Value Added Tax (VAT) was introduced in the UAE on 1st January, 2018 with a rate of 5%. The VAT is an Indirect tax imposed on the supply of majority goods and services, like automobiles, fuel, jewellery, food & beverage, Hotels & motels, restaurants, entertainment, Insurance etc. are charged at this rate. Health, education, transport by air, land or sea, etc. are classified as Zero-rated. Whereas; local passenger transport and bare land are exempt from VAT. Businesses require taking certain steps for VAT implementation into their operations. The implications of UAE VAT can be huge for you and your business. We at AKGVG Accounting and Bookkeeping can provide assistance to businesses implementing VAT in UAE.
Businesses can be in ambiguity as VAT is a new concept for the UAE. We can assist businesses by providing a complete walk through for VAT implementation. Our VAT experts can systematically assist you in following manner:
AKGVG Accounting and Bookkeeping do everything you would expect from accountants and tax advisors, but there is more to us. We provide a wide range of personalized tax and accounting services. So, whether you’re a well-established company or just starting out, we are here to help you and direct you through the step-by-step cycle of business and financial needs for your business. We ensure that you have all the information you need and help you prepare to optimize your business performance. To begin your steps towards filing VAT, please contact us- we would be happy to assist you.
A Value-Added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.
VAT will provide the country with a new source of income, which will ensure the continued provision of high-quality public services in the future. It will also help the government achieve its vision of reducing dependence on oil and building a sustainable knowledge economy for the future.
Output VAT is the value added tax that you calculate and charge on your own sales of goods and services if you are registered for VAT. Output VAT must be charged on sales both to other businesses and to ordinary consumers. Input VAT is the value added tax added to the price you pay for eligible goods or services. If you are registered for VAT, you can deduct the amount of VAT paid from your settlement with the tax authorities.
VAT registered businesses charge and add VAT to the value of goods and services they supply. They can also reclaim VAT incurred on goods and services. Please refer to the illustration for an easy-to-understand example.
|Coffee Beans Manufacturer||10.50 AED||0.50 AED||0||0.50 AED|
|Beans Distributor||15.00 AED||0.75 AED||0.5 AED||0.25 AED|
|Coffee Shop||20.00 AED||1.00 AED||0.75 AED||0.25 AED|
|Total VAT paid by end consumer||1.00 AED|
*VAT is collected through the supply chain, and the end consumer pays and bears the VAT cost.
Mandatory registration threshold limit of AED 375,000.
Voluntary registration threshold limit of AED 187,500.
Due date to file VAT return is 28th of following month, when quarter ends.
Every Customer, have to pay UAE VAT if they are consuming the VAT applicable goods or services.
Export of goods and services outside the GCC and international transportation are Zero-rated.
Imports are taxable under VAT. The importer has to pay VAT on imports on reverse charge basis. This is in addition to customs duty levied on imports.
The registered entities who are eligible to get VAT refund (When input VAT is more than output VAT) can submit the VAT returns to the authority by disclosing the same.
Some following categories of supplies that will be exempt from VAT are: