VAT equates to Value Added Tax and it is compulsory for all goods and services. Currently, close to 160 countries have levied VAT or similar taxation systems as per their laws and regulations and acceptance of this taxation regime has been rapidly increasing throughout the world. In case you still have not registered your organization for VAT, then this is the first task that needs to be accomplished. VAT returns have to be filed by businesses whenever they start operating. The GCC nations have thus entered the agreement for implementation of VAT and this was agreed for execution by the 1st of January, 2018 with the tax rate being capped at 5%.
Registration under VAT laws means that the business has obtained recognition under the Government. For easing out the entire process, some categories have been defined which are similar to those in income tax slabs. Here’s taking a look at the slabs for VAT registration in the UAE:
- Businesses with taxable imports and supplies exceeding AED 375,000- Should apply for VAT registration compulsorily
- Businesses with imports and supplies which are taxable and between AED 187,500 and AED 375,000- Can apply for VAT registration on a voluntary basis
- Businesses with taxable imports and supplies which are less than AED 187, 500- Not required to apply for registration under VAT
Learning more about VAT in Dubai (UAE)
Dubai has witnessed multiple changes in its structure of taxation from 2018 onwards. The Emirate is one of the biggest business centres in the region since it has several free-trade zones on offer. VAT was a landmark reform in the taxation structure of Dubai with the universal rate of 5% being applicable for several goods. Maintenance of VAT records is executed for tracking of updated information pertaining to filing of VAT and also for bypassing tax payments which are unnecessary. Companies registered Dubai under the VAT Law are required to impeccably maintain books of records for 5 years as the minimum period. This includes the following core components:
- Debit and credit notes
- Sales and purchase invoice
- Accounting books
- Export and import notes
- Goods issued for private usage
- Zero-rated supplies and purchases
Applicability of VAT across Multiple areas
- Management & Administration- Implementation of VAT or changes will naturally have an impact on the structure of the company, customer interactions and suppliers alike.
- Finance- Finances of companies will naturally be affected since they will be impacted by cash flow and allocation of cash resources throughout the organization.
- Operations- All administrative processes and functions of businesses should be VAT compliant prior to execution.
Why a VAT Consultant is Required
VAT Consultants are naturally in great demand since they will help in streamlining and managing all the above mentioned aspects. You naturally need a VAT Consultant that understands all the intricate aspects of the taxation regime, covering multiple aspects such as accounting and other VAT services in addition to taking care of things like compliance, payment, filing, control, recording and management of data, supplier management, customer management and more.
The FTA has also issued its list of UAE’s designated zones and free zones which are classified as designated zones will only be following the special regulations. These are zones which have special treatment in terms of supply of goods, i.e. supply of the same within any designated zone will be perceived as out of scope without any VAT being applicable upon the same. However, services that have been supplied by designated zone companies are in the same category as they are for mainland organizations and will be following similar rules as are applicable for mainland companies as well. Their rates of taxation will be 5% unless there is any zero rating or exemption. So naturally, a VAT consultant is needed for clarity regarding these provisions along with taking care of the monthly or quarterly filing process within stipulated deadlines.
GCC Filings is a good choice for VAT Consulting in Dubai and the rest of the UAE along with providing services like accounting, auditing, company incorporation, VAT registration, tax filing and returns and more. The company guides customers throughout the entire process seamlessly without any hitches.