The GCC also known as the Gulf Co-operation Council came to the fore in 1981. It is the economic and political union of 6 nations in the Middle East Region. This comprises of nations like Kuwait, Bahrain, Oman, Qatar, Saudi Arabia and the UAE. The unified VAT agreement of the GCC has set out various guidelines to implement VAT in each of the member nations. This framework usually allows for a basic rate of VAT of five percent. On the other hand, it also allows certain supplies of goods and services to be rated zero. In other words, some articles are exempted from VAT. The organizations with a turnout of over $100,000 are legally obliged to register for VAT in UAE.
What is VAT Basics UAE?
VAT in UAE is a general consumption tax which will be levied on a majority of transactions of goods and services. Interestingly, VAT will be charged at every stage of Value Addition in the supply chain of a particular product. A standard rate of 5% would be levied on the supply of goods and services in the UAE. On the other hand, certain supplies such as the healthcare goods and specified financial services will be exempted from VAT in the UAE. This is also the reason that a majority of businesses in the UAE are gearing up to be ready for VAT.
Being VAT ready implies that you have to levy VAT on the supply of taxable goods and services, account the VAT you are paying so that the input tax deduction can be claimed. Moreover, businesses in the UAE also have to file online VAT returns in UAE on a regular basis by disclosing the details of the VAT paid and charged to the authorities. Thus, the first major step towards being VAT ready is to explore an array of software services. By opting for a software platform, a business would transit to the new VAT era in a smooth manner.
Information Related to the KSA Registration
Usually, there are two types of registration. Under the mandatory registration, all companies that have an annual taxable supply in excess of SAR 375,000 are needed to register for VAT.
On the other hand, those who have an annual taxation of more than SAR 190,000 are eligible for voluntary registration. Interestingly, with voluntary registration, you would avail the deduction of input tax.
If you want to register for VAT in UAE, your business must be registered at GAZT for Zakat and Income Tax.