VAT consultancy
What is VAT?
Value Added Tax (or VAT) is an indirect tax. VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.
A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.
We will take care of the requirements of VAT or similar taxes in any jurisdiction.
From when the VAT collection came into effect and what are the rates?
VAT collection was introduced across the UAE on 1 January 2018 at a standard rate of 5%.
Who can or will be able to register for VAT?
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Furthermore, a business may choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
What are the VAT-related responsibilities of businesses?
All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate.
VAT-registered businesses generally:
- Must charge VAT on taxable goods or services they supply
- File VAT returns at regular intervals.
- May reclaim any VAT they’ve paid on business-related goods or services
- Keep a range of business records (for min 5 years) which will allow the government to check/ audit.
- A supplier must issue a valid VAT invoice
What sectors will be exempt?
- Financial services that are specified in the Executive Regulation
- Supply of residential buildings through sale or lease, other than that which is zero-rated
- Supply of bare land.
- Supply of local passenger transport.
What sectors will be zero rated?
VAT will be charged at 0% in respect of the following main categories of supplies:
- Exports of goods and services to outside the GCC
- International transportation, and related supplies
- Supplies of certain sea, air and land means of transportation
- Air passenger transport (international carriage)
- Certain investment grade precious metals.
- Newly constructed residential properties (within 3 years of completion)
- Supply of crude oil and natural gas.
- A supplier must issue a valid VAT invoice
- Supply of certain education services and related goods and services owned / funded by Government.
- Supply of certain Healthcare services
How can we Help?
We have extensive experience in VAT for Singapore and Malaysia. We can assist UAE entities in the following:
- Register for VAT
- Maintain Accounting records for VAT as per International Financial Reporting Standards
- Comprehensive action plan to analyse VAT impact on people, organisations, processes, controls, data and technology.
- File VAT returns at appropriate intervals. Assist in VAT reviews and audit.