VAT Consultants in Dubai – VAT Consultancy Services in UAE
The VAT in Dubai, UAE became effective back on Jan 1, 2018. Since then, businesses and legal entities have been consistently looking for VAT and tax services from the best VAT consultants in Dubai that are registered with the Federal Tax Authority (FTA) of the UAE as a dedicated tax agents and a tax agency. It is compulsory for companies to implement structured or proper VAT. This is why VAT consultancy is required at any cost to ensure your company complies with the UAE VAT Laws.
RIZ & MONA VAT & tax consultancy is here to help you solve all of your VAT matters.
Our experienced team of professional VAT consultants is able to deal with any type of VAT problem including VAT laws and regulations, VAT consulting, VAT returns, VAT training, VAT registration, and more. We have a clean track record and detailed knowledge & years of experience in VAT registration for businesses.
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Our Tax & VAT Consultancy Services in Dubai
Following are the primary VAT & tax consultancy services that we offer to our clients:
VAT Returns Preparation
Our skilled team will prepare your quarterly VAT reports, enabling you to accurately determine any refundable or payable amount for VAT.
Tax Residency Assistance
Our team of tax advisors can help you obtain a corporate or individual tax residency certificate from the Federal Tax Authority, ensuring compliance with tax regulations.
FTA Portal Guidance and Documentation Support
Our experienced accountants will guide you through the process of creating an online account on the FTA portal. They will also assist you in preparing and submitting the necessary documents in the required formats specified by the FTA.
Customized Tax Consultations
Our qualified and experienced tax professionals are available for personalized face-to-face consultations. They will work closely with you to develop tailored tax planning strategies that optimize your business’s tax outcomes while ensuring compliance with all tax obligations.
VAT Registration (TRN) Support
We have dedicated accountants that will provide comprehensive assistance in registering your business for VAT with the FTA. They will also offer advice on your eligibility for a VAT exception. Upon successful completion of the registration process with our help, you will receive a Tax Registration Number (TRN) certificate.
Our VAT Advisory Services
- VAT training programs and awareness sessions for employees
- Strategic VAT Planning in UAE
- Guidance on choosing between VAT registration as a tax group or a single entity
- Consultation services for VAT implementation and compliance
- Assessment of the applicability of the reverse charge mechanism for Imports
Our Primary VAT Compliance Services
- Reviewing and customizing source documents to ensure VAT compliance
- Timely submission of VAT returns and reconciliation
- Providing expert advice on client inquiries regarding FTA notifications
- Reviewing VAT records, returns, and reconciliation for accuracy and compliance
- Representation and advocacy before the FTA for tax-related matters
VAT Compliance in Dubai, UAE – Complete Guide
Businessmen and entrepreneurs are not subject to taxation in the Middle East. Instead, taxation is imposed on foreign banks and oil companies, which can be advantageous for those considering starting a business in Dubai. However, it’s important to note that as of January 1, 2018, Dubai introduced value-added tax (VAT) on the majority of services and goods.
As a businessman doing operations in Dubai, you will be required to apply VAT to nearly all services and goods, ranging from restaurant food items to hardware equipment. If you’re unfamiliar with VAT you should gain a better understanding of it.
Explore the details of Value Added Tax (VAT) compliance in Dubai, United Arab Emirates (UAE) with our comprehensive guide. As VAT regulations evolve, understanding and adhering to the latest requirements is crucial for businesses operating in Dubai. This guide provides an in-depth overview of VAT principles, registration procedures, invoicing guidelines, record-keeping obligations, filing and payment deadlines, and VAT return submission processes.
Stay up-to-date with the latest updates and ensure your business remains compliant with Dubai’s VAT framework. Enhance your knowledge of VAT compliance and navigate the complexities of taxation in Dubai, UAE effectively.
What Does Value-Added Tax Mean?
VAT, also known as value-added tax, is a consumption-based tax. It is added at each stage of the manufacturing and distribution process where the business has added value to the product.
In general, VAT is the responsibility of the business to collect and remit the VAT to the government. It is paid by the customer on their purchases. Failure to collect and remit the VAT can result in penalties or even criminal charges for businesses.
VAT is applied to the purchase of services and goods in opposition to taxes on income. VAT is the most commonly implemented form of consumption tax worldwide. More than 150 countries have implemented VAT systems including member states of the European Union, Canada, and New Zealand.
