1 What is VAT (Value Added Tax)?
- A tax that is tacked onto the supply of most merchandise and programs.
- Charged at each progression of the production network
- The end-shoppers at last bears the expenses.
- Businesses collect and account for the tax.
- In effect, business will be collecting the tax on behalf of the government.
2 Why is the UAE implementing VAT?
The UAE provides its citizens and residents with high quality public services including hospitals, roads, public schools, parks and civil services. These services are funded by the government.
The VAT will supply the nation with another wellspring of pay, which will guarantee the proceeded with arrangement of high quality public benefits later on. Moreover, the VAT will enable the government to accomplish its vision of decreasing reliance on oil and building a diverse economy.
3 - Which sectors are subject to VAT?
VAT is required for the supply of all products and ventures, including food, commercial buildings and hotel services. if no express arrangement is made to force a zero rate or an exemption.
4 - What is the difference between exempt supplies and zero-rated supplies?
Businesses that supply goods or services that are subject to a zero rate must register for VAT but can recover the VAT that they acquired on their purchases.
Moreover, businesses that supply tax-exempt goods or services will not be eligible to recover the VAT they acquired on their purchases.
5 - The mandatory registration limit and the voluntary registration limit
- A business must enroll for VAT if their taxed goods and services surpass the required enlistment limit of AED 375,000.
- A business may voluntarily enroll in VAT
- if their provisions and imports are under the required enlistment limit, however surpass the willful enrollment edge of AED 197,500.
- Additionally, a business may enroll deliberately if their costs surpass the intentional enlistment edge.
6 - Are there specific dates for businesses to register for VAT?
All organizations must immediately present an application for enlistment with a specific end goal to maintain a strategic distance from the danger of non-enrollment by January 2018. Non-enrollment will result in fines which are stipulated in Cabinet Decision No. (40) of 2017 on Administrative Penalties for violations of Tax Laws.
7 - How to register for VAT?
Tax registration can be arranged through the Federal TAX Authority's website. The website registration is accessible 24 hours a day, seven days a week. All means of communication with the Authority are available on this website.
8 - Will there be Tax grouping?
Organizations that fulfill certain prerequisites secured under the Legislation(such as having a place of residence in the UAE and being connected/related parties) will have the capacity to enlist as a Tax gathering. For a few organizations, Tax gathering will be a helpful device that would streamline representing VAT.
9 - Can businesses begin charging VAT before January 1, 2018?
Organizations are precluded from forcing VAT on any goods or services before January 1, 2018.
10 - Records to be retained?
All businesses, enlisted and unregistered, must save records and proper documentation. For example, balance sheets, profit and loss statement, records on settled resources, finance, stock and stock levels, and also bookkeeping records (installment receipts, buys, deals, incomes and costs).
Business might be required to roll out improvements to their center operations, budgetary administration rehearses, the systems they use to continue bookkeeping books and records, and the innovation they use in their bookkeeping hones, notwithstanding changes in their HR (bookkeepers, impose guides, and so forth).