under common management, they may be eligible to register as a tax group. These businesses must share economic, financial, and regulatory relations (either legally, through shareholding, or voting rights). Group members do not exchange money with one another, and a single member, referred to as a “representative member,” will submit a combined VAT return that details all of the group’s operations. In addition, any supply given or received by a member of the tax group will be regarded as having been made by the representative member of the group, even if all group members will still be accountable for VAT debts jointly and severally.
- UAE VAT registration steps-
The FTA website’s online portal provides access to the VAT registration form and the tax group registration form. For further details on how to register, please visit the e-Services portal’s Downloads area and start following the step-by-step process from there. - How VAT works in the UAE infrastructure?
Unless your supplies are exempt or zero-rated, you must charge VAT (output tax) on them after registering for VAT. It would help if you also accounted for the VAT you charge your customers on tax reports filed to the FTA. If you have a tax invoice or other proof of the import or supply and have paid the VAT you intend to recover, you will be entitled to claim the VAT you pay to your suppliers (input tax) on your tax returns. - Is there any input tax that cannot be claimed?
Indeed. It is not possible to recover the VAT paid on entertainment costs, personal motor vehicle use, or employee-related expenses. - What are the records that are to be kept for UAE VAT Implementation?Accounting documents of all supplies and purchases of goods and services, all tax invoices, tax credit notes, other documents received and issued, sales and use documents and goods for purposes other than business and the VAT paid for those purchases, records of goods and services purchased for which input tax was not claimed, records of exported goods and services, records of changes made to accounts and tax invoices are some the records required.Apart from that, you will also need to maintain a VAT record or account that details the following: includes output tax on taxable supplies; output tax where those supplies are accounted for by the reverse charge mechanism; output tax after making any necessary adjustments for error; VAT recoverable on acquired supplies or imports; and VAT recoverable after making any necessary adjustments for error.Also, like all businesses, you will need to keep records and any papers that are related to your accounting transactions. The balance sheet and profit and loss accounts, the records of wages and salaries, the records of fixed assets, the inventory records and statements (including quantities and values) at the end of any applicable tax period, and all stock-count records related to inventory statements are examples of such records and documents.
- When is the VAT due paid?
Any taxes that are owed must be paid by the deadline for each return, which is the 28th day of the month after the end of each tax period (or the following working day if the regular deadline occurs on a national holiday or weekend). - Filing VAT returns and what will the things being reflected on the VAT returns?You will normally be granted a quarterly or monthly tax period based on your yearly turnover; however, the FTA may allow a shorter or longer tax term if it thinks it is appropriate. You have to file your tax return by the 28th day of the subsequent month for each tax period (or the next working day if the customary due date falls on a weekend or national holiday). The FTA portal will be used to file tax returns electronically.
You must include the following information on each return:
- The amount of standard-rated supply made during the tax period and the output tax collected, broken down by emirate.
- The cost of supplies that were zero-rated during the tax period.
- The value of exempt supplies made in the tax period
- the amount of any supplies that were reverse charged and received during the tax period.
- The amount of recoverable tax and the value of the costs paid during the tax period in which you are attempting to recover input tax.
- The entire tax liability for tax period, including recoverable input tax.
- The amount of tax owed (or repayable) for the given tax year.
9. When will the repayments of claimed be received?
If you are in a repayment position, the FTA will notify you within 20 working days of the approval or rejection of any payback claims you submit. Occasionally, though, the FTA might let you know that the claim’s evaluation will require more time.
10. How VAT payments can be done in the UAE?
The payment of any taxes to the FTA through e-Dirham will be possible through a variety of channels. Please create an e-Dirham account as soon as you can if you don’t already have one.
VAT registration UAE can help implement VAT in the UAE
Our tax professionals at VAT Registration UAE are experienced and they can help you in UAE VAT Implementation in your organization and hence reach out to us today and make your company VAT-friendly in no time. call us today to book a consultation!