History of VAT
VAT is applicable to both online purchases and traditional in-store purchases made within Dubai. It was introduced in Dubai in 2018. Starting from January 1, 2018, businesses in the UAE were required to register for VAT and collect the tax amount, which they then remit to the government. This marked the first implementation of VAT in the Middle East.
The implementation of VAT aimed to diversify the government’s sources of income and support the provision of various services, such as waste control, hospitals, and parks. By reducing dependence on oil-related income, VAT was envisioned to contribute to a more sustainable financial framework. To oversee the management and collection of federal taxes, the Federal Tax Authority (FTA) was established.
The first thing we will do is analyze your purchase orders, invoices, contracts, and quotations to assist you in determining whether your legal business entity qualifies for either voluntary or mandatory registration.
If your company is expected to exceed the threshold of AED 187,500 in the next 30 days or its total value of taxable goods and services has surpassed the voluntary registration threshold (AED 187,500 ) within the past 12 months, you are eligible for voluntary registration.
If your company is expected to exceed the threshold of AED 375,000 in the next 30 days or its total value of taxable goods and services has surpassed the voluntary registration threshold (AED 375,000) within the past 12 months, mandatory registration is required.
Note that it is important to have a corporate bank account in order to facilitate the registration process. Also, please remember that those companies whose revenue remains below AED 187,500 are currently not eligible for VAT registration. However, if your company surpasses the mandatory threshold, you have 20 working days to submit the application. Additionally,
If your company has generated revenues below AED 187,500.00, then you are not yet eligible for VAT registration. If your company crosses the mandatory threshold limit, you have 20 working days to submit the application.
To comply with the VAT regulations, business owners in the UAE are required to register their companies under the VAT system as outlined in Federal decree-law No. 8 of 2017 on VAT and the Cabinet Decision (52) of 2017. It provides the executive regulations for the Federal Decree-Law No. (8) of 2017 on VAT. The VAT applies equally to tax-registered businesses operating in the UAE free zones as well as those located in the mainland.
VAT in the UAE is imposed on the consumption or utilization of goods and services, with the ultimate cost borne by the end consumer. Registered businesses in the UAE are subject to a 5 percent VAT rate on taxable supplies of services or goods at each stage of the supply chain. However, it is the responsibility of businesses to collect and account for the VAT on behalf of the government.
Documents Required for VAT Registration in UAE
To apply for VAT registration in the UAE, the following documents must be submitted to the authorities:
- Company address and contact details
- Authorized signatories: passport, Emirates ID, and authorization documents
- Details of the bank account
- Trade license copy
- Monthly income statement for 2017 until the present, in the format specified by the Federal Tax Authority (FTA)
- Customs registration details (if applicable)
- Articles of Association (AOA) and Memorandum of Association (MOA) of the company
- Passport copy of the business partners and owner
- Nature of business and activities performed
- Expected turnover in the coming month
- Copy of Emirates ID of the owner and partners.
After submitting the required documents, the FTA will review your application. If all the requirements are satisfied, the FTA will approve your application and issue a Tax Registration Number (TRN) within 2 to 3 weeks. The registration process of a tax group begins with a single company as outlined above, and then group details are to be provided. Failure to register for VAT within 30 days may result in a penalty of AED 20,000.
Top 7 Things About VAT that Businessmen and Entrepreneurs Must Know in Dubai
Before starting a business in Dubai, it is crucial to follow several steps to ensure successful company formation. Getting your business formation right from the beginning is essential as it can help you avoid potential issues in the future.
One of the key aspects to consider is understanding and fulfilling your VAT obligations. It is important to register for VAT if required and ensure timely payment of VAT. Failing to comply with VAT obligations can lead to substantial penalties and accrued interest. In fact, the interest charged on unpaid VAT liabilities can reach up to 300% of the outstanding amount.
By being aware of your VAT obligations and fulfilling them in a timely manner, you can safeguard your business from unnecessary penalties and financial burdens. It is advised to seek professional guidance to ensure proper compliance with VAT regulations and to mitigate any potential risks.
Here are top most important things about VAT that Dubai businessmen must know:
Specific Services Have 0% VAT
If you are unsure whether the 5 percent VAT applies to your business, it is essential to determine the nature of your supplies and classify them as either exempt or 0 percent VAT supplies.
Even if your supplies fall under the category of taxable supplies, certain services are subject to a 0% VAT rate. For businesses providing such services, it is important to include a zero value on their invoices.
