FTA announces Corporate Tax Registration Deadline. AED 10k penalty for late registration.
Value Added Tax (VAT)
The UAE (United Arab Emirates) added VAT on January 1, 2018, at the standard rate of 5%. It is applicable to almost all the goods and services, with just a few exceptions. There are a few key rules regarding VAT:
- Businesses whose taxable supplies and imports exceed AED 375,000 per year should register for VAT mandatorily. However, businesses whose supplies are in the range of 187,500 and 375,000 can register voluntarily.
- VAT registration should be completed through the Federal Tax Authority (FTA) portal.
- Businesses that are registered for VAT should file monthly or quarterly VAT returns. The returns should be filed within 28 days after the tax period ends.
- Payments should be made within this time frame to avoid penalties.
WHAT IS VALUE ADDED TAX (VAT)?
Defined in simple words, Value Added Tax (VAT) is levied by the government of the UAE on the sale of goods and services to consumers. The general VAT rate is 5% and applies to a majority of goods and services at the point of sale, with some goods and services subject to a 0% rate. Some are even exempted from VAT, depending on their specifications and UAE laws. When each tax period ends, businesses must submit returns to the Federal Tax Authority (FTA).
Value Added Tax (VAT) is an indirect tax imposed on most goods and services in the UAE. It’s a consumption tax levied at each stage of the supply chain, with businesses acting as intermediaries in collecting and remitting it to the government. VAT plays a crucial role in the UAE’s economic landscape for several reasons
WHY VAT? VAT plays a crucial role in the UAE’s economic landscape for several reasons
- Economic Diversification
VAT helps reduce dependency on oil revenues by diversifying income streams. - Funding Public Services
Revenue from VAT funds essential public services like healthcare, education, and infrastructure development. - Stability and Growth
VAT provides a stable source of income, fostering economic stability and investor confidence.
Services offered At Wealth Edge Taxation and Accounting, we offer a range of VAT services to help businesses navigate the UAE's taxation system
- VAT Registration
- VAT Return Filing
- VAT Consultancy
- VAT Health Check
- VAT De-registration
- VAT Refund
- Tax Agency Services
- Training and Workshops
FAQs
Businesses must register for VAT if their taxable supplies and imports exceed AED 375,000. Voluntary registration is also available if supplies are below this threshold but exceed AED 187,500, or if expenses surpass the voluntary threshold.
Commercial property sales or leases are taxable at 5% VAT, while residential properties are generally exempt. The first sale or lease of residential properties within 3 years from completion is zero-rated.
Registered businesses must file VAT returns with the FTA within 28 days of the end of the Tax Period.
Businesses must adapt their operations, financial management, bookkeeping, and technology to comply with VAT. Understanding VAT implications and aligning with government reporting and compliance requirements are essential.
VAT-registered businesses must charge VAT on taxable goods/services, reclaim VAT on business-related expenses, maintain VAT-related records like tax invoices, and report their taxable supplies and purchases in periodic VAT returns.
Our Services At Wealth Edge Taxation and Accounting, we offer precision-driven accounting solutions for smooth financial operations tailored to diverse client needs.
- Financial Statement Preparation
We prepare accurate and timely financial statements, giving you a clear picture of your business’s financial health. - Bookkeeping
Our meticulous bookkeeping services ensure that your financial records are always up-to-date and error-free. - Accounts Payable and Receivable Management
We manage your invoices and payments efficiently, helping you maintain healthy cash flow and strong relationships with your suppliers and customers. - Payroll Processing
We handle all aspects of payroll processing, ensuring your employees are paid accurately and on time, and all payroll-related compliance requirements are met. - Tax Preparation and Filing
Our tax experts prepare and file your taxes, ensuring compliance with all regulations while maximizing your tax savings. - Corporate Tax and Other Tax Accounting
We handle all aspects of accounting for Corporate Tax and other taxes, ensuring your business stays compliant with the latest tax laws and regulations. - Budgeting and Forecasting
We help you plan for the future with precise budgeting and forecasting services, giving you the tools to make informed financial decisions. - Financial Analysis and Reporting
Our detailed financial analysis and reporting services provide you with valuable insights into your business performance, helping you identify opportunities for growth and improvement. - Internal Audit
Our internal audit services evaluate the effectiveness of your internal controls, risk management, and governance processes, ensuring operational efficiency and regulatory compliance. - IFRS Compliance
We assist your business in preparing financial statements in accordance with International Financial Reporting Standards (IFRS), ensuring transparency and comparability of financial information globally.
Common VAT Challenges in the UAE
Below are some of the greatest VAT challenges in the United Arab Emirates
- It’s difficult to understand the Complex VAT Regulations
Some of the VAT laws in the UAE can be complex and confusing. This is especially true for small and medium-sized enterprises. They are often subject to misinterpretation, which leads to a lot of confusion among businesses while filing for VAT. - A single lapse can lead to a huge error
Because the laws are so complex, it is a real challenge to maintain a perfect record. The law demands that transaction records be maintained for at least five years. During this period, even the smallest of lapses can complicate things during a VAT audit in Dubai. This, in turn, leads to enhanced scrutiny and penalties. - The filing deadlines are inflexible
This is yet another momentous challenge. If you submit late, then you can incur penalties and extra costs, adding pressure to the finance teams. This is the reason why things sometimes get difficult while adhering to the deadlines while filing for VAT.
Benefits of Professional VAT Management
VAT management is hugely beneficial for businesses in the UAE. Since payment of VAT reflects compliance with local regulations, it shows that a business is trustworthy. It allows businesses to save extra costs and improve cash flow. VAT-registered businesses can gain access to broader opportunities since they are eligible for bigger collaborations and contracts. It also promotes improved recordkeeping and financial management. It also helps in providing transparency and valuable insights for strategic decision-making and growth.
Why Choose WealthEdge UAE for Your VAT Needs?
- Expertise You Can Trust
WealthEdge UAE has a team of experts who are some of the best minds in the country when it comes to dealing with your tax filing and VAT compliance needs. - Tailored Solutions
Every company’s tax and VAT needs are different. As mentioned in the introduction, VAT rules are different for companies whose imports and supplies exceed AED 375,000 and the ones who are within AED 375,000. We specialize in offering discerning support to both these categories of companies. - Addressing your compliance needs
We also help you comply with the VAT and other business rules and laws of the United Arab Emirates. We are the best option since we have transparent and competitive pricing, dedicated client service, and are trusted by businesses across industries. - Great customer service
If anything goes wrong, you can always revert to our customer care service. We will take care of whatever issues your company might be facing.
We’re here to help! Feel free to reach out if you have any questions, feedback, or need more details.