Important points of VAT Dubai explained in short

Value-added tax or VAT is a consumption tax on a product that has been set @ 5 % on a host of products, but certain goods do not fall under its purview and enjoy the holiday viz., basic consumer goods, healthcare, and education, etc.

The VAT regulations declared by the local regulatory authorities gave clarity for investors and companies in the UAE and across the Gulf countries. The new regulation allocates responsibilities to eligible resident taxable persons including non-residents, investors and their agents, including nominated representatives with a mandate to register and ensure compliance indicated by the authorities.

Important points to be considered on VAT law

• All taxable persons need to register under the respective country’s law i.e., VAT and excise. Apply for a Tax Registration Number (TRN) within a specified time once the new, soon to be enforced, laws in UAE.
• The registration and appointment of tax agents and/or a legal representative, is mandatory, who will be responsible for all compliances of tax payments on behalf of their principals.
• Non-adherence to tax provision by defaulters for non-compliance; willful or otherwise, will invite strict penal action, including prison terms and also fines up to five times of the tax due for key management personnel/proprietors, responsible for compliance and payable by each taxable person and/ or entity.

 Step 1: VAT advisory services comprise of:

• Identification and analysis of the VAT impact on your business
• Outlines the VAT registration obligations and steps for applying for the VAT registration number.
• Review and amendment of contractual arrangements with customers and suppliers with a detailed transaction plan.
• Analysis of IT system and accounting requirements.
• Ensure the business is organized to avoid excessive cash outflow or absolute VAT costs arising, particularly on intercompany transactions.

 Step 2: VAT Implementation:

SQI Accounting’s finance and taxation team would guide implement changes, based on the outcome of the 1st step, in the IT systems of your organization.

• We will ensure relevant books and records are maintained appropriately
• We guarantee the accounts payable function evidence that input VAT paid is recovered without delay.
• Our team safeguards the accounts receivable function by understanding when to charge output VAT and accounted accurately at correct rates.
• Updates invoice templates to ensure that all relevant information for VAT invoices is included.
• Assists with the VAT registration with the competent authority at all levels of the process.

For small SMEs, SQI Accounting is competent to provide through outsourced accounting services, a framework of simple accounting systems and implementation of VAT rules.

For larger SMEs, in order to strengthen your finance team and organization, we can assist with the implementation and offer outsourced CFO or Finance Manager Services on a monthly basis.

Step 3: VAT training and post-implementation support

Transition or shift to other systems is difficult. A bespoke VAT training system from SQI Accounting will help your team with the transition to VAT. Our specialist VAT advisory team will provide post-implementation support and guidance during the project for proper implementation.

Step 4: VAT compliance

• Advise on the application of the rules, particular on available exemptions, VAT treatment of intra-GCC transactions, imports and exports
• Preparation and filing of VAT returns
• Assistance in claiming VAT refunds
• Update of the invoice templates for submission of relevant information for VAT Invoices
• Assessment of the VAT implication related to: new business models, elaborated supply chains, asset purchases and transfers, M&A, etc.

Consultation & guidelines

VAT is a general consumption tax and barring basic food items, health care and education, it applies to almost all goods and services. As part of diversifying the economy and revenue generation, the GCC governments have decided to adopt Value Added Tax (VAT) from Jan 2018.

Though the burden normally lies on the end consumer, the business organizations need to change the system processes to comply with the new legal requirement of the government

Normal requirements under VAT system – companies to comply:

• At the time of purchase of goods or availing any services – Ensure, whether tax has been properly charged (input tax in case of taxable items) by the supplier and details given in the invoices.
• At the time of sale or provision of services – Apply the rate on the sale value and reduce the amount of input tax to arrive at the payable amount.
• Make the computed tax payment with due (if any) within stipulated date to Govt.
• Filing the VAT returns by providing the relevant information requested by the GOVT, within the stipulated period.
• Maintain proper stock, invoices, accounts, VAT returns and other relevant records to justify the tax paid at the time of purchase.

The above requirements demand more control and safety on invoices, records, stock, proper filing system, modification/ upgradation of software, compliance within due dates for collection, payment, remittance of tax and filing of VAT returns. The role of the accounts department becomes significant for the compliance of VAT since maintenance of accounts and records is vital as per new company law.

Consequently, auditing and accounting firms in UAE is on the rise as the companies need to keep accurate and extensive records of their business transactions. We at SQI Accounting will help to maintain the data while the company can focus on other important matters.

Availing the VAT-related services provided by SQI Accounting is a perfect option as they are competent and reputed auditing firm to handle perfectly. Our services are second to none in mainland and free zones. For more details, Contact Us. We will be glad to be of service to you.