VAT in UAE

Value Added Tax (VAT) was introduced in the UAE on January 1, 2018, at a standard rate of 5%. VAT is an indirect tax that is applied to the majority of goods and services purchased and consumed within the UAE. At Shuraa Tax, we offer expert VAT consultation services in Dubai to help businesses understand UAE's VAT laws, we assist you from VAT registration to compliance, refunds, and more.

VAT Implementation in UAE

VAT was implemented by the UAE government to diversify the country’s income sources and reduce dependency on oil revenues. It’s a consumption tax, meaning that it’s borne by the end consumer, while businesses act as intermediaries to collect and remit the VAT to the Federal Tax Authority (FTA).

What is the VAT Rate in the UAE?

The standard VAT rate in the UAE is 5%. This applies to most goods and services. However, there are specific categories that have different treatments under VAT.

Types of Supplies under UAE VAT Law

The UAE VAT law categorizes supplies into three main types:

1. Taxable Supplies

Standard-rated supplies taxed at 5%. This applies to most goods and services.

2. Zero-rated Supplies

Supplies that are taxable but at 0%. Examples include international transportation and the export of goods and services.

3. Exempt Supplies

Supplies that are not subject to VAT. Examples include residential property leases and financial services.

4. Out of Scope Supplies

Goods and services that are outside the scope of VAT, such as certain financial services and real estate transactions.

How Does VAT in UAE Work?

VAT is calculated as a percentage of the taxable supply value. Businesses registered for VAT collect VAT from their customers and remit it to the Federal Tax Authority (FTA). They can also claim input VAT credits for VAT paid on purchases related to their business activities. This system ensures that businesses only pay VAT on the value they add to goods and services.

Example:

A business sells a product for AED 100, with a 5% VAT rate, the customer pays AED 105.

If the business paid AED 50 to purchase the product (plus AED 2.50 as VAT), the business owes the FTA only the difference: AED 2.50 (AED 5 collected - AED 2.50 paid).

Who Needs to Register for UAE VAT?

Businesses must register for VAT in the UAE if:

• Mandatory Registration: The taxable turnover exceeds AED 375,000 in the past 12 months.

• Voluntary Registration: Businesses with a turnover between AED 187,500 and AED 375,000 can voluntarily register for VAT.

Failing to register when required can lead to significant penalties.

VAT Registration in the UAE

Registering for VAT is straightforward but requires attention to detail. Businesses can register through the FTA portal. Here’s a quick step-by-step guide:

1. Create an account on the FTA website.
2. Fill in the VAT registration form: Provide business details, turnover, and financial information.
3. Submit the required documents: Trade license, passport copies, Emirates ID, and financial statements.
4. Receive TRN (Tax Registration Number): Once approved, you will receive a TRN, confirming your registration.

Our team at Shuraa Tax can assist you through every step of the VAT registration process to ensure accuracy and timely submission.

VAT Refund in the UAE

Businesses can claim a VAT refund on the input tax they paid on purchases. If the input tax exceeds the output tax in a given tax period, the difference is refundable. VAT refunds are subject to certain conditions, and businesses must file VAT returns quarterly or annually depending on their revenue.

We assist our clients in preparing and filing VAT returns, ensuring compliance with FTA regulations and maximizing refund opportunities.

VAT Consultation in the UAE

Understanding UAE VAT laws can be complex and time-consuming. A professional VAT consultant in Dubai ensures that:

• Your business remains compliant with the latest tax regulations.
• You avoid penalties for late filings, incorrect returns, or non-registration.
• You optimize your VAT recoveries and minimize costs.
• You receive assistance with VAT audits and resolving disputes with the FTA.

At Shuraa Tax, our VAT experts are here to help you with VAT registration, return filings, compliance, and refunds, making the process seamless and stress-free.

VAT Penalties in UAE

The FTA has strict penalties for non-compliance with VAT regulations. Some common penalties include:

• AED 10,000 for failure to register within the deadline.
• AED 1,000 to AED 50,000 for failure to file VAT returns or incorrect VAT return submissions.

By working with Shuraa Tax, you can avoid these penalties and ensure your business stays complaint with UAE VAT laws.

Shuraa Tax VAT Services in the UAE

At Shuraa Tax, we offer comprehensive VAT services in the UAE tailored to your business needs, including:

• VAT registration and de-registration
• VAT return filing and compliance
• VAT refund claims
• VAT consultancy and audit support
• Assistance with VAT disputes and FTA communication

If you are looking for comprehensive tax management along with VAT accounting and advisory services, then Shuraa Tax Accounting & Auditing have to be the ultimate solution to all your problems. Speak to our agents and get quick assistance with your financial dealings and this way you'll be able to increase your company's productivity and overall efficiency.