The government requires massive sums of money to maintain the administration. The implementation of the welfare schemes involves funding. The authority levies different types of taxes from ordinary people and business owners. VAT also falls into this category.
The government charges Value Added Tax or VAT from the clients who purchase any goods or services. The service provider calculates VAT on the billing amount and adds it to the total sum. The customer must pay the VAT to the service provider.
The business owner must offer a bill to the clients. It highlights the billing amount, VAT amount, and other taxes. The owner of the organization must pay a VAT to the UAE government.
Classification of Supplies
The UAE tax department charges money from the business houses under various heads. The VAT calculation depends on the services that the company offers to a particular client. However, business houses must understand the various VAT slabs. As per the UAE tax department, the chargeable service can be classified under two heads:
- Single Composite Supply
- Multiple Supplies
What Are Multiple Supplies?
The UAE VAT treatment depends on the nature of the services. Novice clients and business owners may fail to differentiate between Single Composite Supply and Multiple Supplies. If the client gets more than one facility, which does not come under the same category, then the tax department places it in the Multiple Supplies category.
Sometimes, the service provider must offer more than one facility to the client as one component is incomplete without the other. The business owners cannot charge separately for these services. It is an example of a Single Composite Supply. Sometimes the clients opt for multiple facilities, which are not related to one another. In such cases, the company can charge for the services separately.
Here is an example that makes things easy. A client can book a room in the hotel via an online platform. He/she can register for a pickup service from the airport as well. These two services do not depend on another. So, the hotel can charge the client separately for each service. Thus, the Multiple Supplies VAT rules will be applicable in this case.
Calculate VAT on Multiple Supplies
The service provider must make a list of the facilities that the client asks for. The UAE government has a list that highlights the VAT percentage that can be levied on a specific service. The business house must calculate the VAT amount as per this rate chart on the particular services.
After this, the different VAT amounts must be summed up. It must be added to the actual billing amount. The client needs to pay the total charges. The UAE tax department keeps a close watch on the transactions of the companies. It assists the government to charge the service providers accordingly.
Opt for the best VAT filing company in UAE
Each nation has different taxation rules and slabs. The same applies to the goods and service providers operating in the UAE. New organizations may lack proper understanding. It is important to note that the UAE tax department is rather strict. If you are guilty of tax evasion, the UAE authority will take stringent actions. So, you need the assistance of the experts to keep such issues at bay.
Several VAT filing companies operate in this area. However, you must appoint the services of the best to safeguard your investment and business. If you need assistance with VAT registration, then consult the experts at GCC Filings. The organization can also help with the incorporation of the business in UAE.
Apart from registration, this company can assist with tax return applications, document submissions, accounting services and organizational audit facilities. The tax experts can help the business owners to apply and obtain the special incentives offered by the UAE government.
Novice clients may lack the skills to evaluate and pay VAT. If business owners miss deadlines, they have to pay fines likewise. With the assistance of experienced tax officers of GCC Filings by your side, you need not worry about legal entanglements.