From the year 2018 onwards, Value Added Tax (VAT) has been introduced by the Ministry of Finance (MOF) in the UAE. This meant from that year onwards, the government of the UAE started imposing a certain amount of tax over businesses with a still to be finalized minimal annual turnover. It was decided that the rate of VAT will be set to 5%. The 5% rate of VAT started imposing on most of the transactions made throughout the value chain. The regime of 0 taxings in the UAE was one of the biggest reasons that traditionally made the country seem as commerce-friendly amongst the businesses. However, a lot of questions have arisen since the UAE government has planned to raise revenues to increase the income from oil and other hydrocarbons by imposing VAT on companies.
For a lot of new companies coming to existence in the UAE, consulting services play a guiding role to give advice on tax issues to entrepreneurs and foreign companies looking to enter the UAE business market. The consulting services in the UAE guide their clients regarding avoiding double taxation, reviewing the periodical forms, how to execute tax treaties between countries and statements of the companies among others.
It was required for every business to register prior to the date on Jan 1, 2018, to start charging VAT and be called a VAT registered business. Every business exceeding the mandatory registration threshold of AED 375,000 of their imports and taxable supplies is required to register for VAT. Other than that, a company can choose to register for VAT even if imports and supplies taxable do not exceed the registration threshold of AED 375,000 voluntarily, however, do exceed the voluntary registration threshold of AED 187,500. In the same way, a business can also voluntarily register for VAT if the expanses of the business exceed the threshold of voluntary registration. This opportunity in specific was designed so that startups with nill turnover can register for VAT as well. Once the business is registered for VAT, it is required to keep the records that the Federal Tax Authority can use to review transactions and identify the business activity details. The specified documents and the period of keeping them will be stated in the pertinent legislation.
Tax Consulting Services
Tax consulting services provided by tax consulting business in Dubai are as follows:
- Direct Tax Services
The service of direct tax ensures that a company does not by any chance pay the taxes to the government twice, as well as at the same time, do not get caught in avoiding payment of taxes. In this category, some of the services provided are as follows:
- Representing the client in front of the tax authorities for appeals, assessments, survey, research and seizure cases
- The services of tax management consultation to manage and decrease tax liability under the laws of UAE taxation
- Filing of tax returns
- Value Added Tax
The value-added tax (VAT) is a newly introduced tax category altogether in the UAE in 2018 and for companies to not get caught unaware of major compliance issues, these services are provided. A VAT certificate is required to be made exempt from VAT. Services regarding VAT consultation provided are as follows:
- Registration with VAT/sales tax authorities
- Calculation of tax liability and filing of periodical returns on VAT
- Representing for appeal reference, assessments and etc
- Assisting with other sales tax/VAT compliance
- Procurement of statutory forms
- VAT planning and consultation services
- Service Tax
If a business is involved in any kind of service provision, then it shall be required to pay service tax. The services provided in this specific category are listed down below:
- Service tax registration
- Service tax calculation
- Consultation services for assessments, appeals and etc
- Advisory services for planning taxes and minimization
- Filing of regular service tax returns and other compliances
- Preparation and research of records for Cenvat, service tax credit and other records that fall under the category of service tax law
Since the implementation of VAT on all the companies across UAE by the government, a lot of people have turned to become qualified legal tax consultants for other businesses and are obtaining consultancy licenses to set up consultancy businesses. During this time, the amount of tax consultancy firms has drastically increased in the UAE and in fact stand as one of the leading business sectors in the UAE market. It can be said that a tax consultancy license is running most on-demand recently in the United Arab Emirates as all the already existing as well as new businesses require the services of tax consultancy to carry out their VAT registration, accounting, vat refund and for filing vat return.
Why Tax Consultancy In Dubai?
- An individual or a business can legally become the tax consultants for any company to carry out their tax or VAT requirements
- Provides an option to add bookkeeping and accounts activity in the same license
Step-By-Step Of Setting A Tax Consulting Firm
To obtain a relevant license for a consulting firm, a professional license shall be obtained as the activity of tax consulting falls under this category of license. Setting up a tax consultancy firm allows an expat to accountable for the 100% shares of the company without having to share the local agent in the UAE will only be the local service agent in the license. A limited liability company can not be formed as a tax consulting firm. To establish a tax consultancy firm, the first step is to determine the legal name of the company and sit under an exam for the American University of Dubai (AUD) by online registration. Once the exam has passed, it is required to obtain an initial approval followed by the signatures from the court and final submission with the Ejari for a desk agreement or an office space, in case of a desk agreement in order to obtain a license.
Cost Of Setting Up A Business In Dubai
|Cout Fees||Approx. AED 2000|
|Market Fees||2.5% of Annual Rent|
|License Fees||Approx. 10000|
Management Skills Placement Test By AUD
In order to obtain a consultancy license from the Department of Economic Development (DED) in the UAE, a shareholder or business manager will be required to undergo an exam in the American University in Dubai (AUD). In case of passing the exam taken at the American University in Dubai (AUD), a business or a business owner will be able to secure a consultancy license and start providing consultancy services in the market. The paper taken at the AUD is of a total of 100 points and the passing score is 60 points.
The paper taken at the AUD is divided into 4 different parts, which are as follows:
- Basic marketing questions which are of 24 points
- Basic management financial question which is of 20 points
- Basic management questions which are of 20 points
- Three short cases which are of 36 points
The cost of taking an exam at AUD is AED 2000, and the location of AUD is in Dubai Media City. The date of the exam will be informed and confirmed once the online registering form is submitted.
Required Documents For Tax Consultancy License
- Passport copy
- Bisa status
- NOC – if required
- Ejari or the desk agreement
- 3 options of the trade name
In order to avoid any kind of confusion regarding the documents, policies and licensing procedures, it is advisable to consult a professional business advisory like us!