The 0% VAT rate is applicable to services and goods exported outside the member states of the Gulf Cooperation Council (GCC), which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. Additionally, international transportation services, the supply of natural gas or crude oil, and the supply of investment-grade precious metals (such as silver and gold with 99% purity) are also subject to no VAT. Furthermore, certain sectors like education, healthcare, and newly constructed residential properties supplied within 3 years of their construction also benefit from the 0% VAT rate.
In addition to that, if you are considered “outside of the state,” you may qualify for a 0% VAT rate. This includes being present in the state for reasons unrelated to supply and being in the state for less than one month.
It is important to note that zero-rated VAT differs from exempt VAT. Even if you provide a zero-rated taxable supply, you still need to register for VAT with the government and issue an invoice, but you will charge 0% VAT on the transaction.
VAT in Dubai Is Levied at a Rate of 5%
It is important to understand that the value-added tax (VAT) in Dubai is uniformly imposed at a rate of 5%. This applies to all taxable supplies of services and goods, including imports. However, it is essential to determine whether your specific services fall under the category of taxable supplies, as there are certain exemptions in place.
A taxable supply refers to the provision of services or goods for consideration by a business entity operating in Dubai. This encompasses various sectors, including food establishments such as restaurants and hotels, retail businesses as well as other forms of entertainment activities. If you are considering starting a business, it is highly likely that your venture would fall within the scope of taxable supplies.
To ensure compliance with VAT regulations, it is crucial to determine the nature of your business activities and assess whether they are subject to VAT. You should have an understanding of the specific requirements and implications related to VAT registration, invoicing, and reporting, enabling you to effectively navigate the VAT landscape in Dubai.
You Can Pay Online
You are required to file a VAT return to the FTA online at the end of every tax period. Essentially, this is a list of all the taxable supplies you generated during that time. It also demonstrates how much VAT you must have gathered and must now pay the government.
Every quarter, by the 28th of the following month, you must submit your VAT returns and settle any outstanding amounts. Penalties may apply if VAT returns are filed late. You will be charged a penalty of AED 2,000 for each subsequent missed deadline and AED 1,000 for the first missed deadline.
The cost of paying after the due date can be high. For the first seven days, it is 2% of the unpaid VAT amount, and after those seven days, it is 4%. If the VAT amount is not paid within a month, a penalty of 1% per day will be assessed until it equals 300% of the unpaid VAT amount. You must submit your VAT returns even if you have a zero-rated supply. You will be charged the same late-filing fees if you don’t do that.
VAT might be either payable or outstanding. Through the official FTA website, you can make an online payment if you owe VAT. Payment options include credit cards, bank transfers, and eDebit. You can easily and conveniently pay your VAT thanks to the flexibility of the payments. Local or foreign bank transfers are also acceptable. Make sure you pay the due amounts on time. It shouldn’t be difficult to pay your VAT.
Certain Services Are Exempt From VAT
Exempt services are completely free from VAT in contrast to zero-rated services where businesses charge 0% VAT. There are only four items that fall under the exemption category, namely local public transportation, financial services vacant land, and the supply of residential property.
Financial services, which involve dealing with money, are generally exempt from VAT. This includes activities such as operating savings or deposit-taking accounts, currency exchange, and providing credit or loans. Insurance contracts also fall within the scope of exempt financial services. However, it’s important to note that financial services are only exempt if a discount, fee, or commission is charged for offering those services.
The supply of residential buildings, regardless of whether it is for lease or sale, is exempt from VAT. Additionally, hotels and motels are not exempt from VAT. However, it’s worth mentioning that movable structures not fixed to the ground, such as RVs and motor homes, are not considered residential buildings and do not qualify for the exemption.
Exempt services encompass local transportation by air, land, or water from one state to another. This exemption applies even to local transportation using helicopters or airplanes. If you operate a business involved in local transport, it is advisable to determine whether your services fall under the exemption.
VAT is Applicable to Businesses With an Income of AED 375,000 Per Year
You are obligated to charge a 5% VAT, if not a single one of your supplies falls under the zero-rated or exempt categories. However, it’s important to note that not all businesses are required to register for VAT.
There is a minimum threshold that must be met before registration becomes compulsory. If your taxable imports or supplies exceed AED 187,500, you have the option to voluntarily register for VAT. For businesses to be required to register for VAT, they must have taxable imports or supplies totaling AED 375,000 or more per year.
