VAT Planning & Consultancy :-
The Government of United Arab Emirates (UAE) has announced the introduction of a new law under Federal Decree – Law No. (8) of 2017 pertaining to Value Added Tax (VAT) on supplies of goods and services in UAE. To be implemented from January 1st, 2018, in UAE and Saudi Arabia, And other GCC countries are in process to introduce the VAT law soon.
WHAT IS VAT :-
VAT is an indirect tax, it is imposed on the import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply. Occasionally, you might also be referred to as a type of general consumption tax. VAT is one of the most common types of consumption tax found in over 150 countries.
VAT REGISTRATION :-
VAT is applicable to every business sector and its registration is classified into three categories:-
- Mandatory Registration: Taxable supply is crossing the threshold limit AED 375,000/- within last 12 month.
- Voluntary Registration: Taxable supply is crossing the threshold limit AED 187,500/- within last 12 month.
- Exemption from Registration: As per VAT law some are a supply of goods and service are exempt for registration.
VAT RATES :-
VAT applicable RATE are classified into four type:
- Standard rate 5% :
Everything which is not zero-rated, exempt or out of scope
- Zero rate :
- Export of goods and services
- International transport and related supplies
- Air, Sea and Land means of transport and associated services
- Supply of precious metals
- First supply of residential properties within 3 years of completion
- Qualifying education services
- Preventive and basic healthcare services
- Exempt for VAT:
- Residential properties following the first supply
- Bare land with no civil engineering
- Margin-based financial services
- Local passenger transport
- Life insurance
- Out of Scope:
- Supplies which are not made in UAE
- Supplies which are not made in the course or furtherance of a business
- Transfer of a business as a going concern
- Supplies by certain Government entities.
VAT REQUIRE ACCOUNTING
Businesses will be required to keep accounting records which will enable the Federal Tax Authority to identify the details of the business activities and review their transactions. The time period to retain accounting books is minimum 5 years
Several types of penalties will be levied for non-compliance of VAT law. Few examples of actions and omissions that may give rise to penalties include:
- A person failing to register when required to do so
- A person failing to submit a tax return or make a payment within the required period
- A person failing to keep the accounting records required under the issued tax legislation
Tax evasion offences where a person performs a deliberate act or omission with the intention of violating the provisions of the issued tax legislation.
HOW FINHUB CAN HELP YOUR BUSINESS
There is a relatively short time to consider the implications of VAT in UAE. The amount of work required depends on the size and complexity of the business concerned which is why it is important to take steps to assess how best to deal with the reality of VAT as soon as possible
- FinHub has professional experts in a VAT, who undertake the following step for successful implementation of VAT in your business.
- FinHub Experts visit your office to understand the business model for designing a VAT Implementation plan, which suits the UAE VAT regulations for your business.
- To comply with UAE VAT Law, FinHub Experts will advise regarding the procedural formalities and the date by which registration must be made, considering whether the company will get an exemption in this respect or not.
- FinHub will study the impact of VAT on working capital, costing and profitability of business to streamline the operations by complying with UAE VAT LAW
- To incorporate the changes in the billing, accounting, and other administrative procedures to comply with UAE VAT formalities, necessary guidance or information required will be communicated to the client
- FinHub Experts will provide the support for preparing and filing of the VAT return by taking the correct input tax credit against the total VAT liability