Registration for VAT
It is obvious that you must register for the VAT. You need to register your business with FTA, The FTA oversees VAT in Dubai. You must first set up an e-service account. Before you can register for VAT, you must first create an account. You’ll need a working email address in order to register. You can begin the registration procedure through the FTA portal once you create an account. Add all the necessary details and submit the required papers. You must enter your financial and contact information.
Your application will receive FTA approval after which you will receive a special TRN (Tax Registration Number). You can log in to your VAT portal using the TRN. You must maintain a record of your taxable supply. Ensure that all of your information is latest. You will be required to register the moment you reach the minimum amount. If you exceed the threshold, you don’t want to be aware that you have VAT duties.
The FTA requires that you submit your VAT return online within 28 days of the conclusion of the “tax period”. Your annual turnover determines the timeframe of a tax period. You must file your VAT returns on a monthly basis if your yearly revenue is less than AED 150 million
Big companies that have a yearly revenue exceeding AED 150 million are required to file their returns on a monthly basis. With this level in place, the company may make its monthly VAT payment without hassle or delay. It is preferable to handle these higher VAT payments on a monthly basis.
You Can Receive Some of the Paid VAT Back
Your consumers will be charged VAT as you are running a business. However, you’ll also be required to pay VAT on some of the services and items you buy. You have the opportunity to recover some of the VAT you paid. It is called the input tax.
The total amount of VAT you have accrued from clients less input tax is your total VAT liability. The amount of money paid by the company while buying particular goods is the input tax. Any tax paid on inputs is refundable. But keep in mind that if you offer exempt services, you cannot claim VAT back.
For instance, a company could purchase 20 computer tablets from another company in a single month and sell the consumer 30 tablets. They’ll cover the purchase’s 5% VAT and the purchaser will pay 5% VAT. Double taxation on the same commodity may result from this purchase. Because of this, the company can claim the VAT it paid on the initial purchase. In the end, the end-user is only billed for VAT once.
Guidelines on Filing VAT Returns in Dubai, Sharjah, and Abu Dhabi, UAE
The Federal Tax Authority (FTA) offers an online site for VAT filing in Dubai, United Arab Emirates. All firms must fill out the relevant sections of the VAT return form, which is available on the Internet, with information about their input VAT, sales, output, and purchases. The VAT 201 form comprises various categories that a taxpayer must fill out in order to complete the VAT filing procedure in Dubai, United Arab Emirates. The form’s sections consist of:
- Declaration and authorized signatory
- Details of the taxable person
- Extra requirements for reporting
- VAT return period
- Total VAT due
- VAT on sales, expenses, and all other outputs
You only need to concentrate on operating your business when you take the services of VAT consultants in Dubai, Abu Dhabi, Sharjah, and the UAE like RIZ & MONA CONSULTANCY. We will handle all of the work associated with filling and completing your VAT returns.
VAT Refund in Dubai, Sharjah, and Abu Dhabi, UAE
A corporation may be eligible to get a VAT refund in Abu Dhabi, United Arab Emirates, under the terms of the VAT Law in Dubai, depending on the situation. This may involve a special program or a taxable person who is in a net taxable refundable position. It is as follows:
- Dubai VAT refunds for diplomatic bodies, foreign governments, & international organizations
- Refund of VAT for residents of Dubai building new homes
- VAT refunds in Dubai for foreign companies
- VAT refunds for visitors in Dubai
To get help with VAT refunds, get in touch with RIZ & MONA CONSULTANCY, one of the top VAT consultants in Dubai, United Arab Emirates.
RIZ & MONA: Top Tax & VAT Consultants in Dubai, UAE
If you are looking for experienced VAT consultants in Dubai, who have a deep understanding of the UAE tax laws and regulations then RIZ & MONA CONSULTANCY is the ultimate option for you. Our team of expert VAT consultants and tax consultants is dedicated to providing exceptional guidance to deal with FTA and support individuals and businesses in managing their matters of tax and VAT in UAE effectively. With a deep understanding of the ever-changing regulations and laws, we ensure that our clients stay compliant while optimizing their tax strategies.
Whether you need assistance with VAT registration, filing returns, or resolving complex tax issues, our tax experts are here to assist you every step of the way. Contact us right now for reliable, accurate, and personalized VAT and tax consultancy services in the UAE that meet your specific needs.